Smooth Sailing for Danish Payments

April 2016 Issue 530 www.cardsinternational.com SMOOTH SAILING FOR DANISH PAYMENTS

• DIGITAL: Moven • PAYMENTS: Cards v.s. Mobiles • PRODUCTS: Charities & Contactless • COMMENT: Worldpay

CI 530.indd 1 01/04/2016 15:33:47 Multichannel digital solutions for ﬁ nancial services providers

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IE RBI final design.indd 1 17/09/2015 11:21:32 Cards International EDITOR’S LETTER

CONTENTS EDITOR’S LETTER 2 COMMENT: CONFERMA/THAMES CARD TECHNOLOGY New £30 limit proves instant Simon Barker from Conferma discusses how virtual card numbers can aid corporate payments. In contactless hit addition, Paul Underwood argues that challenger banks need to find the right combination of card and o far, so good. The card payment limit Commercial cards opportunity? mobile technology to be competitive increase to £30 from £20 last Septem - The EU interchange fee caps that finally came into 6 DIGITAL: MOVEN ber was always expected to provide a effect last December relate only to consumer cards Robin Arnfield talks to Vincent further boost to contactless transaction and so, the argument went, there would be great Bahk, Moven’s chief customer S stats. scope for cards schemes to expand more profitable officer, on why the New York-based Figures released by Visa on 4 April show that commercial cards. bank is being considered as a player that is really changing the mould in contactless transactions over £20 are growing at Commercial cards in Europe account for only the financial sector more than double the rate of those under £20 with about 5% of all payment cards in Europe, but is 8 AWARDS: ASIA TRAILBLAZER 2016 bars and pubs a prime mover driving contactless there any evidence of innovation, new product The winners of the 2016 Asia growth. launches? Trailblazer Awards have been announced, rewarding the Visa report 36 million contactless transactions institutions setting the industry over £20 in the first six months since the limit Google learns expensive lesson alight increase amounting to nearly £900m of transac- Estimates vary but Google is reckoned to have 9 PAYMENTS: CARDS VS MOBILES tions chucked $300m in digital payment startup acqui- Philipp Nieland, co-founder and Contactless transactions over £20 saw an sitions to support Google Wallet. Add in the cost CTO of the PPRO Group, believes that average monthly growth rate of 19.1% between of hundreds of developers who do not come cheap. the hype around mobile payments is unjustified as cards are just as October 2015 and March 2016. This is over Then add in the cost of launching and running mobile as smartphones twice the average monthly growth rate of 8% for its Wallet Card, the physical debit cards linked to contactless transactions under £20 over the same Google Wallet accounts, now unceremoniously 10 PRODUCTS: CHARITIES & CONTACTLESS period, highlighting consumer appetite to use the axed. Charities have finally taken the technology for more expensive purchases. Customers with a Wallet Card won’t be able to plunge and are beginning to accept Contactless payments now make up 10% of all add money to it after 1 May and the cards (and contactless donations. How will this affect the industry? Alexander face-to-face payments between £20 – £30 with recurring transfers set up with it) will be cancelled Atkins investigates service stations, supermarkets and restaurants all on 30 June 30. Android Pay will also stop accept- reporting significant contactless growth. ing Wallet Card payments. 11 DEBATE: DIGITAL BANKING CLUB In supermarkets, where the average supermar- Google will now bank on a peer-to-peer pay- In the latest Digital Banking Club debate, hosted by Intelligent ket basket is £25, Visa’s figures show a 100% ments system pitting it against the likes of PayPal Environments, the discussion increase in contactless transactions compared to and Facebook Messenger. focused on what the financial sector in the UK could learn from the six months before the £30 limit was intro - As a huge fan of Google (and Android) I will its European counterparts. Patrick duced. be delighted to be proved wrong but on the evi- Brusnahan writes Restaurants have enjoyed a similar boost with dence of Google’s track record to date in financial 14 COUNTRY SURVEY: DENMARK spend there up by a whopping 155%. services, PayPal will not be losing a whole lot of 16 COUNTRY SURVEY: HONG KONG At service stations, the average contactless sleep. < 16 COUNTRY SURVEY: SAUDI ARABIA transaction at the pump has increased by £2.22 20 COMMENT: WORLDPAY since the £30 limit began, rising from £8.47 to Damon Anderson examines the £10.69. effects of payment instalments in Overall, UK contactless payments have risen by e-commerce and online retail Douglas Blakey 237% compared to the same period year-on-year. [email protected]

Editor: Douglas Blakey Sub-editor: Tom Langfield For more information on Timetric, visit Tel: +44 (0)20 7406 6523 our website at www.timetric.com. As a Director of Events: Ray Giddings Email: [email protected] subscriber, you are automatically entitled to Tel: +44 (0)20 3096 2585 online access to Cards International. For more Financial News Publishing, 2012 Deputy Editor: Anna Milne Email: [email protected] information, please telephone +44 (0)20 Registered in the UK No 6931627 Tel: +44 (0)20 7406 6701 3096 2636 or email customer.services@ Sharon Howley ISSN 0956-5558 Email: [email protected] Head of Subscriptions: uk.timetric.com Tel: +44 (0)20 3096 2636 Unauthorised photocopying is illegal. The Reporter: Patrick Brusnahan Email: [email protected] London Office contents of this publication, either in whole or Tel: +44 (0)20 7406 6526 71-73 Carter Lane part, may not be reproduced, stored in a data Email: [email protected] Sales Executive: Alexander Koidis London retrieval system or transmitted by any form or Tel: +44 (0)20 3096 2586 EC4V 5EQ means, electronic, mechanical, photocopying, Asia Editorial: Xiou Ann Lim Email: [email protected] Asia Office recording or otherwise, without the prior Tel: +65 6383 4688 1 Finlayson Green, #09-01 permission of the publishers Email: [email protected] Customer Services: Singapore 049246 Group Publisher: Ameet Phadnis Tel: +44 (0) 20 3096 2636 Tel: +65 6383 4688 Tel: +44 (0)20 7406 6561 or +44 (0)20 3096 2622 Fax: +65 6383 5433 Email: [email protected] Email: [email protected] Email: [email protected]

www.cardsinternational.com April 2016 y 1

CI 530.indd 1 01/04/2016 15:02:19 OPINION: CONFERMA/THAMES CARD TECHNOLOGY Cards International

Digitising expenses

CNs (Virtual Card Numbers) have handle expenses? A staff member has to and there is no way to know if it is being the power to change radically purchase something on company business. spent on the right things. the complex world of corporate They then have to fill in forms, collate their Surely, in this age of digital banking, near payments. receipts, scan them and then get it all over to instant money transfers and automated rec- V onciliation, we can do better. This is a bold statement, but one that rais- the appropriate member of staff. es two questions. How can they change this The accounts department then have to Well, we can. Virtual card numbers make environment and, crucially, why does it need manually reconcile the expenses and author- the whole expenses and corporate payments changing in the first place? ise a payment to be made. If our member of process easy and automated, leaving no one How business handles corporate payments staff is lucky, they’ll get it in a week. If not, out of pocket. and expenses needs overhauling because, for they might have to wait till their next payday. To put it simply, VCN technology mod- the most part, it's a steam powered system in It’s a system where no one wins. The poor ernises corporate payments and expenses. It a digital powered age. member of staff has a mountain of paper- rationalises a complex and confusing system Think about how banking has changed in work to fill in, has to keep track of their to the benefit of all of the stakeholders. the last twenty years. For those of us of a receipts and has to wait up to a month to be This sort of technology is already being certain age, it wasn’t that long ago that busi- reimbursed the money they are owed. offered by banks, acquirers and travel and ness banking necessitated forms to fill out, As for the accounts department, they have entertainment firms globally. Barclaycard cheques to deposit (and wait up to five days to manually check the forms, find out what offer Precisionpay, for example. to clear) and regular trips to branches. cost centre to charge the payment against, The big question, then, is if your bank Yet for the vast majority of us, this model authorise payment, possibly needing sign is not offering this service, then why not? of business banking is as archaic as Captain off from a senior member of staff, and deal Expenses and corporate payments need Mainwaring’s bowler hat and pinstripe suit. with the multiple members of staff who are digitising for convenience, cost control and Yet, despite this, corporate expenses are demanding to know where their money is. efficiencies.< still stuck in this time intensive and com - And for the company? There is no easy plex model. How does your own company way to know where the money is being spent Simon Barker is the CEO of Conferma

Challenger banks must strike the right balance between mobile and card

FC mobile payments continue to dialogue. help them provide handy location-based info grab headlines, but to really drive But NFC payments would be nothing on retail offers, for example, or the wherea- uptake and ensure full market without contactless technology. And, while bouts of the nearest ATM. The key point coverage, combining contactless whole-of-market NFC payment solutions here is that contactless cards can provide this N remain waylaid by their issuing stakeholders cards with next-gen mobile banking apps data right now, in real time, and regardless is surely the right way to go for 2016’s divisive battle for market supremacy, of which handset the customer uses. challenger banks. contactless card issuance and use has abso- This means challenger banks hell bent on Much has already been said about the lutely exploded. positioning themselves at the heart of the opportunity for challenger banks to disrupt Some stats from the UK alone (courtesy of customer’s spending experience can, via a the traditional banking system. These next- the UK Payments Council): In October 2015, contactless card, deliver the exact same tap gen financial institutions have a very differ- there were a total of 76 million contactless and go, value added service enabled, loca- ent view of the world and are, in the main, cards in issue (that’s comfortably more than tion optimised experience as mobile NFC- also quite different from one another. one each for the whole population), repre- payment services, only they can deliver it to What unites them, however, is the belief senting a year on year hike of 39.7%. 120.5 everyone right away; not just those with a that they can deliver a more convenient, val- million contactless transactions were made premium NFC-enabled handset. ue-oriented and better contextualised bank- in that month alone, each worth an average So, my message to challenger banks gear- ing experience than their bigger, traditional of £7.72 ($11) and total contactless spending ing up for 2016 is this: By all means, get counterparts can. was up by more than 213% year on year, to stuck into the mobile channel, just don’t get No challenger bank would disagree that almost £930m. hung up on NFC payments. mobile is a key weapon in their fight to dis- What does this signal for the coming year’s In contactless cards, you have an uncom- rupt the market. Virtually everyone today mobile oriented challenger banks? We know plicated and proven route to market which supplements some form of daily activity with that enabling customers to track their trans- your customers already use and love, and a mobile service, and few of attract such close actions and account balance throughout which will deliver you the data you need to scrutiny as those that support the business of the day in real time will be a major proving create the disruptive customer experience spending. ground for them in 2016, not least because you seek. So why wait around?< In the post Apple Pay world, therefore, it traditional banks’ legacy systems just can’t is little wonder that NFC mobile payments deliver this level of agility. Paul Underwood is a managing director at Thames remain central to mobile fintech industry This real time transaction data can also Card Technology

2 y April 2016 www. cardsinternational.com

CI 530.indd 2 01/04/2016 15:02:20 Cards International NEWS: DIGEST

SECURITY Morpho collaborates with Visa on biometric payment solutions

Morpho (Safran), a provider of identity and solutions in response to the strong growth in and strategic partnerships Bill Gajda said: security solutions, has collaborated with Visa this market. "Visa is always exploring new technologies to explore new payment concepts using secu- Morpho and Visa are co-demonstrating which enhance payment security and con- rity technologies including biometric recog- these payment concepts at the Mobile World venience for financial institutions and their nition. Congress in Barcelona, Spain, as well as at customers. We are excited to demonstrate The technologies being studied will Visa's innovation centre at its San Francisco and explore the power of these new authen- be applied to existing payment methods headquarters. tication capabilities with Morpho at Mobile such as credit or debit cards, mobile, Few of the key payment concepts being World Congress." ATMs and point-of-sale (POS) terminals demonstrated include the use of MorphoW- Morpho CEO Anne Bouverot said: "In to boost transaction security for finan - av technology for proximity payments. This addition to touchless fingerprint recognition cial institutions and customer conveni - technology captures and matches four finger- for proximity payments, we are incorporat- ence. prints with a single hand movement in less ing facial recognition capability into smart- Morpho said that its collaboration with than a second. phones and tablets, enabling users to validate Visa intends to explore innovative security Visa senior vice president of innovation payments through a simple selfie."<

MOBILE DISTRIBUTION Samsung Pay adds support for Visa to open Wells Fargo credit and debit cards office in Côte Samsung Electronics' mobile payment plat- d'Ivoire form Samsung Pay has added support for Wells Fargo debit and credit cards. Visa has unveiled plans to set up an office The latest move expands Samsung Pay in Côte d'Ivoire, Africa to offer the benefits support to credit and debit cards from 70 of digital payments to the region's unbanked banks and credit unions, covering over 70% population. of the credit and debit card market in the US, Citing the Global Financial Inclu - the technology giant said. sion Index 2014, Visa said that the Cardholders can make payments via Sam- move will support its financial inclu- sung Pay by swiping up and scanning their sion efforts in Africa where two billion fingerprint. Jim Smith said: "We are pleased today to people live without access to financial The payment platform is accepted in announce that Samsung Pay is available services. majority of existing as well as new termi - for Wells Fargo customers. Innovations like The company said that the launch will nals, and offers triple-layered security that Samsung Pay further our commitment to support engagement with the region's includes fingerprint identification, tokenisa- giving our customers the ability to make key stakeholders; as well as govern - tion and Samsung KNOX. payments anytime and anywhere, including ment, financial institutions, consumers Wells Fargo head of virtual channels from a mobile wallet."< and merchants in the ECOWAS region. The company will collaborate with the government and clients to facilitate M&A the electronification of payments plans, engage in financial literacy initiatives, Network International to acquire Emerging and offer solutions to boost mobile- Markets Payments Group based payments in the region. Visa general manager of North and Network International, a Dubai-based pay- The Abraaj Group. Francophone Africa Tarek Elhousseiny ment solutions provider, has agreed to pur- Emirates NBD will continue to hold said: "We plan to proactively work chase Emerging Markets Payments Group remaining 51% stake in Network Interna- with the governments and partner banks (EMP) for more than $300m to boost its tional. across the region to roll out initiatives presence in the Middle East and Africa. EMP works with more than 130 banks that are focused on financial inclusion The company will acquire EMP from Lon- and 30,000 retailers across 45 countries in and help consumers realise the full don-based private-equity firm Actis. the Middle East and Africa. The company potential of electronic payments while Private equity firms Warburg Pincus and offers a range of payments services, such as expanding the technology and global General Atlantic have agreed to purchase a merchant acquiring, card issuing and net- expertise that would support economic 49% stake in Network International from work processing.< growth plans in the region."<

www.cardsinternational.com April 2016 y 3

CI 530.indd 3 01/04/2016 15:02:22 NEWS: DIGEST Cards International

DIGITAL BitFury invests in African bitcoin exchange BitPesa

BitFury Group, a bitcoin blockchain infra- Uganda, and Tanzania. and our investment will allow us to work structure provider and transaction process- Licensed by the FCA as an authorised pay- together to leverage the innovative power of ing start-up, has invested an undisclosed sum ment institution, BitPesa accepts Bitcoin and the Bitcoin Blockchain for the benefit of the in Pan-African bitcoin payments and trading exchanges it for local African currencies, entire pan-African continent." firm BitPesa. which are then deposited into an African BitPesa CEO Elizabeth Rossiello said: "It BitFury said that the strategic investment was bank account or into mobile money wallets. has been great to have the support of the Bit- made by its investment arm, BitFury Capital. BitFury CEO Valery Vavilov said: "A Fury Group, who works extremely hard to BitPesa allows users across the world to secure, transparent and trusted form of build community amongst companies work- send payments to and from Kenya, Nigeria, exchange is being made possible by BitPesa, ing with bitcoin, large and small."<

PAYMENTS UK contactless spending trebles in 2015 The latest data from The UK Cards Asso- cards featuring the technology. secure way to make payments. ciation revealed that spending on contactless The monthly data revealed that “With a contactless payment, you no cards rose more than three-fold in 2015 to contactless spending grew to £1.2bn in longer have to fumble around for the reach £7.75bn ($10.9bn). December, a jump of 17% on the previ - loose change in your purse or wallet. This means that total contactless ous month. You can simply pay using a contactless spending in 2015 was more than dou - Around 140 million contactless trans- card or with your mobile phone.” ble the preceding seven years combined. actions were made in December - equiva- Recent figures from Transport for Lon- In 2014, £2.32bn was spent using lent to 52 every second. don (TfL) showed that more than one contactless. The UK Cards Association (UKCA) million journeys are now made on the Totally 1.05 billion contactless pur - chief executive Graham Peacop stated: network every day using contactless. chases were made in 2015, a surge of “The swift increase in contactless usage In December 2015, total spending 228% compared to the previous year. continued apace last year, with nearly across all debit and credit cards rose to Contactless spending was up 233% on one in eight card transactions now using £53bn. 2014. the technology. Total annual card spending reached The report said that nearly half of “Whether it’s to stock up in the super- £622bn in 2015 from 13.4 billion trans - all debit and credit cards are now market, travel to work, or buy your actions, up from respective figures of contactless, with a total of 79.3 million lunch, contactless is a fast, easy and £574bn and 12 billion in 2014.<

SECURITY MOBILE Nordea selects FICO’s Barclays Kenya launches new platform to counter mobile card payment solution

payment cards fraud Barclays Bank Kenya has launched Pewin taxi cab to launch the solu- a mobile card payment solution tion to customers on a pilot project. Swedish lender Nordea has select- FICO regional director of Nor- which will enable users to pay for Additionally, Barclays is seeking ed FICO's fraud management dics, the UK and Ireland Steve low-value transactions. partnerships with other firms for solution, FICO Falcon Platform, O'Malley said: "FICO already The Barclays mobile point-of- the solution. to protect its customers from cred- partners with Nordea in multiple sale (MPOS) solution is a small Barclays Bank Kenya manag- it, debit and e-payments fraud. parts of their business, including phone-like GPRS device that ing director Jeremy Awori said: The company will also use customer account management accepts Visa, MasterCard and "Barclays Bank of Kenya is proud FICO's adaptive analytics tech- and scorecard development, and AmEx cards as a payment option. to be the first bank in Africa to nology to refine fraud detection. our work with them on custom- The solution has been designed be launching the Barclays Mobile The fraud management solu- er fraud protection is a natural particularly for making card pay- Point of Sale (MPOS), which is our tion will be implemented for the extension of that partnership. ments for home deliveries, trans- response to the growing demand company's retail banking as well "Enterprise-wide fraud man- portation, entertainment spots for mobile based payment solu- as corporate banking segments. agement is a goal for many banks among others. tions. It will eventually be rolled out worldwide, since criminals are keen All transactions made through "MPOS will enable businesses to all Nordic countries including to exploit gaps between fraud sys- MPOS terminals will follow the that previously operated on a Sweden, Norway, Denmark and tems. Nordea's leadership will show same transactional and payment cash only basis to increase their Finland. The company earlier how a centralised approach can flows as that of the traditional POS sales and expand their customer used separate fraud solutions for reduce fraud losses while improv- system. base by enhancing their payment various countries and channels. ing the customer experience."< The bank has teamed up with solutions."<

4 y April 2016 www. cardsinternational.com

CI 530.indd 4 01/04/2016 15:02:22 Cards International NEWS: DIGEST

MOBILE HomeSend and Vodafone to extend M-Pesa remittance deal to five new markets HomeSend, a joint venture between nia, Romania as well as Kenya. cost-effective money transfer services to MasterCard, eServGlobal and BICS, has HomeSend in a statement revealed that it M-Pesa customers in even more coun - expanded its global framework agree - intends to expand the reach of their network tries." ment with Vodafone Group for M-Pesa to more than 70 markets in 2016 including Vodafone head of M-Pesa commercial service. 20 new mobile money markets. and strategy Claire Alexandre said: "We're Under the deal, the companies will launch HomeSend will offer a way to receive delighted to offer our customers more choice remittance services in Democratic Republic remittances by enabling MasterCard pay- to send and receive money from other coun- of Congo, Ghana, Lesotho, Mozambique ments cards to be used. tries and networks. HomeSend connects and Albania in 2016. HomeSend CEO Stephen Doyle said: them to an extensive global network, offering HomeSend has already introduced "We are thrilled to expand our work an affordable, secure and convenient solu- inbound remittances with M-Pesa in Tanza- with Vodafone to bring all-important, tion for inbound digital money transfers."<

SECURITY DISTRIBUTION China UnionPay and Visa join Western Union expands money transfer services forces on payment security to Ukraine China UnionPay (CUP) and Visa have inked "The joint cooperation will have an impor- a memorandum of understanding (MOU) in tant influence on the healthy development The Western Union Company has partnered Shanghai to partner on payments security, of the global payments industry, providing with Public Joint Stock Company Commer- innovation and financial inclusion. cardholders with more convenient, secure cial Bank PrivatBank (PJSC CB PrivatBank) The MOU will allow the companies to col- and highly efficient payment services." to launch its money transfer services in laborate on complying with regulatory needs Visa CEO Charlie Scharf added: "We are Ukraine. to strengthen the bank card ecosystem, which excited to be working together on innova- The service will allow Western Union cus- will benefit consumers, merchants, financial tion as digital payments transform com - tomers in Ukraine to initiate online money providers, as well as technology partners. merce, resulting in safer, faster and more using their Visa or MasterCard credit cards CUP president Shi Wenchao said: "As convenient ways for consumers to pay. and debit cards issued by any Ukrainian bank. open payment networks, both companies Innovation will also play an important role Western Union said that its cross-border follow the same business model, share the in our joint efforts to expand access to finan- FinTech platform enables a pay-in, pay- common interest of maintaining their brand cial services for the underserved. The global out capability that uses technology, foreign rights and promote the core concept of open payments industry will benefit from these exchange conversion, data management, cooperation. efforts."< as well as regulatory, compliance and anti- money laundering (AML) infrastructure, to DISTRIBUTION accelerate money movement across the world. Western Union now offers online trans- PROSA teams up with Gemalto to actional services in 35 countries, allowing consumers to send money to more than 200 bring mobile payments to Mexico countries and territories. Western Union Digital senior vice president Latin American payment processor PROSA identification and verification, card dig - Molly Shea said: "The launch of on-line ser- has partnered with digital security firm itisation and secure delivery to the TSH vices in Ukraine is consistent with our global Gemalto to offer mobile payments in Mex- based mobile devices. growth strategy that will create additional ico. Additionally, PROSA will operate opportunities for consumers and business." Under the deal, PROSA will use Gemal- Gemalto's tokenisation platform from its PJSC PrivatBank deputy chairman of the to's Allynis Trusted Service Hub (TSH) to premises in Mexico, providing security in board Alexander Vityaz said: "Western Union enable new user onboarding. digital payments to reduce cross-channel has become one of the pioneers in introduc- Gemalto's TSH will allow banks to fraud. tion of on-line access to the money transfer launch their own NFC mobile payment PROSA general manager José Molina service, and now we are pleased to offer all wallets utilising host card emulation said: "Gemalto's TSH provided us with a people living in Ukraine the opportunity to (HCE). full turnkey solution that allows our bank- send transfers virtually anywhere in the world This solution also has ability to provi - ing partners to plug into the NFC infra - in just a few clicks via their online service. sion payment wallets from device manu - structure and roll out easy, secure mobile "Further, we are pleased to be deploy- facturers and mobile network operators as payment services to their customers, while ing the Corezoid.com technology platform they launch in Mexico, Gemalto said. benefiting from the cost efficiency and to our enterprise customers to support their PROSA is planning to offer services for scale a world class processor like PROSA payment, communication, management and mobile wallet development, cardholder can provide."< business intelligence applications."<

www.cardsinternational.com April 2016 y 5

CI 530.indd 5 01/04/2016 15:02:22 DIGITAL: MOVEN Cards International

Is Moven truly a modern game changer? New York-based neo-bank Moven has been widely heralded as a disruptive innovator which is changing the nature of banking. Robin Arnfield talks to Vincent Bahk, Moven’s Chief Customer Officer, about the challenger bank’s views on the marketplace and how it feels it can change the banking paradigm

ounded in 2011 and launched com - depending on us in their daily lives. We’re layer to our partners’ financial products.” mercially in March 2014, Moven becoming something they rely on.” In December 2014, TD signed an agree- offers a US fee-free FDIC-insured Bahk claims current digital banks are still ment with Moven for the exclusive Canadian mobile checking account and debit not meeting the specific needs of millenni- rights to Moven's PFM app, and is currently F als. “While digital banks are in the medium MasterCard which are provided by its in pilot mode. In February 2015, Westpac US banking partner, Weir, Kansas-based that millennials prefer, they are still bringing New Zealand launched a new version of CBW Bank. It also offers real-time per - old rules and trying to apply them to a new its digital banking platform incorporating sonal financial management (PFM) and behaviour,” he says. Moven’s PFM tool. budgeting and savings apps as part of “The millennial mindset is thinking about “There are others banks in the pipeline, its mission to encourage what it terms money management, banking, savings, and but we’re not at liberty to reveal their names ‘financial wellness’. planning for the future in a completely differ- yet,” says Bahk. “Moven isn’t your typical bank,” Alex ent way thanks to innovations of the sharing "Offering a PFM app like TD is doing with Sion, Moven’s president, wrote on his economy such as AirBnB and Uber. Similarly, Moven helps create stickiness for a bank," LinkedIn page. “We provide banking and millennials have different customer service says Ed O'Brien, director of Mercator Advi- financial services, and we work with banks expectations compared to previous genera- sory Group's banking channels service. and industry partners to do this. So you get tions.” In May 2015, Moven signed a services the protection and security of depositing at agreement with Accenture to develop digital a bank, but none of the frustrating baggage. Advice banking solutions such as next-generation We’re changing the definition of what a bank “Moven’s key differentiator is ‘advice and account opening, biometric authentication, does and how it works with its customers. guidance’,” says Ron Shevlin, Director of and real-time marketing, which they will So, while we’re not set up like a typical bank, Research at US consultancy Cornerstone provide to banks globally. we’ll provide all the products, services, and Advisors. “It has developed a number of “Accenture gives us immediate scale, so we features of a typical bank and will even create PFM functions to give its customers real-time can meet our clients’ needs,” says Bahk. some much-needed innovations of our own.” information on how they’re doing against “We have pursued global partners to their budget.” not only distribute our platform but also Digital banking strategy Moven works with conventional plastic strengthen our offering,” says Bahk. “Since “We’re about connecting a bank to the card and mobile wallet transactions, giving launching these partnerships (with TD and moment (in time) that matters for the consumers instant feedback via mobile alerts Westpac), we’ve created an infrastructure customer,”Vincent Bahk, Moven’s chief cus- on their spending activity including real- that is multi-currency, multi-lingual and on tomer officer, tells CI. Using Moven’s app, time, categorised receipts and the colour- a distributed cloud system. This is proven consumers can make decisions about spend- coded Spending Meter. to be a leading formula for a future-proof ing and saving when they are at the point of This helps users avoid overspending by platform, something we wouldn’t get if we sale. showing how much they are spending on dif- pursued only domestic partners.” “We believe banking products are on ferent categories and how recent transactions the road to commoditisation and becoming compare to past activity. Moven uses three Business model ‘utilities’ - just like the telephone dial-tone colours – red, yellow and green – to indicate Bahk says Moven’s business model is SaaS and the Internet,” says Bahk. “Mobile has a user’s financial health. (Software-as-a-Service) based. “We’ve struc- enabled us to play a role in our customers’ Moven app users can get a complete tured our contracts to share risk and upside lives, instead of simply selling them a bank- money management picture by linking and with our partners, but, fundamentally, we ing product. Transaction data, location aggregating all their accounts with different are an engagement platform of which any data, social media, etc. all give us insights on banks through the app, Bahk says. financial institution, including banks in the how to address a true customer need in the US, can take advantage.” moment.” Partnerships Moven differentiates between its Direct Bahk says that what differentiates Moven In addition to its US business, Moven is seek- to Consumer US banking customers and its is its ability to connect the customer expe- ing to partner with banks in other countries, PFM app users. “While we keep our numbers rience layer directly to banking products. and has already teamed up with Canada’s close, we can that we have tens of thousands “Other providers, like traditional PFMs, are TD and New Zealand’s Westpac. of active users on our platform in the US who limited to being a referral engine, but today's “If we partner with a bank, our first are direct customers with Moven accounts,” customer is smarter and knows that they are assumption is that they have their own prod- says Bahk. “We also have hundreds of thou- being sold to,” he says. “Our engagement ucts which we connect with,” Bahk says. sands of (Moven) app users, and, with our data tells the story that our customers are “In essence, we’re the customer engagement global partners, our usage will be in the mil-

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CI 530.indd 6 01/04/2016 15:02:22 Cards International DIGITAL: MOVEN

lions.” Bahk stresses that Moven’s Direct to Con- sumer US banking business is “created specifically to be a live, working laboratory for the firm’s software platform. It’s enough to be a ‘real’ business and ‘practice what we preach,’ which is a key differentiator to any other FinTech firm out there,” he says.

Enhancements “We’re always making enhancements to our digital offerings in order to take a customer- centric approach,” says Bahk. One example is support for Moven’s PFM tools on iOS and Android-based wearables. “We have more to come in our product roadmap soon,” Bahk tells CI. In January 2016, Moven released a new version of its app which no longer requires passwords or fingerprint authentication for certain basic level transactions such as viewing balances, provided customers have enabled auto-login on the app. Once they have set up auto-login, customers use their mobile device as ID authentication. However, risk-based transactions such as fund transfers still require authentication through usernames, passwords or fingerprint ID. “We’ve taken an old paradigm of passwords and moved it to a mobile-first world of fingerprints and device ID where passwords are obsolete,” says Bahk. “We will be taking the approach of auto-login and finger- their savings funds are immediately US technical team. print ID as we introduce new features within transferred into their Moven spending In July 2014, Moven completed its Series A our app and our banking products.” account for their desired purchase. Funding round led by SBT Venture Capital, During the first half of 2016, Moven will raising $8m from investors such as Route 66 introduce its Impulse Savings feature which Moven will also launch a GPS-based Emer- Ventures and Standard Bank. includes: gency Cash notification feature which tells users their funds are low as they enter their Loan repayments • Prompts to ‘lock away savings’ when favourite or most frequented merchants. In January 2016, Moven announced a user’s spending behaviour has placed Using its behavioural insights on a user’s partnerships with US loan refinancing them sufficiently in the green (below typical spending habits at that location – for providers Payoff and CommonBond to their average spending) that it makes example, their average grocery bill – Moven incentivise its customers to pay down sense to do so. “Moven gamifies that sends the user an alert offering them a real- their loans. CommonBond operates moment in time when you’re thinking time overdraft with a transparent upfront fee, a low-cost student loan marketplace, about spending that cash that is burning to bridge the gap between their typical spend while Payoff provides tools to help cus - a hole in your wallet, and turns it into a and their current balance. When the user’s tomers pay off credit card debt. savings moment,” the firm says; next direct deposit to their Moven account Moven’s customers who become comes in, the emergency cash advance is set- Payoff Loan repayment members will • The ability to set up a visual wish list of tled. receive a $100 credit to their Moven items a user wants to save for, as well as account, while those who become Com - the option to curate these directly from Funding monBond members will receive a $200 a user’s board on visual social media In October 2015, Moven closed a $12m credit to their Moven account and a 25 services such as Pinterest, and Series B Funding round led by Route 66 basis point discount off their monthly Ventures with investments from back - student loan repayment when they pay • When users have reached a savings ers such as Anthemis Group, its original via Moven. milestone, they access their savings by seed capital provider, and Atlas Asset “As many Moven users have credit tapping the app interface three times Management. The new investment will card or student loan debt, incentivising to simulate ‘breaking the glass.’ This be used for international expansion, them to pay their balances through these employs behavioural gamification to enhancement of Moven’s consumer bank- partnerships allows them to manage make users think before spending their ing experience including new spending and improve their financial health via hard-earned savings. If they proceed, and credit products, and expanding its a seamless experience,” Moven adds. <

www.cardsinternational.com April 2016 y 7

CI 530.indd 7 01/04/2016 15:02:23 AWARDS: ASIA TRAILBLAZER 2016 Cards International

Winners of the Asia Trailblazer Awards 2016 announced

ewarding the banks and financial institutions that take the initiative and push the market forward, the latest Asia Trailblazer Awards saw many take home the gold. The R award winners were announced at the Gala Dinner on Thursday, 17 March 2016 at the Carlton Hotel Singapore. Now in its 7th year, the Asia Trailblazer Awards maintain its growth across categories including product, service, process, strategy, channel, marketing, communications and people excellence. ANZ Optimum World MasterCard has won 'Best Card Offering' at the 7th Asia Trailblazer Awards, held in Singapore. This was one of the four awards ANZ won this year, also including 'Excellence in Customer Centricity' and 'Best Deposit Offering'. "The prestigious Asia Trailblazer Awards is the only one of its In addition, DBS won thirteen awards at the event, including 'Excel- kind that focuses on innovation within Asia's competitive retail lence in Internet Banking' and 'Trailblazer of the Year 2016', while banking space. They continue to expand in reach and interest, Citibank won four awards on the night as well. with year-on-year growth in the number of submissions received, Now in its 7th year, the Asia Trailblazer Awards maintains its with participation of local and foreign banks across Asia/Pacific. growth across a myriad of categories, including service excellence, “Furthermore, the quality of submissions continues to be increas- strategy excellence, product excellence, channel excellence, people ingly impressive, as a testament to Asia's banks continued push to excellence and process excellence. innovative and game-changing propositions in the retail banking Ruben Kempeneer, Regional Director for Timetric, commented: sphere." < Retail Banker International Asia Trailblazer Awards 2016 Winners Process and Strategy Awards: Best Marketing Campaign: Innovation in Service Delivery - ATM: Excellence in Loan Origination: DBS BANK CTBC BANK DBS BANK, SINGAPORE Excellence in Contact Centre Innovation: Excellence in Collection and Debt Products and Service Awards: DBS BANK Management: Excellence in Mass Affluent Banking: Excellence in Internet Banking - Cross Border: TAISHIN BANK, TAIWAN CITIBANK SINGAPORE DBS BANK Excellence in Client On-Boarding and Excellence in Service Innovation: Excellence in Internet Banking - Overall: Communication: DBS BANK DBS BANK DBS BANK Excellence in SME Banking: Excellence in Mobile Banking - Customization: Excellence in Business Model Innovation: DBS BANK UNITED OVERSEAS BANK DBS BANK Best Initiative in Financial Inclusion: Excellence in Mobile Banking - Overall: Excellence in Customer Centricity: HBL PAKISTAN UNITED OVERSEAS BANK AUSTRALIA AND NEW ZEALAND Best Mortgage Offering: Excellence in Multi-Channel Integration: BANKING GROUP LIMITED MAYBANK AUSTRALIA AND NEW ZEALAND Dynamic 3rd Party Partnership: Best Loan Offering: BANKING GROUP LIMITED BANK MUAMALAT MALAYSIA MAYBANK BERHAD Best Bancassurance Product: People Awards: BANK DANAMON INDONESIA Best Graduate Employment Scheme - Retail Marketing and Communications Best Deposit Offering: Banking: Awards: AUSTRALIA AND NEW ZEALAND ALLIANCE BANK MALAYSIA BERHAD Best Social Media Marketing Campaign: BANKING GROUP LIMITED Best Staff Training & Development CITIBANK SINGAPORE Best Card Offering: Programme: Best Digital Marketing Campaign: AUSTRALIA AND NEW ZEALAND CITIBANK SINGAPORE DBS BANK BANKING GROUP LIMITED Best Bank in Community Outreach Initiative: Excellence in Internal Communications: Outstanding Investment Services, Retail DBS BANK DBS BANK Clients: Excellence in Social Media - Customer CITIBANK MALAYSIA Trailblazer of the Year 2016 Relations and Brand Engagement: Trailblazer of the Year for 2016 (Individual): CTBC Bank Channel Excellence Awards: DR KOSON SAPPRASERT, SIAM Best New Product, Service or Innovation Most Innovative Branch Offering: COMMERCIAL BANK PCL Launch: STANDARD CHARTERED BANK Trailblazer of the Year for 2016 (Institution): MAYBANK KOREA DBS BANK

8 y April 2016 www. cardsinternational.com

CI 530.indd 8 01/04/2016 15:02:26 Cards International PAYMENTS: CARDS VS MOBILES

Credit cards are the most mobile payment method The world has been talking about ‘mobile payments’ for years, but the phrase means different things to different people. So what exactly are mobile payments? And how much more mobile than cash or cards can payments actually get? Philipp Nieland, co-founder and CTO of the PPRO Group, comments on this trend

ome people believe that mobile functions to even the oldest Nokia. Adoption payments are those made using In any critical review, it is important Why, then, haven’t NFC payments taken mobile phones. Others, myself to remember that smartphone operat - off in countries outside the UK, for exam- included, understand the phrase to ing systems incorporate a wide range of ple, Germany? There is, in theory, nothing S functions. By their very nature, therefore, mean the most mobile, cash-independent technical or structural standing in the way payment method possible—although smartphones will always contain security of mobile—or even, contactless—payments. I consider cash to be more mobile than vulnerabilities which can, in extreme cases, Except, of course, the Germans themselves. many other forms of payment. But let’s even jeopardise the security of your pay - In a country where frugality is still consid- leave those alone for the moment. ment data. ered a virtue, customers are unwilling to pay The second most mobile payment type It’s not just payment data that is at stake for banking services. is the credit card: electricity doesn’t always here (although a fraudster could use it to Instead, they believe that everything work, and as Barclaycard demonstrated so go shopping), but all the data pertaining to should be free, from the cards themselves to effectively in its ad, you can even use your user purchasing patterns. You’re probably cash machine withdrawals, account mainte- card on a waterslide. thinking: “What’s wrong with someone nance and loans. Nowhere else in the world seeing what I’m buying?” Now, though, is ‘free banking’ as ingrained into the culture How mobile is a mobile phone? imagine that you were on holiday in the as it is in Germany. Now let’s take a look at the much-lauded USA and that someone could use your Contactless cards are only slightly more smartphone. Of course, people have their phone to see that you were currently mak- expensive to produce than standard ones. smartphones with them most of the time, ing all your purchases there. Wouldn't that Banks in Germany tend not to offer them, but, as the majority of business travellers at be the best time for them to burgle your however, because they’re afraid customers airports have demonstrated, they will seize flat? won't want to pay the difference. any opportunity to extract just one more I don’t understand why developers feel For this reason, contactless payments drop of power from any source—even the compelled to include payment functions in using credit cards are still largely unknown most inaccessible ones—to ensure that their smartphones. Why don’t we just use credit in Germany, whereas they’ve become the smartphone batteries will survive the day. I’m cards? They’re the most widespread, most norm in countries like the UK and Sweden. not convinced that relying on your smart- mobile of all mobile options and—most Perhaps this is precisely the advantage of phone (and thus, its battery) for your pay- importantly—they’re the least breakable. making mobile payments via smartphones: ment options is a good idea. Ultimately, it doesn’t matter whether the adding credit card data to a smartphone is Ultimately, you’d still have to carry a NFC chip is embedded into a rectangu - cheaper than adding an NFC chip to every credit card—or at least a battery charger— lar plastic card, a cufflink, an earring or customer’s card. to ensure that you weren‘t left high and dry a sticker; I’ve simply yet to be convinced This means, though, that it’s not the if the worst happened. This begs the ques- of the consumer benefits of using a smart- consumers who are reaping the benefits of tion, though: if you’re going to be carrying phone. The facts are: smartphone payments: it’s the card-issuing a credit card anyway, why do you need a banks. smartphone to make payments? • Mobile payment systems’ success is In future, NFC-capable credit cards will Many people, on the other hand, would determined by the availability of NFC- be the standard for mobile payments— say: “Ah, but with a smartphone I can capable terminals and the acceptance even outside the UK. make contactless payments.” of credit cards by retailers; Alternative ‘mobile’ payment systems, While this statement is perfectly true, it which use options like QR codes rather applies equally to credit cards. • Local card systems, like, for example, than NFC, will never achieve this level When it comes down to it, smartphones Carte Bleu or Girocard, are becoming of popularity. It’s not just the technology are nothing more than a medium for stor- less popular among retailers due to vendors and the hugely diverse operators ing credit card data. Any credit card can the European interchange regulation. of all kinds of ‘mobile payment types’ also be equipped with a contactless func - Retailers are losing the cost benefits who are to blame for this state of affairs; tion; and unlike a smartphone, it won’t they have hitherto enjoyed, and are instead, it’s fear and lack of knowledge on break if it‘s dropped into water or onto a being forced to accept more complex the part of retailers. concrete floor. payment processes, and It no longer matters whether chips are There are also NFC credit card stickers embedded in smartphones, stickers, or which you can, for example, stick onto • NFC is now effectively the standard. body parts. Instead, convenience and cost your mobile phone. Paradoxically, doing As of 2016, all POS terminals must be will determine which option consumers this allows you to add mobile payment NFC-capable. prefer. <

www.cardsinternational.com April 2016 y 9

CI 530.indd 9 01/04/2016 15:02:26 PRODUCTS: CHARITIES & CONTACTLESS Cards International

Tap-and-give: Charities Adopt Contactless As digitisation sweeps across each sector, companies must evolve in order to stay competitive. One industry that has remained largely unchanged for the last decade has unveiled its digital strategy. Now charities will be able to accept contactless donations on the street and in shops. Alexander Atkins writes

s we start to see contactless pay- trends that will help raise more money and “Conversations have been on-going, ments appearing for more and continue to fund our life saving research,” and this trial represents a small step in the more uses, the charity sector says Docherty. right direction for charities learning about has come up with one idea to The charity is hoping that the new form and expanding contactless donations,” he A added. both incorporate contactless payments of giving will increase steadily declining and to help boost casual donations: donations, and that it will encourage peo - The UK Cards Association (UKCA) contactless acceptance for donation ple to give in a way that is convenient for has been involved in several contactless tins. them. developments in different industries The scheme, developed between mem - “With the increasing use of contactless recently, the most notable being the recent bers of the charity sector and acquirers, on the high street, along with the decline announcement of contactless payment for and facilitated by the UK Cards Associa - we’re seeing in cash usage, it seemed a transport throughout the UK, based on a tion aims to revolutionise casual dona - natural next step. We hope our support - similar system to that used by TfL. tions by allowing those, who have no ers will be really excited and inspired For this charity scoped scheme they change but still want to give, with the by contactless donations,” explains took a communicative role between the option to donate by using their contactless Docherty. interested parties and were not directly card on devices attached to the donation involved in the schemes development. buckets or tins. Public awareness and acceptance However, they admit that they have One of the first to sign on to the scheme According to Docherty though, the big - identified a number of environments in was Cancer Research UK. The char - gest challenge facing the scheme was not which these donation devices can work. ity, which is the sixth biggest charity in in applying the technology, but in creating One such idea to further expand the the UK by total income according to the awareness to the public that the option to use concept is to have similar devices installed national regulator, the Charity Commis - contactless was now in place for donations. on the donation boxes in museums “where sion, launched its contactless collections He explained that, together with the UK you could tap your card or phone instead systems across the UK on the 4th Febru - Cards Association, Cancer Research UK is of dropping coins or notes into a dona - ary, World Cancer Day. working with a number of other charities tions box”, says a spokesperson for “We launched it as part of our World across the industry to ensure consistency and UKCA. Cancer Day fundraising campaign,” says scale so as to help drive contactless donations Michael Docherty, director of digital and throughout the sector. Steps forward supporter experience at Cancer Research The scheme means that fundraising Although charities have already digitised in UK. volunteers for charities can walk about many ways, by being able to receive direct “Supporters had the opportunity to in public with portable contactless termi- debit donations, online and mobile dona- donate £2 to the charity’s life-saving nals which accept Visa and MasterCard tions, and also through the use of apps, this research to beat cancer sooner by simply contactless cards. concept certainly represents a step forward in tapping their contactless card on a spe - However, other payment methods such digitising the charity sector. cially designed reader, operated by our as Apple Pay and Android Pay will also be Docherty advocates that digitisation fundraising volunteers,” he added. accepted meaning those wanting to donate is crucial to the survival of the industry. will be able to do so with wearables as “We’re continuously looking at improving Combating declines creatively well, such as the Apple watch. our fundraising and services to support - It marks a milestone in the digitisation of the The concept, which is hoped to greatly ers, of which digital is a key part,” he said. sector and is a creative solution to a society boost donations, has been in the planning “Over the last few years we’ve seen a that is, in many instances, fast becoming for the last ten months and has involved drastic increase in the number of people cashless, meaning fewer donations in stores dialogue between a range of interested engaging through digital channels, and and on the streets where volunteers regu- parties. we will continue to listen to our support - larly ask the public for donations and spare “Cancer Research UK has been working ers and do our best to make it easy and change. alongside the payments industry, through satisfying for them to help us raise more “Cancer Research wants to be at the the UK Cards Association, and a consor - money and continue to fund our life- forefront of innovation in this space, to tium of charities to scope the potential for saving research, as digitisation happens continue exploring new technology and contactless giving,” says Docherty. around us.<

10 y April 2016 www. cardsinternational.com

CI 530.indd 10 01/04/2016 15:02:28 Cards International DEBATE: DIGITAL BANKING CLUB

What can UK banks learn from Europe? In the first Digital Banking Club debate of 2016, a panel of banking experts assembled to discuss what the financial sector in the UK could learn from its European brethren. As it turns out, it could be a lot, ranging from digital adoption to dealing with new competition. Patrick Brusnahan writes

ntitled What can we learn about 780,000 active mobile banking users. It has to turn. Now, we are moving quicker. Even best practice from our European not neglected the physical aspect of banking though we are an old bank by Polish stand- colleagues?, the debate had del - though with 100 branches across Poland. ards, we have hardly any legacy systems. egates from across Europe flocking Iljin said mBank was in the right place at “Back in 2000, the market was not satu- E the right time: “We were well positioned rated. Even today, there is a stake to fight into the historic Law Society in London. While certain parts of Europe, usually from the start. It was in our DNA to be for. We knew this was worth fighting for. We the nations described as ‘developing’, are 100% digital from the beginning. Our case have some legacy branches that are simply regarded for their innovative and digital is special. There are not many like us: a digi- too big, but we will still need face-to-face output, Simon Cadbury, director of strategy tal bank that has succeeded. We treat Google contact with customers.” and innovation at Intelligent Environments, and Facebook as our competitors.” Ahmet Ertan Algan, ABank’s unit head for believed the situation to be more complex. As a fairly new bank, mBank was devel- digital banking and card payment systems, He said: “No one country dominates oping in a similar fashion to its market. believed that Turkey was in a good position with respect to innovation. However, there’s Iljin stated that the team behind the bank is to have the best of both. something about developing countries. Is it ‘young with no tradition, only looking out- He said: “Turkey is attractive to the for- a young population? Is it an organisational wards with nothing to lose’. eign market. Its demographic is perfect for culture? Does this embrace innovation? Oliwia Berdak, senior analyst for e-busi- digital banking. Branches are still important Overall though, London is the capital when ness and channel strategy professionals at for banking in Turkey, we have 16 in the big it comes to fintech.” Forrester, believed that the efforts of players cities, but Turkey is getting many more cus- Jacek Iljin, managing director of retail such as mBank forced markets to evolve. tomers online. banking at mBank, had a unique perspective She said: “[I] think there is a cycle in coun- “Generations Y and Z, the younger audi- on the matter. mBank was founded in 2000, tries where one bank does something innova- ences, are demanding more from their banks. with its core banking up and running within tive and others are pressured into it.” New start-ups and smaller digital banks are 100 days, and has since risen to become the Jakub Grzechnik, Head of Mobile and changing the Turkish market.” fourth largest retail bank in Poland with Internet Banking, PKO Bank, Bank Polski, over five million customers, 3.8 million of agreed. As Bank Polski is one of Poland’s old- Inspiring innovation them in Poland. Taking into account that its est banks, and its largest with almost 2,000 The chair, Douglas Blakey, asked where the main focus has been digital, this is even more branches, it needed to adapt. panellists looked to for inspiration in terms impressive and the bank has won several Grzechnik explained: “The effect of these of innovation, whether that is in the financial awards for its online and mobile banking. banks has forced us to be innovative. We saw sector or not. Its success can be seen in figures with over the iceberg on the horizon, but it took an age Iljin states that he looked towards disrup-

www.cardsinternational.com April 2016 y 11

CI 530.indd 11 01/04/2016 15:02:32 DEBATE: DIGITAL BANKING CLUB Cards International

tive companies, such as Klarna and PayPal, Berdak warned about focusing purely on that to ruthless targets. It’s hard for some while Grzechnik looked at Spanish banks as innovation without deciphering how it is people to see the value of digital without ‘prime examples of banks digitally innovat- financially viable. that. ing’. Simon Cadbury gave USAA Bank as an She said: “There is a danger on only focus- “People feel uncomfortable investing. example of a player that is ‘constantly inno- ing on functionality; thinking about deliver- Start-ups are showing you can change that vating’. ing customer experience without connecting through digital.”

The panel

Oliwia Berdak, Senior Analyst Serving E-Business & Channel ATM & ITM banking, fraud monitoring and credit & debit card systems Strategy Professionals, Forrester software development at ABank. He studied at Okan University, where he Oliwia is a Senior Analyst at Forrester serving the European consumer obtained a master’s in business administration, specialising in ‘customer financial services sector. Her research focuses on the digital transfor- relationship management’ in 2013. He also holds a bachelor’s degree in mation of banking, insurance, and wealth management, mapping out computer science engineering from Ege Üniversitesi. digital strategies, adoption trends, and best practices. Prior to join - ing Forrester, Oliwia held a number of research positions in both busi- Jakub Grzechnik, Head of Mobile and Internet Banking, PKO ness and academia, working with a variety of methodologies to deliver Bank, Bank Polski insight. Oliwia also worked for six years as a freelance analyst for Jakub Grzechnik is head of mobile and internet banking at Poland’s Euromonitor International, drawing on national laws, macroeconomic largest bank, PKO Bank Polski. Jakub is responsible for the devel - data, and statistics to analyse the latest economic, social, and political opment of the bank’s digital distribution channels, for their sales developments in Europe and explain their significance to businesses. performance as well as integration with other distribution channels of the bank. He also leads the innovation agenda in digital channels Simon Cadbury, Director of Strategy and Innovation, Intelligent and the fintech ecosystem. Jakub was chairman (until the end of Environments 2014) and since then, a member of The Supervisory Board of Polski Simon is a product marketer and strategist with 18 years’ experience Standard Płatności (PSP), the company created by 6 of the largest working for a range of major international brands. Simon’s role is to Polish banks to jointly build the innovative mobile payment standard work with Intelligent Environments’ investors to set and deliver the Blik, based on the IKO app developed by PKO Bank Polski. Jakub led company’s mid and long term strategy, as well as overall responsibility the Blik creation project from the outset in March 2013, interacting for the product development and management of Interact; the com - directly with CEOs of the 6 banks to agree on the system design and pany’s core product offering. Simon joined in 2013 from Lloyds Banking governance. Group where he was responsible for payment technology and also sat on the Credit Card division’s leadership team. Prior to this he worked Jacek Iljin, Managing Director Retail Banking, mBank on the launch of a number of firsts in new technology – the Blackberry Jacek Iljin has been Managing Director Retail Banking, Sales & Processes (BT Cellnet), BT Openzone (BT Retail), 3G Live! (Vodafone Australia) at mBank since January 2014. Prior to assuming his current role, Jacek and Sky HD (BSKYB). spent over 5 years as Head of the Product Management Division at mBank responsible for Core Banking Products Business (Accounts and Cards) and Ahmet Ertan Algan, Digital Banking and Card Payment Systems Analytical CRM. Previous roles undertaken by Jacek at mBank included Unit Head, ABank Marketing and Business Development Director and Head of Business Ahmet is responsible for internet banking, mobile banking, IVR systems, Strategy and Customer Segmentation.

12 y April 2016 www. cardsinternational.com

CI 530.indd 12 01/04/2016 15:02:35 Cards International DEBATE: DIGITAL BANKING CLUB

Iljin saw his goal to be at the ‘frontier of innovation’ and that meant, to him, focusing on mobile. He explained: “We are betting on mobile, but not through a ruthless financial per - spective. We are pushing our customers to mobile. It’s no longer a red light for us. Half of our customers regularly use our mobile solutions. We are making the mobile app a preferred gate to all other channels. “Mobile is much more comfortable for the customer. We have special offers for customers on mobile as well. The only big concern is the onboarding process.” Berdak retorted: “There are still security and trust issues with mobile.” Grzechnik emphasised that there is more to banking than just moving it onto the mobile channel. He stated: “We are betting on a multi-channel scenario. Our branches are part of a legacy, but also an asset. Peo- ple don’t like bank [branches], but they trust them.” Algan agreed with that perspective and added: “We are trying to implement a multi-channel infrastructure at the moment, but we are also trying to digitise the whole process.” Cadbury remarked that there were other markets outside Turkey and Poland imple- menting plenty of innovation as well. “Germany is a market we will learn a lot from; banks such as Fidor and Number26 particularly. There is more that the UK can do, but it’s not far behind. Online bank - ing adoption rates are above average in the UK.”

The PSD2 shadow One thing that is on the minds of everyone in Europe is the upcoming PSD2 regulation. Jakub Grzechnik talked about why this is a worrying aspect of the future. tional institution, have managed to retain in the foreseeable future. Iljin once again He said: “We are deeply concerned about our market share and remain the top bank stated his belief that mobile technology will PSD2, but at the same time, we are familiar in the country. We are all big banks try - dominate the market in the near future. with the theme of the whole retail bank - ing to create a customer experience, good He purported: “The best camera you can ing revenue stream being cut up by fintechs enough for the customer so that the cus - have is the one you always have with you, that are taking chunks of retail banking tomer is too lazy to go elsewhere.” i.e. your phone. The best bank is the one and building their own businesses on it. It’s Berdak also wondered if the market was you have in your pocket, once again, your just that after PSD2, the fear is we will be truly considering the implications of how phone.” left only with the cost and process of brand expensive being innovative can be. However, Simon Cadbury was not as current accounts and all the profits will be She explained: “The biggest obstacles to convinced. He replied: “I’m not so sure. taken up by the other small fintechs. innovation are running costs. Digital banks 50% of iPhone users actually struggle to “It is a possible scenario, but we are try- that are being created now will struggle to read their screen. In addition, only 20% of ing to create such a strong experience for grow. I am not convinced they will gain a the UK population is prepared to bank only the customer: an integrated, multichannel million customers overnight, or if they will on their mobile.” experience, that the ‘stickiness’ customers even grow beyond 100,000 customers. We Another emerging service is blockchain, have will make it difficult for all the start- underestimate the challenges in being a something quickly shut down by Grzech- up players and all the competitors to get challenger bank.” nik. He said: “I would compare blockchain those profitable opportunities. to QR codes. There is simply no unified “Just look back at our history. mBank Emerging technology customer experience. Being digital is not is a formidable competitor, but even with The discussion moved towards what form good enough to be successful in the mar - mBank, we as an incumbent and as a tradi- of technology would grow within banking ket.”<

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CI 530.indd 13 01/04/2016 15:02:40 COUNTRY SURVEY: DENMARK Cards International

Denmark continuing its payment prosperity With a well-developed market, one of the best in the Baltic region, one wonders how it could possibly improve on its already envious position. This is where contactless is coming in, not only to raise card adoption levels within the country, but also to bring Denmark one step closer to being a cashless society

he Danish cards and payments accounts and banking products such as (DKK100m) by 2020. industry is well-developed, and debit cards. Danish consumers are prolific Dankort maintains its dominance in the T users of payment cards. Denmark is moving towards a cashless Danish debit cards market This is evident by the fact that in 2014 society Dankort is the national debit card scheme, the country had the highest frequency of use Cash payments are declining in Denmark. which dominated the debit card market (transactions per card per year) in the world In terms of transaction volume, cash trans- with an 83.7% share of the total transac - – 173.6 transactions per card. actions accounted for 37.4% in 2010 and tion value in 2014. Denmark is followed by Nordic peers – decreased to 16.1% in 2014. In compari - Dankort cards were introduced in 1983 Finland with 170, Norway with 126.3, and son, in other developed European markets and have since dominated the market. Sweden with 126.2 transactions in 2014. such as the UK, cash accounted for an Visa and MasterCard are also strengthen- The consumer preference for electron - industry share of 46.2% in 2014. ing their presence, with respective shares ic payments and government plans to To encourage cashless payments, the of 12.4% and 3.8% of the total debit card advance as a cashless society supported Danish government proposed a plan in transaction value in 2014. the growth of payment cards. May 2015 to allow certain categories of According to the New Payment Solu - Overall, payment cards posted a com - retailers – restaurants, apparel stores and tions report published by the Danish Pay- pound annual growth rate (CAGR) of gas stations – to refuse payments in cash. ment Council in March 2014, Dankort 6.70% in terms of transaction volume The proposed plan is anticipated to be was the most popular method of payment between 2010 and 2014 – a trend that is implemented by 2016. for purchases made at retail outlets. anticipated to continue over the next five In October 2014, the central bank The use of Dankort debit cards is wide - years. announced that it would stop the internal spread for a range of purchases, and The government took several initiatives production of the printing of banknotes 60% of online payments are made using to bring the entire population into the and minting of coins by the end of 2016 Dankort and VisaDankort cards. banking system. and outsource the process to external sup- VisaDankort is a co-branded debit card According to the World Bank Global pliers. which can be used as a Dankort card in Findex survey, the percentage of Dan - Rising costs associated with cash han - Denmark or as an international Visa card ish population aged 15 or above with a dling and production are the reasons abroad. bank account reached 100% in 2014. behind this move. The government claims Consumers can use the card at 24 mil - This resulted in high penetration of bank that the initiative will save up to $17.2m lion outlets with cash withdrawal options

n VALUE OF CREDIT TRANSFERS ($BN) IN n VALUE OF CHEQUE PAYMENTS ($BN) IN n VALUE OF PAYMENT CARDS ($BN) IN DENMARK, 2010–2014 DENMARK, 2010–2014 DENMARK, 2010–2014

30 1100 75

25 1000 72 20 900 69 15

800 10 66

700 5 63

0 600 2010 2011 2013 2014 60 2010 2011 2013 2014 2012 2012 12 13 2010 2011 20 20 2014 S o u r c e : E u r o p e a n C e n t r a l B a n k a n d T i m e t r i c S o u r c e : E u r o p e a n C e n t r a l B a n k a n d T i m e t r i c Source: Timetric

14 y April 2016 www. cardsinternational.com

CI 530.indd 14 01/04/2016 15:02:42 Cards International COUNTRY SURVEY: DENMARK

E-commerce market offers scope for card n DENMARK’S DEBIT CARDS MARKET SHARE BY n DENMARK’S DEBIT CARDS MARKET SHARE BY ISSUERS (%), 2014 SCHEMES (%), 2014 payments E-commerce increased between 2010 and 2014, going from $7.1bn in 2010 to $13.1bn MasterCard in 2014, at a CAGR of 16.57%. 3.9% The widespread digital access in the form of growing internet and mobile penetration Danske Bank rates is the key driver contributing to the 26.4% Visa growth of e-commerce in Denmark. 12.4% According to the ‘E-Commerce in the Others Nordics’ report published by PostNord in 53.6% Dankort 2014, Denmark had the highest percent - Nordea 83.7% age of online shoppers in the Nordic region, 20% with 37% of consumers shopping online at least once a month. The report indicated that Denmark had the second-highest number of online shoppers in the region, and the second-highest percentage of online shoppers making purchases through mobile phones in 2013. Source: Timetric Source: Timetric E-commerce growth in Denmark was facilitated by the development of internet n DENMARK’S CREDIT CARDS MARKET SHARE n DENMARK’S CREDIT CARDS MARKET SHARE and mobile payment services. Consumers BY ISSUERS (%), 2014 BY SCHEMES (%), 2014 mostly use payment cards to pay for their online purchases. All payment instruments – including payment cards, credit transfers, digital wallets, cash on delivery, mobile wal- Others lets, and direct debits – increased their share 10% between 2012 and 2014. Others According to a PayPal study in 2015, 21.7% Danske Bank Denmark is anticipated to record the maxi- 38.3% mum m-commerce growth in Europe, with a CAGR of 55% between 2013 and 2016, SEB while the rest of Europe is expected to 16.7% record the lesser CAGR of 42% over the Nordea MasterCard same period. 23.3% 90% Growing number of POS terminal installations across the country The number of POS terminals increased over the past five years, going from 110,389 in Source: Timetric Source: Timetric 2010 to 139,240 in 2014, at a CAGR of 5.98%. The number of POS terminals is expected to increase at a CAGR of 3.90% at 340,000 banks, and from 400,000 Also, there were 61,600 contactless POS from 2015 to reach 169,227 in 2019. The ATMs internationally. terminals in the country, representing rough- expansion of the organised retail sector is ly 40.1% of the overall number of POS ter- expected to drive the growth of POS termi- High uptake of contactless technology minals. nals over the next five years. to increase scope and adoption of card To capitalise on the growing popular- The growing payment cards market payments ity of contactless technology, Danske Bank had attracted several entrants to the The Danish payment cards market has and Jyske Bank began offering contactless Danish mPOS market. seen a rising uptake of contactless tech - Dankort cards from August 2015 to great Adyen launched an mPOS solution nology. acclaim. Shuttle in August 2013. It can be used According to Timetric, Denmark had the Danske Bank replaced all old cards with to by merchants to accept payments via highest number of contactless terminals and contactless Dankort cards free of charge smartphones at POS terminals. the second-highest number of contactless until November 2015. Shuttle is available in 17 European cards in the Nordic region as of November M-payments are also gaining prominence countries, including Denmark, Swit - 2015 – next only to Norway. in the region through a number of firms. zerland and Norway. Similarly, iZettle According to Timetric, there were 5.3 mil- Verifone signed an agreement with the launched the iZettle Card Reader Lite in lion contactless cards in the country as of m-payment solution provider Swipp in February 2015. November 2015 – equivalent to 60.2% of November 2015, to allow 30,000 part - The product is a chip-and-PIN card overall payments cards currently present in ner merchants to accept contactless pay - reader that can be connected to tablets the marketplace. ments using the Swipp app. and smartphones via a cable. <

www.cardsinternational.com April 2016 y 15

CI 530.indd 15 01/04/2016 15:02:43 COUNTRY SURVEY: HONG KONG Cards International

Hong Kong boosting their card products Hong Kong has remained a strong financial hub through the financial crisis and is going from strength to strength. This is due to its strong card market, particualrly Octopus cards and multiple currency cards, and its strong links with mainland China. Now, consumers are looking towards more special products

ong Kong is a global financial of financial products and services in phases and the CUP Dual Currency Platinum Card hub, with few regulatory barriers to consumers living in rural areas, senior citi- offered by Bank of China. for foreign banks and card pay - zens and unbanked consumers. High bank- In addition to dual currency cards, banks ment participants. It has close ing penetration resulted in an increase in the are also offering triple currency cards. H total number of bank accounts, as well as ties with mainland China for smooth Banco Nacional Ultramarino partnered cross-border business and trade. The banking products such as consumer loans with UnionPay to introduce a triple currency growing payment cards market, coupled and payment cards. credit card in August 2015. The card is avail- with favourable regulations, encourages able in Platinum, Gold and Classic variants foreign banks from mainland China and The use of multiple currency cards becomes and can be used in Hong Kong, Macau and other overseas markets to expand their prominent with rise in cross-border mainland China. Transactions are settled presence in Hong Kong. Foreign banks transactions in the respective local currencies for Hong such as Bank of China, Citibank and To capitalise on the increasing cross-border Kong, Macau and mainland China. Standard Chartered Bank have a strong trade between Hong Kong and mainland presence in the country’s cards and pay - China, as well as to cater the fast-growing Demand for premium cards is on rise with ments industry. Chinese population working and studying the growing presence of high-income Hong Kong’s payments cards market is in Hong Kong, banks are issuing dual cur- population highly developed, with card penetration of rency payments cards. These cards can be The demand for premium credit cards is 3.4 cards per individual in 2014. Further- used to conduct transactions in local and high in Hong Kong due to the growing pres- more, the average annual spend per card Chinese currencies. Expenses in Hong Kong ence of high-income population. Consumers stood at $4,052.80 in 2014 – higher than in and overseas are settled in the local currency, have become more sophisticated, and credit Malaysia, Indonesia, Taiwan and Singapore. while expenses made in mainland China are cards are becoming an essential part of the Banking penetration is very high in Hong settled in the Chinese currency. lifestyle. The demand for high quality ser- Kong, recording 96.1% in 2014 according Banks usually waive the foreign currency vice and rewards is also increasing among to the World Bank Global Findex survey. To transaction fee, and cardholders are offered consumers. increase this further, the HKMA assigned benefits such as cash rebates, medical assis- To serve the most profitable consumer seg- HSBC, Standard Chartered and Bank of tance, travel assistance and concierge servic- ment, banks are offering exclusive benefits China the role of major financial service pro- es. Some examples of dual currency credit and rewards. For instance, HSBC started viders in November 2015. cards are UnionPay Dual Currency Platinum offering reward programme called – ‘Red These banks are responsible for the release Credit Card offered by Standard Chartered, Hot Rewards of Your Choice’ to consumers

n VALUE OF CREDIT TRANSFERS ($BN) IN n VALUE OF CHEQUE PAYMENTS ($BN) IN n VALUE OF PAYMENT CARDS ($BN) IN HONG HONG KONG, 2010–2014 HONG KONG, 2010–2014 KONG, 2010–2014

1100 50 100

1070 47 90

1040 44 80 1010 41

980 70 38 950 60 2010 2011 2014 35 2012 2013 2010 2011 2012 2013 2014 10 11 12 13 20 20 20 20 2014 Source: Timetric Source: Timetric Source: Timetric

16 y April 2016 www. cardsinternational.com

CI 530.indd 16 01/04/2016 15:02:44 Cards International COUNTRY SURVEY: HONG KONG

well-established internet infrastructure, n HONG KONG’S DEBIT CARDS MARKET SHARE n HONG KONG’S DEBIT CARDS MARKET SHARE coupled with a large base of online shop - BY ISSUERS (%), 2014 BY SCHEMES (%), 2014 pers, is driving the growth of e-commerce in the country. The proliferation of online shopping sites such as Alibaba, Groupon Others and Beecrazy and the use of social media 14.5% as a shopping platform are expected to drive the growth of e-commerce over the Others HSBC next five years. The value of e-commerce is 36.9% 41.4% expected to record a CAGR of 10.30%, to reach $38.4bn by 2019. According to a study published by the EPS international online web application design 85.5% and development company Go-Globe in Standard May 2015, the intent to shop online among Chartered Hong Kong customers increased from 75.5% in 2011 to 82% in 2015. In addi - Bank 12% tion, the study suggested that Hong Kong of China was ahead of the rest of the world in terms 9.7% of the average order value in 2013, which Source: Timetric Source: Timetric was $321, compared to $183 for the rest of the world. n HONG KONG’S CREDIT CARDS MARKET SHARE n HONG KONG’S CREDIT CARDS MARKET SHARE To cater to demand for quick delivery BY ISSUERS (%), 2014 BY SCHEMES (%), 2014 services, retailers are now also offering self- Others pickup solutions. Amazon offers ‘Amazon Locker’, a parcel delivery locker which can 5.7% be used by customers to collect their products bought online, by entering a security code on to a touch screen. These initiatives Others HSBC are anticipated to drive e-commerce market 37.6% 39.3% growth.

MasterCard Rising POS terminals supported card- 34.2% Visa based payments 60.1% The number of POS terminals recorded a CAGR of 6.55%, rising from 433,909 in 2010 to 559,276 in 2014. POS termi - nals’ penetration per 100,000 inhabitants Bank of China Standard increased from 6,177.3 in 2010 to 7,745.8 10.9% Chartered in 2014. The potential of card-based 12.2% payments is expected to grow due to an Source: Timetric Source: Timetric increase in the number of POS terminals at retail outlets. To increase the uptake of mobile POS from January 2016. This reward programme MTR launched the Octopus fare collec - (mPOS) among small merchants, solu - offers cashback on dining, entertainment tion system and the Octopus card in 1997, tion providers are offering terminals at and lifestyle expenditures around the which eliminated the need for travellers to lower costs. For instance, Dah Sing Bank world. find the exact change to pay fares. partnered with Visa to launch Pay@Mobile The Octopus card was one of the – the first mPOS solution in Hong Kong Octopus card continues to be one of the world’s first contactless cards, and was – in December 2012. Pay@Mobile can be world’s highest used smart card initially launched for public transport. It used by merchants to accept both chip and The Octopus card was one of the world’s is now widely accepted across convenience magnetic stripe credit card payments using first contactless cards. It is one of the stores, restaurants and supermarkets in smartphones. world’s highest used smart cards, owned by the country. More than 13 million transac- Similarly, Global Payments, an electronic 99% of Hong Kong residents aged 15–64 tions using Octopus cards, valued at over transaction processing company, and the in 2015. $20.6m (HKD160m), are carried out daily mobile operator 1010 launched an mPOS As of August 2015, there were 29 mil - across 70,000 card readers. reader in December 2013 that is compat - lion Octopus cards in circulation in Hong ible with both iOS and Android mobile Kong – around four times the country’s E-commerce driving card-based payments phones. The emergence of low-cost solu - population. Hong Kong’s Mass Transit E-commerce’s value increased over the last tions is anticipated to encourage merchants Railway (MTR) started operating a fully five years, going from $11.3bn in 2010 to to accept card-based payments, further automatic fare collection system in 1979. $23bn in 2014, at a CAGR of 19.36%, driving payment card transaction volumes To further enhance customer convenience, and is estimated to be $26bn in 2015. The and values.<

www.cardsinternational.com April 2016 y 17

CI 530.indd 17 01/04/2016 15:02:45 COUNTRY SURVEY: SAUDI ARABIA Cards International

Saudi Arabia striking gold While cash has traditionally dominated the Saudi Arabian payments market, there is a shift in the air. Not only are government initiatives encouraging the usage of cards in the country, but markets such as the unbanked, expatriates, and religious tourists are bringing forth a booming prepaid card sector

ash was the predominant pay - bank accounts. WPS was implemented took the initiative to transform its entire ment instrument between 2010 in phases depending upon the number of card portfolio to contactless technology. and 2014, accounting for 98% employees in any given organisation. Other banks and card issuers are antici - C of total transaction volumes in It became mandatory for companies pated to follow the same pattern over the 2014. This was primarily due to a lack with 100 or more employees to transfer next five years, to propel the growth of of knowledge of other payment instru- salaries into bank accounts in November the industry. ments such as payment cards, little or 2015. Such initiatives are anticipated to no access to banking infrastructure further increase the volume of debit cards Unbanked and expatriates, coupled with and religious beliefs. in circulation over the next five years. religious tourism, supported prepaid However, the government’s initiative to card growth promote POS transactions, banks’ efforts Card issuers’ technology adoption to The prepaid cards market poses signifi - to introduce Sharia-complaint cards, the encourage the penetration of cards in cant growth opportunities due to the high rising technologically advanced young the country unbanked and expatriate populations. population and increasing e-commerce Technology adoption is expected to be Prepaid cards for remittance and cash market are expected to push the growth the key driving factor of industry expan - transfers were found to be of interest of the country’s cards and payments sion. Europay, MasterCard and Visa across the board, particularly for expa - industry over the next five years up to (EMV) chip enabled cards are already triates. 2019. in circulation, and banks started to issue Prepaid cards are more popular in contactless cards, causing the cards and Saudi Arabia than other Middle Eastern Saudi government’s effort to encourage payments industry to be on the cusp of countries. The country has a large influx less-cash payments propelled debit transformation. of tourists to the Islamic holy cities of cards’ growth The adoption of EMV enabled cards Mecca, Jeddah and Riyadh. The government took a number of initia - grew substantially between 2010 and Every year, millions of religious tour - tives to migrate towards a cashless society 2014, rising from 6.3 million in 2010 to ists visit Saudi Arabia as part of the Hajj during the last five years. One such ini - 20.5 million in 2014. pilgrimage, with others also taking part in tiative was the introduction of the Wage In addition, the country is mov - the Umrah pilgrimage. Protection System (WPS) law in June ing towards contactless payments with A substantial number of tourists with - 2013. The law mandates that the salaries Riyad Bank launching the country’s first draw cash and carrying it during the pil - of employees are to be paid directly into contactless card in September 2015 and grimage which signifies an opportunity

n VALUE OF CREDIT TRANSFERS ($BN) IN n VALUE OF CHEQUE PAYMENTS ($BN) IN n VALUE OF PAYMENT CARDS ($BN) IN SAUDI SAUDI ARABIA, 2010–2014 SAUDI ARABIA, 2010–2014 ARABIA, 2010–2014

250 1400 60

55 1300 235 50 1200 220 45 1100 40 1000 205 35 900 190 30 800 25 175 700 20 2010 2011 2012 2013 2014 2010 2011 2013 2014 2012 2010 2011 2012 2013 2014

Source: Timetric Source: Timetric Source: Timetric

18 y April 2016 www. cardsinternational.com

CI 530.indd 18 01/04/2016 15:02:46 Cards International COUNTRY SURVEY: SAUDI ARABIA

between 2010 and 2014, rising from n SAUDI ARABIA’S DEBIT CARDS MARKET n SAUDI ARABIA’S DEBIT CARDS MARKET 80,505 in 2010 to 132,146 in 2014. SHARE BY ISSUERS (%), 2014 SHARE BY SCHEMES (%), 2014 With the increased number of POS ter - minals installations at retail outlets, the potential of card-based payments in Saudi Arabia is also expected to grow. The US-Saudi Arabian Business Council estimated that the number of contactless Others Al Rajhi Bank payment terminals will increase from 35.2% 31.8% MasterCard Visa 100,000 to 500,000 over the next five 49.2% 50.8% years. Despite a significant number of POS terminals available, the usage by custom - The National ers is still low. Commercial Bank With the new electronic payment 21.7% system, mada, and its enhanced fea - tures, POS transactions are expected to Riyad bank 11.3% improve, and in turn the number of POS terminals is expected to increase over the next five years. Source: Timetric Source: Timetric Retail and tourism sectors offer scope n SAUDI ARABIA’S CREDIT CARDS MARKET n SAUDI ARABIA’S CREDIT CARDS MARKET for payment cards SHARE BY ISSUERS (%), 2014 SHARE BY SCHEMES (%), 2014 The total value of retail sales in Saudi Arabia increased from $78.9bn in 2010 Others to $104bn in 2014, at a CAGR of 7.14%. 5.6% Growth in demand due to increased dis - The posable income, declining inflation and National lower unemployment rate compelled Commercial Bank retailers to invest in new outlets, promo - 21.% tional activities and convenient payment Others systems. The MasterCard Visa 43% Increasing disposable income was an Saudi 47.2% 47.2% impetus for outbound tourism between British Bank 2010 and 2014. 19% The number of tourists travelling to foreign destinations increased from 17.8 million in 2010 to 19.9 million in 2014. Outbound tourist expenditure also grew; from $17.7bn in 2010 to $25.1bn in Samba Financial 2014. Group Source: Timetric Source: Timetric This was due to the preference for 17% outbound over domestic trips, as Saudi Arabia lacks entertainment destinations for prepaid card issuers. As a result, many merce Law in February 2015 to increase such as water parks, cinemas and thea - banks and card issuers offer cards exclu - the competitiveness in the e-commerce tres, which are preferred by many fami - sively for individuals travelling to Mecca market as well as to enhance the custom - lies during occasions such as the summer and Madina. ers’ trust on online purchase. and Eid. The growing e-commerce sector About 20.1% people visited abroad for Rising e-commerce to drive electronic prompted many banks – such as Al Rajhi leisure. In addition. 3.7% visited friends payments Bank, Riyad Bank, the National Commer- and relatives and 1.5% travelled abroad The value of e-commerce transaction grew cial Bank and SABB – to offer cardsthat for business purposes. rapidly in Saudi Arabia between 2010 and were exclusively targeted at the online The Saudi Arabian travel and tourism 2014, from $459.9m (SAR1.7bn) 2010 shopper sector. industry registered growth during the to $2.0bn in 2014, and was estimated at With more than half of the population review period; an increasing number of $2.6bn in 2015. below the age of 30, online transactions pilgrims performing Hajj and Umrah con- The growth of the online transac - are expected to increase, which in turn tributed to this. tion volume was assisted by the rise in push the growth of electronic payments. The holy cities of Mecca and Medina internet penetration. The government are located, encouraging Muslims to visit has also been taking steps to develop the Rising POS terminals to support card- from different parts of the world. e-commerce market. based payments Moreover, new projects in these two The Ministry of Commerce and Indus - The number of POS terminals in Saudi cities are supporting the growing demand try introduced the first draft of the eCom - Arabia recorded a CAGR of 13.19% for accommodation.<

www.cardsinternational.com April 2016 y 19

CI 530.indd 19 01/04/2016 15:02:48 COMMENT: WORLDPAY Cards International

Could instalments be the key to loyalty in E-commerce? Ever since credit cards first became readily available in the 20th century, consumer spending has been driven by borrowing. Today, plastic cards continue to dominate the world of consumer credit, but the traditional instalment plan is taking a new form for the digital generation

n recent months, we have seen the realised that today’s digital consumers are introduction of new alternative highly sensitive to how quickly and easily instalment plans by PayPal and they can make payments, and that it needed MasterCard, not to mention the to help merchants deliver on these expec- I tations with a user-friendly interface and a launch of Amazon Pay Monthly in the UK – thought to be the first country in smooth, speedy checkout process. The com- the world to gain access to this payment pany has now reached more than 45 million method. users and continues to expand across Europe Much like traditional credit cards, these and the US. new services enable shoppers to split high- As more people shop online, APM provid- value purchases across a series of monthly ers such as Klarna could have the advantage transactions, offering greater flexibility and over traditional credit card companies when freeing consumers from paying extra for it comes to helping cost-conscious shop - credit. pers make the purchases they want while What sets these services apart is that they still enjoying speed and convenience of a cater specifically to the growing proportion digital transaction. Sitting within the check- of people that favour alternative payment out page, these new services offer a fast and will win over a growing proportion of young methods (APMs) to purchase goods. APMs seamless shopping experience with no visible customers on the continent. include any payment that falls outside the break in the customer journey. On a global scale, we’ve seen a growing sphere of traditional plastic credit or debit What’s more, the majority of credit appli- adversity to credit as consumers are increas- cards, from e-wallets to mobile payments, cations are approved within seconds, provid- ingly concerned about living beyond their and now monthly instalment plans that are ing the instant feedback that has become so means. To add to this, being able to compare exploding onto the payment scene. important to online shoppers. the price of a good from multiple retailers in In its latest Global Payments Report, Young consumers today are spoiled for a matter of seconds has made young shop- Worldpay found that APMs inched past card choice, and unless merchants can deliver pers more savvy about cost in general. payments for the first time ever in 2015, a suitably quick and flexible service these The option to pay by instalments, repay- gaining 51% of global market share. This shoppers will quickly take their custom else- ments or when prices are fixed in advance, gap is set to widen in 2016 and beyond, as where. A slick design and smooth checkout means shoppers are less likely opportunity – more consumers opt for the convenience of process are not merely a ‘nice to have’ in this and are less tempted – to overspend. In the e-payment options over traditional plastic. environment; they are essential. case of companies such as Klarna that offer a Shoppers today have grown up in a With an entire generation of young shop- less intimidating payment alternative, young hyper-connected world, with a wealth of pers beginning to consider its credit options, consumers are attracted by the ability to information and services at their fingertips. those merchants who offer digital-friendly make safer, simpler purchases. According to comScore’s Global Mobile flexible payment plans will be best-placed to Throughout the history of consumer bor- Report, more than 90% of millennials own reap the long-term benefits. rowing, our purchasing preferences have a smart phone, and there’s little doubt that In Brazil, one of the largest eCommerce changed with the advent of new payment mobile devices are becoming this generation’s markets in the world, up to 80% of online types. In each of these cases, those businesses favourite shopping tool. purchases are already made by instalments. that met shoppers’ new expectations moved According to research by Barclays , UK This instalment culture is driven largely by forward with them while those that did not consumers are set to spend over £53bn the expense of traditional credit services and remained stuck in time. ($76.2bn) each year using their smartphones desire to better manage cash flow, but it’s Today, an entire generation of young peo- and tablets by 2024. also a way for merchants to empower con- ple need a cost-efficient way to purchase As young people enter the workforce and sumers by allowing them to purchase goods large goods without running into credit establish their homes, they will also begin they would be otherwise unable to buy, with troubles. And while the concept of paying by to purchase big-ticket items from furniture the added advantage of easy budgeting. instalments is by no means new, the potential to freezers, and will appreciate flexible pay- The benefits to merchants are evident in size of the millennial market has made adapt- ment options from their payment providers the regular income they receive, along with ing instalments for the digital generation a and merchants alike. repeat custom and improved customer loy- natural next step. < It is this demographic that has driven the alty. It’s worth noting that as the level of rise of Klarna, one of today’s leading pro- internet penetration across Latin America Damon Anderson, VP of global payment products viders of pay-by-instalment. Klarna quickly increases, the attractiveness of instalments and global e-commerce at Worldpay

20 y April 2016 www. cardsinternational.com

CI 530.indd 20 01/04/2016 15:02:48 Untitled-1 1 29/02/2016 16:48:55 POWERED BY

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