March 2016 Issue 529 www.cardsinternational.com REAPING REVENUE REWARDS IN RWANDA

Contactless brings an end to fare theft on public transport

• REPORT: Mobile Payments • PRODUCTS: HalCash • FEATURE: Contactless in Africa • COUNTRY SURVEYS: Sweden, Norway and France

CI 529.indd 1 29/02/2016 16:29:25 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 ANALYSIS: CREDIT CARDS Andrew Edem, the head of Profit to come before loyalty engineering & information security officer at the PPRO Group, examines the credit card and if there’s any life left in the payment device

6 FEATURE: CASHLESS SOCIETY t was, I suppose, inevitable that UK credit many people here will be able to benefit from this? Paul Underwood of Thames Card card issuers would slash rewards perks in The latest stats from the UK Cards Association, Technology looks at cashless services response to the EU interchange regula - released as CI goes to press suggests that contactless in the United Kingdom. Are cashless tion. is growing healthily in the absence of any mass mar- payments sustainable? Are they ket promotional incentives. worthwhile? IMarks and Spencer is the latest: it has pared back Spending on contactless cards rose more than 7 REPORT: MOBILE PAYMENTS the rewards it gives to cardholders who will now three-fold in 2015 to reach £7.75bn, more than Mobile payments are still a relatively receive one point for every £5 ($6.95) spent outside new service in the financial sector. of Marks & Spencer, as opposed to one point for double the preceding seven years combined. In However, it has expanded into a 2014, £2.32bn was spent using contactless. every £2 of spend. global marketplace with insane There were a total of 1.05 billion contactless amounts of competition. Who halved the loyalty points on its credit purchases in 2015, up 228% on the previous year. are the main players and how are card last September, blaming the EU interchange they attempting to differentiate Contactless spending was up 233% on 2014. cap, following a similar move by Capital One. themselves in the digital sphere? Despite such impressive growth, it is still early P looks into Meantime, John Lewis continues to offer its Part- atrick Brusnahan days. Major cities such as Manchester and Glas- Timetric’s research into competition nership credit with its rewards element as yet undi- gow have still to get their act together to roll out within mobile payments luted: it offers one point for every £1 spent at John TfL-style contactless systems; major retailers such 10 DISTRIBUTION: HALCASH Lewis, Waitrose and John Lewis , and one as Sainsburys have been lamentably dilatory in roll- HalCash North America is hoping to point for every £2 spent everywhere else. ing out contactless enabled POS. attract US ATM deployers to its Pin4 Customers receive a £5 voucher on achieving 500 cardless ATM access technology. The expected roll out of Android Pay in the UK Robin Arnfield writes about this points. in March will doubtless attract a great deal of atten- development In the event that John Lewis does not take an axe tion and overexcited PR pitches, overestimating the to its programme, it is not difficult to envisage the 12 FEATURE: CONTACTLESS IN AFRICA significance of the launch. No doubt lessons will card increasing in popularity. Alexander Atkins examines have been learned from Google Wallet. I seem to the progress being made with Innovative card programme marketing innova- recall receiving some ludicrous sound bites from contactless technology in Rwanda tions seem to be thin on the ground of late so hats some of the great and the good in the analyst and and South Africa, particularly with off to MasterCard for the return of its Fare Free regards to public transport consultancy community forecasting just how Goog- Monday’s promotion. le Wallet would transform customer behaviour. 14 COUNTRY SURVEY: SWEDEN Admittedly it is limited in scope: you have to be Just because Google is involved does not neces- 16 COUNTRY SURVEY: NORWAY in London, so that limits its geographical range; it sarily guarantee an immediate success. 16 COUNTRY SURVEY: FRANCE is also only available to MasterCard cardholders There were many who told the writer – over 20 COMMENT: GEMALTO using Apple Pay. two years ago by the way – just how significant William Tran of Gemalto writes So for the relatively chosen few users that have the launch of Zapp would be: with payments infra- about how the financial sector both a MasterCard and Apple Pay, the promotion can become more environmentally structure experts VocaLink in charge, what could sustainable and eco-friendly. This is limited but generous: three Mondays of free trav- go wrong? can range from biodegradable cards el across London’s transport network. Zapp may yet be a huge success and Apple Pay to moving more services online Whether visitors to London or regular commut- and Android Pay may well transform customer ers, the promotion is worth up to £28.10 on each behaviour: all I question is the timescale and speed of the three promotional Mondays. at which people may reduce their reliance on the Impressive, but limited: on a random quick straw old fashioned plastic in their wallets. < poll of the CI editorial desk, a grand total of one Douglas Blakey hand went up when the question was asked: so how [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@ uk.timetric.com ISSN 0956-5558 Email: [email protected] Head of Subscriptions: Sharon Howley 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, EC4V 5EQ retrieval system or transmitted by any form or Tel: +44 (0)20 3096 2586 means, electronic, mechanical, photocopying, Asia Editorial: Xiou Ann Lim Email: [email protected] recording or otherwise, without the prior Tel: +65 6383 4688 Asia Office permission of the publishers Email: [email protected] 1 Finlayson Green, #09-01 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 March 2016 y 1

CI 529.indd 1 29/02/2016 16:29:30 ANALYSIS: CREDIT CARDS Cards International

Is there life beyond the credit card? In the UK and across the English speaking world, credit card payments remain prominent, totalling £14.6bn ($20.4bn) in May 2015 alone. Andrew Edem, Head of Engineering & Information Security Officer at the PPRO Group, considers the strengths of this market and whether this type of payment will last or not

espite new innovative payment ments to seal the deal, could also be opening vent misuse of sensitive data by not collecting methods on the horizon, the popu- themselves up to financial and reputational it in the first place. larity of credit cards as an online damage. These consumer initiated payments mean D payment method shows no signs of For larger companies, being able to deal the shopper needs the merchant’s details but diminishing. with fraudulent transactions and data theft their details remain secure. With push pay- For those operating across international might not have a significant impact on their ments fraud is reduced, but there is a trade- online borders, getting to grips with and bottom line or long-term reputation, but for off between convenience and a more robust, fighting card fraud can be even more diffi- smaller ones, a fraudulent transaction or secure option. cult. For example, in Germany, credit card data breach could cost them dearly. For merchants, push methods mean less usage for online payments and ‘card not pre- work, they don’t have to adhere to the strict sent’ transactions is low, with invoice and The right response? PCI (payment card industry data security SEPA direct debit leading as the more popu- We have already discussed security meas- standards) rules and the shopper has no lar options. ures and the attempts to minimise fraudu- chargeback right as they would with a credit In the Netherlands, almost two thirds of lent online transactions, but what steps can card payment. The onus is therefore very shoppers use iDEAL which prevents the mis- merchants realistically take to minimise the much on the consumer to initiate the pay- use of sensitive data by putting the onus on impact whilst still ensuring consumers can ment which can require more administration the shopper to initiate the payment meaning use credit cards safely and securely? and effort. As a result, push payments could merchants don’t collect it in the first place. In As a rule, these types of ‘pull’ payments be perceived as an inconvenience for those the US, credit card use is prevalent but they – i.e. those initiated by merchants - are less used to the ease of paying by credit card or are only just undergoing migration from secure and appropriate for online purchases, one-click ordering. magnetic strip to chip–and-pin so the nature with the merchant storing customer data and There are a number of key steps that mer- of fraud in this territory will change from becoming an easy target for data theft. chants can take to minimise the risk of fraud- cloned cards to ‘card not present’ transac- To try and counteract this risk, the cred- ulent card transactions: tions in the near future. it card industry has introduced measures Varying credit card penetration and usage including 3D Secure to authenticate online 1. Understand your customers – for across different territories can make a global payments which prompts the card holder smaller merchants in particular, know- response difficult. But with e-commerce to provide a password associated with that ing your customers’ buying habits and an easy target for fraudsters and at best, card, making them more of a ‘push’ experi- patterns will help identify any unusual attempts by the industry to stay one step ence. These efforts have however had a large- behaviour. ahead are still a few years behind, risks of ly detrimental effect on transaction rates. 2. Be vigilant – be suspicious of unusual credit card fraud still remain no matter who On top of this, merchants can incur the behaviour as it could be a fraudulent you are and where in the world you operate. additional risk of chargebacks. Originally transaction made using a stolen card. If designed to provide security for dissatis- in doubt, contact the customer to con- Assessing the risks fied customers, by enabling them to dispute firm the order. It might set alarm bells The use of credit cards to make a purchase charges and receive their money back, this ringing and enable the merchants to can be a double edged sword for both mer- concept has established itself as a playground halt the transaction if they feel it could chants and consumers alike. For merchants, for swindlers. In ‘friendly fraud’, customers be fraudulent. credit card payments will increase conversion simply maintain that they did not place a 3. Work with a PSP. Merchants don’t rates in those territories where usage is high particular order, or that they never received need to go it alone. Whereas some of but with that, the likelihood of fraud also their items. In such cases, merchants are the bigger merchants might have their increases which could lead to both monetary almost always left holding the baby. own risk models and the financial and and reputational consequences. Credit cards are an integral part of online reputational repercussions of a fraudu- High profile cases of Sony Playstation, shopping, but a ‘healthy mix’ is recommend- lent transaction or data breach can be Xbox and Amazon user accounts being ed. minimised and easily managed, for hacked and credit card numbers and expi- Online merchants should always offer smaller players it could have devastat- ry dates being published, are increasing in ‘push’ payment methods as well as including ing, long-lasting consequences. Work- occurrence alongside the more common, invoicing, prepayment and real-time bank ing with an expert to help understand daily risk of chargebacks. transfer systems and schemes such as giropay the options available could help put in This shows just how vulnerable and valu- and SOFORT banking in Germany, iDEAL place other payment methods which able customer data is to a fraudster and how in the Netherlands, Przelewy24 in Poland or will minimise risk to merchants’ busi- companies which rely on credit card pay- Boleto Bancario in Brazil, all of which pre- nesses.<

2 y March 2016 www.cardsinternational.com

CI 529.indd 2 29/02/2016 16:29:31 Cards International NEWS: DIGEST

M&A Visa discloses its ownership in Square

Visa, in a regulatory filing, revealed that 9.99% stake in the publicly-traded share 2011, but terms of that investment were it owns about 4.19 million of Square's class. never revealed. Class shares, which don't trade pub - After mutual fund giant Capital Square, which is co-founded by Twitter licly. Research & Management, Visa is now the CEO Jack Dorsey, made its market debut But the card company has the option to second-largest owner of Square's A shares. in November 2015. It makes a plastic convert those shares to about 3.52 mil - Visa first bought a stake in the mobile- device that allows mobile phones to accept lion Class A shares, which would give it a payments start-up Square back in April credit card payments.<

M&A STRATEGY Citigroup to sell retail banking and card AmEx plans operations in Brazil, Argentina and Colombia sweeping overhaul to cut $1bn in costs Citigroup has announced plans to sell its these countries. retail banking and credit card businesses in "While our Consumer businesses in Credit card issuer American Express Brazil, Argentina and Colombia in an effort Brazil, Argentina and Colombia are of (AmEx) has unveiled plans for a restruc- to boost profitability. high quality, we have decided to focus ture in an effort to cut $1bn in costs The units to be sold include about $6bn our efforts on opportunities with our over the next two years. in assets, and will now be transferred from institutional clients in these countries and As part of the overhaul, AmEx will Citicorp into Citi Holdings. throughout the wider region. Citi is com - streamline and consolidate some market- Citi CEO Michael Corbat said: "These mitted to Latin America, where we have ing activities to reduce costs and dupli- actions will further simplify our Global Con- operated for over a century and built an cation of work. The company will set up sumer Bank, allowing us to more effectively unmatched network across 23 countries," a global marketing operations unit that deploy resources to where we have the abil- Corbat added. will be headed by Mike McCormack. It ity to achieve scale within our targeted seg- The latest move follows the bank's will establish an enterprise digital group ments and see the greatest opportunity for announcement to exit the Latin American to centralise web, mobile and digital growth." markets of Costa Rica, El Salvador, Guate- product management activities. The unit The bank, however, will retain its corpo- mala, Nicaragua, Panama and Peru at the will be headed by Luke Gebb. rate and institutional client operations in end of 2014.< AmEx will also merge its world service and global credit administration opera- RESEARCH tions into one unit led by Raymond Joabar. Four in every five pounds of UK retail The company also plans to axe jobs, though it has not yet disclosed the pre- spending made with payment cards cise number of employees it wants to reduce. Brits now use debit and credit cards transactions. In addition, the company has for nearly four in every five pounds The UK Cards Association head of announced the appointment of the com- of spending at retailers across the UK, policy Richard Koch said: "Chip and pany's global banking president Paul according to data from The UK Cards PIN was introduced a decade ago to Fabara as the new chief risk officer, and Association. combat the rising levels of counterfeit the exit of its chief marketing officer The association has unveiled the data and stolen card fraud in the UK. It was John Hayes. as the UK completes ten years of switch the biggest change to consumer behav- AmEx chairman and CEO Kenneth to Chip and PIN cards, which was first iour since decimalisation and it has been Chenault said: "This is a big task. It introduced in 2006. hugely successful in tackling counterfeit essentially means that we must trans- In December 2015, 78.5% of spending cards and reducing the threat of fraud- form the way the company works. We at retailers was made via payment cards, sters using lost and stolen cards on the need to do some things better and some compared to only 55% in 2006. Spend- high street. things differently - with a ‘one company’ ing through these cards is predicted to "The introduction of Chip and PIN perspective instead of operating as a col- reach £901bn ($1,274bn) by 2024. was a break with an 18th Century sys- lection of individual businesses. The trade body further said that annu- tem which relied on signing pieces of "Among other things, this means tak- al counterfeit card fraud losses dropped paper to authorise a payment. Chip ing a company-wide look at functions by £81.9m between 2004 and 2014 and PIN was deliberately designed so it and processes that now exist in multiple owing to use of Chip and PIN cards. could deliver significant technical innova- parts of the organisation and identifying The most successful among the Chip tion and these successes have included opportunities to consolidate them into and PIN system are contactless cards, contactless and mobile payments, which centralised utilities that provide support which are now used for a tenth of card use the same robust security features."< across business lines."<

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CI 529.indd 3 29/02/2016 16:29:31 NEWS: DIGEST Cards International

SECURITY Precise Biometrics and Fingerprint Cards sign licensing deal for smart cards Precise Biometrics, a fingerprint software Precise Biometrics said that its Precise said: "There is a great interest to integrate developer, has expanded a licensing deal with BioMatch Embedded solution offers secure fingerprint technology in new product areas. Fingerprint Cards to incorporate Precise Bio- fingerprint recognition for products with The expanded agreement with Fingerprint Match Embedded for smart cards. small fingerprint sensors and platforms with Cards - the largest sensor manufacturer - The deal will generate royalty revenue limited processing power and memory space confirms our position as the leading supplier based on Fingerprint Cards' sales of finger- including smart cards, wearables, locks as of fingerprint software and opens up inter- print sensors for smart cards that leverage the well as cars. esting growth opportunities within smart solution. Precise Biometrics CEO Håkan Persson cards."<

RESEARCH DIGITAL MasterCard and Maestro contactless Payment Data transactions surpass the one billion mark in Systems offers Apple Europe Pay support for Akimbo card The total number of MasterCard and Maes- store transactions were contactless in the tro processed transactions surpassed the one fourth quarter of 2015, MasterCard said. billion mark in 2015, a surge of 150% from MasterCard head of contactless payments in Payment Data Systems has enabled its 2014, MasterCard reported. Europe Chris Kangas said: "New research has Akimbo Prepaid MasterCard users, The value of transactions conducted using revealed that in Europe, about 48% of daily including the co-branded reloadable cards a contactless card or device increased by purchases are below €25 ($27.50), and there- distributed by its corporate clients, to use 183% year on year. fore typically within the contactless tap & go Apple's mobile payment platform Apple The data also revealed that the number of limit (above €25 it is possible in most countries Pay. cards, mobile phones or other devices used to tap and authenticate with a PIN code). Apple Pay enables customers to make to make contactless transaction soared by "In the Netherlands and UK, this figure is purchases at retailers by adding participat- 121%. even higher at 55% and 59% respectively. ing credit and debit cards to their Apple The count of merchant locations accepting However, with so many transactions falling Wallet. It also mitigates risk of fraud by contactless payments also registered a surge within the contactless tap & go band, and authorising transactions with a one-time of 72% year-on-year. consumers proving their openness to using unique dynamic security code. Over 10 countries in Europe have more this technology, merchants are in the ideal The Akimbo Card is a consumer-facing than five million contactless cards or devices position to take action and reap the ben - social payments provider and prepaid in circulation and an average of 13% of in- efits."< card. In November 2015, Payment Data Sys- SECURITY tems launched Akimbo Now, a new virtual MasterCard introduces MasterCard IQ Series to card account platform and API that allows businesses and third-party applications to minimise number of false declines send rewards, incentives, and other pay - ments. In December 2015, the company MasterCard has unveiled a suite of solu - about the circumstances of a transaction. introduced a new gift card named Akim - tion, dubbed MasterCard IQ series, which MasterCard president of enterprise secu- bo Gift MasterCard that can be ordered uses real-time intelligence to enable issuers rity solutions Ajay Bhalla said: "While the online, sent by email or traditional mail. to make more informed fraud management industry has relentlessly worked to reduce Payment Data Systems subsidiary decisions. fraud, some of these efforts have resulted in FiCentive president and CEO Louis Hoch The solution is launched to target rising an increase in transactions being needlessly said: "Being first-to-market with the lat - number cases of transactions declined unnec- declined. est payment innovations is a top priority essarily when the card user travel out of his "Our IQ products leverage technology and for our prepaid card solutions, and we're state or shop at a different store. insights to deliver merchants and consumers proud to launch Apple Pay support for our MasterCard IQ series includes two a convenient and uninterrupted checkout flagship consumer card brand Akimbo. core products, which provides insights experience." "Our goal is to help businesses use the into cardholder expending habits, namely The new MasterCard IQ series, which Akimbo platform to deliver a wide vari - Authorisation IQ and Assurance IQ. is available across the world, supports all ety of payments from rewards and incen - Authorisation IQ offers card issuers with MasterCard brands and products. tives to regular payroll. We've built one segmented account spending insights to help According to an industry research by Jave- of the most unique consumer reloadable them make more informed authorisation lin Strategy one out of every six cardholders card programmes in the market today and decisions, while Assurance IQ allows the experienced at least one decline because of look forward to continuing to develop and exchange of information from the merchant suspected fraud in 2015.< grow our Akimbo platform."<

4 y March 2016 www.cardsinternational.com

CI 529.indd 4 29/02/2016 16:29:31 Cards International NEWS: DIGEST

SECURITY Visa Europe expands tokenisation service to support cloud payments

Visa Europe has expanded its Visa Europe institutions to technology partners, all through a daily basis and for payments on mobile or Payment Tokenisation Service (VEPTS) to one tokenisation platform offered by Visa. tablet to account for more than 50% of Visa support cloud-based mobile payments. These entities will also be able to develop transactions. The expansion of the tokenisation service new, or to improve existing, digital products “Looking at contactless as an early indica- allows and other firms to integrate to meet increasing consumer demand for tor, where adoption has doubled and spend tokenisation into services where payment convenience and security. has trebled in the last year; we believe this pro- credentials are stored in the cloud such as Visa said tokenisation allows for a fast jection could well be a conservative estimate. banks’ own mobile payment apps, wearables and easy way to link a credit card to a digital “By expanding our service to make tokeni- and other connected devices as well as for payment service as well as keep details secure sation available to our client banks through internet browser-based wallets, retailer-spe- when paying in store or online. a number of new technology partners, con- cific checkout offerings like Visa Checkout Visa Europe executive director of product sumers will have access to all manner of fan- and card on file payment options. enablement Sandra Alzetta said: “By 2020, tastic new payment experiences accessible This expansion allows more entities to oper- our projections are for one in five consumers through their mobile phones, tablets and all ate in the payments ecosystem, from financial to pay for items using their smartphone on manner of other ‘connected’ devices.”< REGULATION Westpac to repay $4m to customers over debit card fees

Westpac New Zealand has agreed to repay Another 60,000 customers were over- of the Fair Trading Act to the Commission over $4m to more than 100,000 customers charged less than $5, and the sum attribut- and FMA. who were overcharged debit card fees while ed to this group, that amounts to just over Commissioner Anna Rawlings said: “Hav- withdrawing money from the bank's ATMs $125,000, will be donated to the Mangere ing reviewed Westpac’s internal investigation across Australia. Budgeting Services Trust. and the information they have provided us, Westpac, which reached a settlement with The breach occurred between October we are satisfied they did not set out to mis- the Commerce Commission and Financial 2012 and August 2014, when the bank lead their customers. While the overcharged Markets Authority (FMA), will compensate charged a higher exchange rate than that fees are small for individuals, cumulatively it about 108,000 past and existing customers fixed by the card schemes. could have generated several million dollars who were overcharged more than $5. In 2014, the bank self-reported the breach in profit for Westpac.”< DIGITAL Amadeus introduces virtual wallet for travel industry Amadeus, a Spain-based travel technology surcharges applied by some travel providers. costs to a minimum. Virtual cards are widely company, has launched a portfolio of virtual Both options are integrated with the selling accepted, so agencies can rest assured that cards, called Amadeus B2B Wallet Prepaid, interface to enable payments while booking a they can use it for all their providers - from to target B2B travel agency payments. trip, the company said. low-cost carriers, to car rental providers, The newly launched wallet comprises of two Amadeus head of travel payments Celia hotels and more." virtual cards linked to the same account. One Pereiro said: "Amadeus brings an innova- "We are currently rolling out a number of card earns travel agencies a rebate on the amount tive approach which allows travel agencies customers across Europe and are in discus- spent, and the other helps avoid payment card to boost savings and reduce payment-related sions with hundreds of others."<

PRODUCTS UK start-up Curve begins operation with launch of payment card

Curve, a London-based start-up founded is accepted such as magnetic strip, chip Curve CEO and co-founder Shachar by Israeli entrepreneur Shachar Bialick and pin and contactless. Bialick said: "With Curve you have in 2015, has commenced operations with It is not distributed by a bank or credit one card and see every single transac - launch of a physical payment card that card provider, hence enabling users to tion in one screen. We're not another allows people to combine an unlimited pay with American Express in places new bank or extra service to deal with; number of bank cards into a single entity. even where it is not accepted. we transform your existing fragmented Curve said it is soft-launching in the In order to mitigate risk of fraud, the financial world into somewhere crystal UK only for now, for a limited number card uses tokenisation to process trans- clear, designed for the user. of users in the business and freelancer actions, without revealing original card "Mobile payments have the potential realm, before it opens up more widely to details and data to the merchant. to bring similar benefits, but cards work consumers in the coming months. The Curve card does not have any everywhere and people are used to them. Built on the MasterCard network, the maximum limit on transaction value. It is So we've created the best of both worlds Curve prepaid card can be used in vari- free to use, with an initial one off cost of - all the benefits of mobile payments via ous payment terminals where MasterCard £35, and is initially compatible on iOS. a ground-breaking card."<

www.cardsinternational.com March 2016 y 5

CI 529.indd 5 29/02/2016 16:29:32 FEATURE: CASHLESS SOCIETY Cards International

Would Britain actually miss cash? Paul Underwood, managing director of card manufacturer Thames Card Technology, considers the conseqences of the UK going cashless. Is it the correct way forward when it comes to consumers and companies alike? Is it secure? And how will it change the entire market’s landscape?

he UK passed a major milestone becomes attached to cash and is less willing on its journey to becoming a cash - to part with it. less society last year when it was T reported that electronic payments Cards are personal overtook their paper counterparts for Whether using loyalty, debit or credit cards, the first time. According to the Payments consumers hand over valuable data to retail- Council, only 48% of payments made by ers on a daily basis. Merchants can not only British consumers and businesses in 2014 use this information to measure the effective- were in cash, down from 52% in 2013. ness of promotions and monitor customer On top of this, a separate survey found loyalty, but also target consumers with more that 71% of British customers carry less specific and personal adverts based on their than £20 ($27) in cash at any time, with shopping habits, benefitting both sides of the half saying that they will walk no further transaction. than 100 metres to find a cash machine. In a piece for Foreign Policy, Vishnu Srid- So what’s causing this shift in payment haran of the New America Foundation wrote habits and how would cashless benefit that that cash-based economies ‘harm the Paul Underwood banks, merchants and consumers? poor by heightening the risks they face when Firstly, cash presents greater risks than carrying money and fuelling government cor- card and other forms of electronic payment. ruption and inefficiency’. For example, keeping cash on the premises While government corruption is (hope- consumers who are less reliant on physical puts banks and merchants at risk of theft. fully) a thing of the past for the UK, the sen- tender. We can learn from Sweden here – as one timent of the statement still rings true. For Happily, cashless acceptance amongst of the first countries looking set to become a many individuals with a poor credit history, more senior consumers is also growing with cashless society – when in 2013 a bank rob- for example, cash has historically been the 19% of over-50s using contactless technol- ber left empty handed after he discovered the only option as they were side-lined by the ogy up to three times a week. branch kept no cash on site. Taking the capital as an example, Separately, paper money is also prop- “Without banking services it is harder to contactless technology has successfully ping up the shadow economy and cost- find a stable financial footing and almost been rolled out by Transport for Lon- ing us all due to the anonymity it pro- don (TfL). vides for elicit transactions. impossible to collect enough for long term In July 2014 it announced that its investments. Times have changed though” buses would no longer accept cash as a Time is money form of payment due to the dwindling It is time consuming and costly for merchants traditional banking system. numbers of passengers using physical money to handle cash. According to PayPal, count- Without banking services it is harder to to travel. ing notes and depositing cash at the bank is find a stable financial footing and almost This is surely justified when you consider costing Britain's small businesses around two impossible to collect enough for long term that around 99% of passengers use Oyster, weeks and £2.5bn per year. investments like education and property. prepaid tickets, contactless payment cards or Conversely, card payments are quick and Times have changed though. concessionary tickets instead. simple, and with contactless going main - Prepaid cards with bank-like online ser- The benefits of a cashless society are many stream, retailers can serve queues of custom- vices are an option for those who can’t have and wide-ranging and this data suggests we ers with even greater speed and convenience. or don’t want a traditional account. These are on the right track. In fact, in June 2015, the British Bankers’ services are increasing financial access and It will take some time to achieve, however, Association reported that since the introduc- improving transparency in the financial ser- as commitment from consumers, merchants tion of contactless cards, consumers have vices industry. and banks is required for it to become a real- collectively saved over 90 years of waiting ity. time at the checkout. Is cashless a reality? Many have realised that cards and digital Not only is cash inconvenient, it is emotive For most young shoppers electronic pay- payments are safer and more secure but the too. Research suggests that consumers spend ments are already ingrained. The Payments UK isn’t ready to say goodbye to cash yet. more using their cards. Council is predicting that the majority of Payment methods come to the market to Psychologists call this reluctance to part consumer purchases in the UK will be cash- increase options and are not easily shown the with cash ‘coupling’ – when a consumer less this year, largely driven by millennial door. <

6 y March 2016 www.cardsinternational.com

CI 529.indd 6 29/02/2016 16:29:33 Cards International REPORT: MOBILE PAYMENTS

The competition in mobile payments hots up Ten years ago, payments via a mobile phone were a thing of fantasy. Now, not only is it an option, but there are several providers of said option, all of whom are competing for their share of the market. Patrick Brusnahan looks into Timetric’s research into the competition within mobile payments

hile mobile payments’ market based, the two sectors are more likely to com- as a result, merchant did not see the point in share is still limited compared to plement each other than to compete. investing in NFC terminals. well-established payment meth- Even if payment cards vanish, as unlikely as The penetration and acceptance of underly- ods, they have reached a new that seems, mobile solutions such as Apple Pay ing technology is another key factor that can W could continue to rely on infrastructure built by milestone with the introduction of Sam - directly impact the success of mobile payments. sung and Apple to the fray. The integra - card networks. This is to benefit from interop- NFC is already established in several countries, tion of mobile payment apps into products erability and existing security standards. Pay- including the UK, Finland, Poland, Turkey, Sin- offered by technology and e-commerce ment cards could also be backups if NFC infra- gapore and South Korea. NFC is also becoming giants, and the proliferation of near-field structure is not readily available or if devices ever more popular in the US after the launch of communication (NFC) technology are are out of battery. Apple Pay. likely to promote proximity in-store mobile Global expansion of NFC-based payment According to MasterCard, contactless trans- payments in the near future. solutions is limited by the low penetration of actions in Europe grew by 174% annually in The popularity of one-touch checkout but- NFC-enabled devices. As a consequence, pay- the last quarter of 2014. In July 2015, Visa tons, peer-to-peer (P2P) payments and sharing ment service providers (PSPs) are utilising alter- Europe reported 1.1 billion contactless transac- economies, such as Uber, has only helped this native technology such as quick response (QR) tions, amounting to €12.6bn ($16.7bn) made rise. codes and barcodes to enable mobile proximity through Visa cards in the twelve months prior. payments. Visa has 131 million contactless cards in circu- What is forcing us to think about mobile For example, Alipay and Tenpay use lation in Europe and expects all Visa-accepting payments? this technology in China, while in the US, POS terminals to be NFC-enabled by 2020. Since the October 2015 launch of Apple Pay JPMorgan Chase has announced a mobile pay- Data published by the UK Cards Associa- in the US, quickly followed by a UK launch, ment solution based on QR technology. A key tion suggested that contactless payments have Apple has driven consumer awareness of not advantage of using QR codes over NFC-based become common in the UK. Contactless trans- only its own product, but mobile payments as solutions is that merchants require minimal action value and volume grew by 255% and a whole. Within a year of its launch, it became investment in new POS infrastructure. 218% respectively annually in 2014. The num- a leading mobile payment platform. Timetric’s research suggests that 80% of ber of bank-owned NFC-enabled terminals However, the value of transactions through consumers see ease of use as the main incen- rose from 169,591 in 2013 to 215,380 in 2014. Apple Pay is still relatively low. Timetric esti- tive to try mobile payments. However, multiple mates, in its report Competition in Mobile steps in mobile payments, such as shifting in- How are banks getting involved? Payments, that the value of Apple Pay trans- between pages and 3D Secure authentication, There are many banks looking into the mobile actions in 2015 is ‘less than half of that of are not making the service easy. The launch payments space. Due to them already having a Kenya’s M-Pesa’. China’s Alipay and Tenpay of one-touch checkout buttons and biometric substantial market presence and customer base, still remain the leading global mobile payment authentication, as used in Apple Pay, is address- they have one advantage over start-ups. Banks providers, according to the report. ing this difficulty. are very willing to use this to their advantage. Consumers across the world are likely to be The BBVA Wallet in Spain has recorded over polarised between Apple and Android mobile How can mobile payments become 850,000 downloads since 2013 and received proximity payment solutions, just due to which successful? positive acclaim from customers. According to brand smartphone they have. Alipay and Consumers do not tend to pick one payment BBVA, it is the most used bank-issued mobile PayPal ‘will continue to lead remote payments method over another. They tend to use several wallet in Spain. for the foreseeable future’ and may become payment methods in unison. Nevertheless, In 2015, six Polish banks introduced Blik, a contenders for in-store payments. growth in mobile payments requires adoption mobile payment service. It allows customers to Partnerships between major participants in by all industry participants, including consum- make in-store and online payments, withdraw the payments field – most notably card net- ers, merchants, card networks, issuers, acquir- cash from ATMs and make P2P fund trans- works, phone manufacturers, card issuers, ers and smartphone developers. fers through mobile devices. Approved by the merchant acquirers, payment processors, and As the limited-to-no success of Google National Bank of Poland, the service is expect- mobile network operators (MNOs) – are set to Wallet and Softcard showed, industry-wide ed to reach 60-70% of consumers in Poland. largely influence which way the global mobile cooperation is necessary for mobile payment Chase announced the development of the payments market will go forward. deployment. Google Wallet failed to gain sup- Chase Pay wallet in October 2015, set for Despite mobile payments growing over the port from MNOs for using SIM cards and launch in 2016. Chase Pay will use QR codes next five years, it is still highly unlikely that both companies failed to gain a large enough for in-store payments, making the service they will disrupt the card market. Considering amount of early adopters to educate the mar- cheaper and easier to adopt for merchants. that most mobile payment platforms are card- ket. Customer adoption did not accelerate and, There is also NFC functionality in the app.

www.cardsinternational.com March 2016 y 7

CI 529.indd 7 29/02/2016 16:29:34 REPORT: MOBILE PAYMENTS Cards International

Chase has around 94 million card accounts in acquired by PayPal in 2013, is behind the buy Sa Sa stores in Hong Kong. the US, making it a formidable competitor for buttons on social media site Pinterest, which, The challenges facing Tencent are similar to newer solutions. according to Schulman, have a potential mar- Alibaba’s with regulation being a key factor, as ket of around 51 million users every month. well as the expected entries of Apple Pay and Who are the key operators in remote With relationships with over 10 million mer- Samsung Pay to add competition. payments? chants, including Amazon, it has an incredibly Vodafone/Safaricom: M-Pesa offers fund There are a number of key operators in remote strong foothold, but its in-store payment initia- transfer and micro-level banking facilities to payments, including in-app and P2P payments, tives are yet to gain momentum. customers of Safaricom, Kenya’s largest mobile looking to expand into proximity payments. However, PayPal acquired Xoom Corp for network. Since its introduction in 2007, it has The report highlights four making waves in $890m in July 2015, a company with focuses become a primary channel for P2P fund trans- the market. on international remittances. The deal will fers and enterprise payments. Alibaba: The Chinese e-commerce company deepen PayPal’s presence in P2P transactions, Due to its popularity, the programme was launched its online payment platform, Alipay, a feature lacking in the solutions offered by extended from a low-cost microfinance loan in 2004 and it is the largest third-party-digital Apple, Samsung and Android. repayment system to an open platform for fund payment service provider in the country. In In addition, PayPal has partnered with POS remittance and commercial purposes. This was 2014, it account for 80% of mobile transac- software providers to grant access to PayPal in due to the high costs of dealing with cash in tions in China. over 50,000 brick-and-mortar merchants. In Kenya and a lack of trust in the banking sys- Alipay offers merchants and software 2012, PayPal entered into an agreement with tem. developers access to its programming tools Discover, which allows them into more than Safaricom has a national network and a for remote transactions to create online store- seven million retail outlets. trusted relationship with millions of mobile fronts within the app. In June 2013, Alipay The company has experimented with QR users. This has allowed it to target consum- introduced Yu’eBao and Tianhong Asset Man- codes and facial recognition for in-store pay- ers’ payment needs and fill the void between agement, a service that allows users to manage ments. Furthermore, in April 2015, PayPal consumer demand and availability of effective excess funds and receive interest. This service acquired Paydiant in a deal valued at $280m payment channels. has over 100 million users by June 2014 with which is set to expand its NFC-enabled pay- Unlike emerging mobile payments centred $92bn in assets under management. ment offering. PayPal is set to offer multiple on smartphones, M-Pesa does not require a In November 2013, Alipay introduced a types of in-store payments and increase access smartphone or tablet as it is based on SMS proximity payment function to its wallet. Pay- to more merchants, whether they support QR technology. This makes it immediately more ments can be authenticated through sound codes, facial recognition of NFC payments in accessible. waves or QR and barcodes at POS terminals. their stores. Safaricom has plans to commercialise this The wallet has 270 million active users with One problem with PayPal’s service is that service. It partnered with third-party merchant around 40,000 retail stores in China accepting it imposes a relatively high merchant service acquirer Kopo Kopo, which provides low-cost payments through the app. charge, which could put merchants off. Apple services that allow small enterprises to manage Pro-UnionPay regulations in China are the Pay and Android Pay are concerned more at the acceptance of mobile payments through biggest hurdle for Alipay as Chinese regulators enhancing the appeal for core products rather M-Pesa. try to cap consumer spending through third- than generating revenue directly, while Apple The MNO has also partnered with banks for party PSPs. In March 2014, the central bank and Google offer services without charging a service called M-Pesa to Bank, enabling cus- of China banned QR-based payments, citing merchants. In addition, PayPal’s current mobile tomers to directly transfer money in and out of security concerns, leading to strong protests by app requires consumers to connect with the M-Pesa accounts, to and from a bank account. Alipay and Tenpay. Additional investment is internet to check into a store, a problem that , , Cooperative, required for Alipay to exland into other modes offline cards does not have. KCB, and Equity Bank all offer this service. of payment acceptance. For example, sound- Tencent: Chinese internet company Tencent Furthermore, Safaricom, in collaboration wave recognition sensors cost CNY50 ($7.99). offers the Tenpay online payment service in with Pesapoint, Diamond Trust Bank, KCB, Despite the ban, it was reported that stores China, supporting B2B, B2C and P2P pay- Family Bank, NIC Bank, and Equity Bank, and restaurants continued to accept payments ments. In July 2014, Tencent launched a new is now able to let M-Pesa customers to make through QR and barcodes. In addition, new mobile wallet, QQ wallet, which targets urban cardless cash withdrawals from ATMs. merchants are continuing to sign up with users. Similar to Alipay’s wallet app, Tenpay’s While present in other countries, M-Pesa’s Alipay for QR and barcode-based payment wallet enables users to make in-store payments success is largely limited to Kenya. Due to acceptance. Pressure is building on the regula- through barcodes and QR codes. regulatory restrictions, mobile money is only tor to lift the ban, but it is crucial that PSPs and Tencent signed an agreement with Western allowed in a closed- or semi-closed-loop sys- regulators work together. Union in November 2015 to enable US users tem. This limits its functionality. Outside of PayPal: PayPal has been heavily involved in to send money to 200 countries and territo- Kenya, users have limited options to make pay- payments since its inception in 1998. In 2014, ries. WeChat users can now remit money using ments at merchant locations, meaning there is total purchases made through PayPal amount- Western Union’s WU Connect platform. In a lack of incentive for consumers to take up ed to $235bn. It also reached four billion October 2015, the company formed a partner- the service. transactions, of which one billion were made ship with Limonetik SAS, a French provider of through mobile devices. online digital payments, to enable cross-border Who are the key operators in proximity The company is the market leader for the in- online payment solutions for Chinese consum- payments? app and mobile commerce market worldwide ers. There are already a number of companies in outside of China with its one-touch checkout To expand in-store payments in Hong Kong, proximity payments while these firms play button and mobile app. According to PayPal Tencent partnered with Sa Sa International catch-up. The report highlights a few making CEO Dan Schulman, PayPal is accepted on Holdings. Following this, WeChat users in huge strides in the market. 67% of mobile apps. Braintree, which was Hong Kong can make payments at around 100 Apple: Apple Pay was launched in October

8 y March 2016 www.cardsinternational.com

CI 529.indd 8 29/02/2016 16:29:35 Cards International REPORT: MOBILE PAYMENTS

to the internet in order to use n BANK-LED MOBILE PAYMENT SOLUTIONS BY COUNTRY it. Even if it could support a limited number of trans- TYPE OF PAYMENT actions without internet COUNTRY SOLUTION PROVIDER REMOTE PROXIMITY access, it needs to connect to a cloud server. This casts The US Chase Pay Chase √ √ doubts on the speed of the service Capital One Capital One √ In addition, Android Pay Wallet does not use fingerprint scanning, focusing on pass- The UK Pingit Barclays √ words and PINs for authen- tication, adding friction to Paym , Barclays, √ the process. , Cumberland One advantage it does Building Society, Danske Bank, have is the collation of , , HSBC, customer data, a key dif- Bank, , ferentiator in comparison Nationwide, Natwest, Royal to Apple Pay. This could Bank of Scotland, Santander, be beneficial for merchants TSB, , Yorkshire wanting to improve targeted Bank advertising, but it could also lead to legal issues regarding Spain BBVA Wallet BBVA √ √ privacy. Samsung: Samsung Pay, Poland Blik Alior Bank, Bank Millennium, √ √ available in the US and Bank Zachodni WBK, mBank, South Korea, brings another ING Bank and PKO Bank Polski level of competition into the market. India mVisa ICICI Bank √ √ Its key advantage is ubiq- uity as Samsung Pay is com- Turkey BKM Express Akbank, Bank Asya, DenizBank, √ √ patible with and generic Finansbank, GarantiBankası, POS terminal. In February Halkbank, HSBC, ING Bank, Is 2015, Samsung acquired Bank, KuveytTürk, Sekerbank, LoopPay, whose magnetic TEB, TürkiyeFinans, Vakıfbank, secure transmission (MST) YapıKrediBankası and Ziraat technology can be used for Bank non-NFC contactless pay- ments. MST relies on mag- Canada RBC Wallet Royal Bank of Canada √ netic stripe cards readers, of which there are 30 million Australia CommBank Tap Commonwealth Bank of √ locations globally. & Pay Australia After modifications, LoopPay’s technology replaced card informa- 2014 and offered on Apple’s iPhone 6, iPad June 2015. tion with tokens, dealing Air 2 and iPad Mini 3 devices. Users can make However, Apple Pay may struggle in other with the biggest flaw with magnetic stripes. contactless in-store payments as well as remote markets. Samsung Pay will use fingerprint scanning to payments with the integrated Apple Pay API. The report stated: “Apple may find it diffi- authenticate payments the same way as Apple The solution uses Apple’s existing Passbook cult to reach an agreement with banks in some Pay. Additional security is provided by Sam- app, now Wallet, to emulate debit and credit countries, due to lower interchange fees. Inter- sung Knox and a third-party solution called cards, including those that have already been change fees in the US are relatively high, mak- ARM TrustZone. added to iTunes. In the latter case, users can ing it easier for Apple to reach an agreement Samsung will not charge any fees from mar- add cards by entering only its CVV number. over shares of transactional revenues. Ameri- ket participants. According to Samsung repre- While the iPhone 6 is the only Apple smart- can Express may be the only viable option as sentative Injong Rhee, Samsung Pay is meant to phone with NFC functionality, iPhone 5 users it imposes a higher merchant service charge.” drive demand for flagship phones, rather than can make contactless payments through the Moreover, its inability to collect consumer act as a revenue stream. Apple Watch. This can only be used for in-store data may make it less appealing to merchants. Unlike others, Samsung is only venturing purchases though and not remote payments Google: Android Pay was launched in into proximity payments and will provide no through Apple Pay. September 2015 and works in a similar way support for in-app payments. Moreover, the 2015 brought more to the fold for Apple Pay. to Apple Pay, the main different being that use of MST requires consumers to hold phones It was launched in the UK in July 2015 and Android Pay utilises HCE rather than SE. The in a specific way over POS terminals, making support for merchant rewards was released in big flaw with HCE as that it must be connected its usage more complicated than NFC. <

www.cardsinternational.com March 2016 y 9

CI 529.indd 9 29/02/2016 16:29:36 DISTRIBUTION: HALCASH Cards International

HalCash offers new revenue streams for ATM operators HalCash is hoping to attract US ATM deployers to its Pin4 technology, which has already been rolled out in Poland, Spain, India and Morocco. The Pin4 service went live in four US cities in March 2016 and enables consumers to instantly cash-out rewards, prizes or P2P remittances received via SMS. Robin Arnfield writes

TM operators in the US are searching for ways to generate extra revenues from value-added A services at their ATMs to supple - ment surcharge fees for cash withdraw - als. This is because they face declining revenues from interchange fees as well as heavy operational costs due to factors such as the card schemes requirement that they migrate their ATMs to EMV or face a liability shift.

New revenue stream Richard Witkowski, CEO of HalCash North America, says Pin4-enabling their ATMs pro- vides a new revenue stream for ATM owners that doesn’t cannibalise any of their existing services. Pin4 offers real-time cardless cash-outs at ATMs from digital wallets, bank accounts, P2P money transfers, and reward, rebate and loyalty offers. “Customers can use any type of cellphone, not just smartphones, to extra customer traffic from people wanting n HALCASH KEY FACTS receive SMS messages containing Pin4 secu- to redeem their Pin4 orders. “Increased foot rity codes,” says Witkowski. “Our system traffic from new customers create potential 19 banks connected to HalCash worldwide works with any make and type of ATM, and for additional retail spending during those ATMs don’t need any additional hardware, visits,” says Witkowski. 4,300 ATMs connected to HalCash in Poland just a software download.” Pin4 order recipients don’t need to have Origins 6,300 ATMs connected to HalCash in Spain bank accounts to use Pin4. What happens is The Pin4 technology was developed and that a Pin4 order supplier sends the recipient launched in Spain seven years ago by five 17,400 ATMs connected to HalCash in India an SMS containing a PIN, and, in addition, Spanish banks as a way to provide a quick, HalCash sends a four-digit secret code to the easy way for their customers to send cash to 700 ATMs connected to HalCash in Morocco. recipient. their friends and relatives. The banks - Aban- Source: HalCash To withdraw their cash, the recipient has ca, Bankinter, Banco Popular, Cajamar and to enter both PINs and their cellphone num- Caja Laboral - formed a Madrid-based com- ber at a Pin4-enabled ATM. “The SMS they pany called HalCash International (HCI) to nected to the HalCash network. HalCash is receive from HalCash has a link to a global roll out their platform in Spain and interna- ideal for this kind of promotion, as it offers GPS app that shows them the nearest Pin4- tionally. instant gratification.” enabled ATM to their location,” says Wit- “Having started with P2P transfers, the HCI’s current business model is to oper- kowski. Spanish banks realised there was a market ate the business in Spain and, outside Pin4 transactions are surcharge-free for in Spain for rewards redemption at ATMs,” Spain to license its intellectual property recipients withdrawing cash from Pin4- says Witkowski. “So they formed partner- and processing platform to local operators enabled ATMs. “The ATM owner receives ships with companies that wanted to fulfill for a specified geography. Country-specific a share of the fee that we charge the issuer consumer promotions via HalCash. Today, a licenses are called ‘nodes’ in the HalCash of the Pin4 order, be this a retailer, rewards large number of promotions are processed network. scheme or money services business (MSB),” on the Spanish HalCash network. If you buy In 2011, the HalCash platform was Witkowski says. a Coca Cola bottle in Spain and win a prize launched in Poland, and the service is also One benefit to ATM owners such as displayed on the bottle cap, you text Coca available in India and Morocco. In addi - supermarkets and convenience stores from Cola which replies with a €20 ($22) reward tion to domestic P2P transfers and rewards offering Pin4 transactions at their ATMs is which is instantly redeemable at ATMs con- redemption, the HalCash network offers

10 y March 2016 www.cardsinternational.com

CI 529.indd 10 29/02/2016 16:29:38 Cards International DISTRIBUTION: HALCASH

intra-country transfers between the nodes in its international network. Analysts’ comments “Poland is seeing a lot of P2P transfers “The pairing of mobile P2P payment services and customer service levels,” says Ron Delnevo, the using the HalCash network, but the major- ATMs can generate new revenue streams such as ATM Industry Association’s (ATMIA) Executive ity of Polish HalCash transactions involve money transfers and bill payments for financial Director Europe. “The ability to remit funds using a promotions,” Witkowski says. “For example, institutions, as regulators around the world limit mobile phone, with the recipient able to withdraw Nikon Poland offers rebates at its Nikon.pl the ability to generate revenue from interchange them as cash at an ATM without using a card is the website to people who buy one of its cam- on POS and ATM transactions,” says Tristan Hugo- ultimate in convenience. The unique code gives eras. These rebates are processed through Webb, associate director of US-based Mercator excellent security, and not having to use a card HalCash, and the benefit to Nikon is that, in Advisory Group’s International Advisory Service. further simplifies the transaction.” order to receive a rebate text message, cus- “Also, the paring of mobile P2P payment solutions “In Africa, systems similar to Pin4 such as iZi tomers have to fill out a registration form and the ATM channel supports local payments Cash in Rwanda, which operates through Rwanda’s providing their contact details for future ecosystems in emerging markets in which cash nationwide ATM network, have worked very well,” marketing.” is likely the predominant payment form and few says Dan Armstrong, Chief Digital Officer of Witkowski adds that HalCash Spain and merchants are capable of supporting mobile BankMobile, a subsidiary of US-based Customers Poland are seeing millions of Pin4 transac- payments or electronic payments in general. Bank, and a former consultant on mobile money in tions on an annualised basis, which are most- Banked and unbanked consumers could use mobile emerging markets. ly rewards-related. P2P payment services to transfer money to friends “In North America, I believe such systems could and relatives who can then withdraw the cash at be really impactful as well, catering for seasonal, North America ATMs to make necessary payments.” casual or migrant labor scenarios, as well as New Jersey-based HalCash North America, “I believe HalCash demonstrates how mobile and international remittance corridors such as Canada/ which is a separate entity from HCI, has ATMs can work together to significantly improve the US to Mexico, etc.” < licensed the Spanish company’s technology for North America and the Caribbean. less ATM withdrawals means improved to use Pin4 in New York City, Miami, Chi- “HCI wants our US operation to come on customer experience, greater flexibility cago and Los Angeles from March 2016, fol- stream so it can act as a remittance hub and rich data for marketing, Witkowski lowing pilots in these cities. The company offering international transfers from the argues. will continue to roll out and will have full US to Latin America and Europe,” Wit - “There are a lot of costs associated with mail- nationwide access in fourth quarter 2016. kowski says. “So far, there has been only ing rewards cheques or prepaid cards, and “Initially, we will be issuing Pin4 orders on a small volume of remittances between often the rewards aren’t redeemed, which behalf of Social Wealth and Viamericas, and HalCash Spain and Poland, but the size of wastes money for the issuer,” he notes. will be expanding across New York State, the US market means there will be a lot “Also, there is a delay before the customer Florida, Illinois and California before going of traffic from the US to other countries. gets the gift card or cheque. With our system, nationwide,” says Witkowski. We’re working closely with HCI to find there is instant gratification. If an order isn’t “We went to the PAI sales conference and new countries where we can transfer remit- redeemed, it is cancelled and the issuer isn’t we had a lot of PAI clients come up to say tances. Spain will be our first remittance charged for the value of the reward, which they couldn’t wait for us to offer Pin4 at their destination followed by Poland and Latin is a saving for the issuer. We can also notify ATMs,” says Witkowski. “They realise Pin4 America.” the company that the recipient has redeemed will provide a new revenue stream for retail- Witkowski says HalCash North America the reward so they can send them a ‘thank ers who operate ATMs in their stores, as it is forming partnerships with licensed MSBs you’ text message and information on further will bring new customers into their stores to which do business in international mar - rewards.” redeem their Pin4 orders.” kets such as Latin America and India. Its One of HalCash North America’s partners, HalCash is also seeing a lot of interest first partner is Bethesda, Maryland-based Social Wealth, works with three out of the from smaller US banks and credit unions. Viamericas which offers transfers to Latin top five US health insurers. “These insurers “A very big US FI is interested in using us for America, the Caribbean and Africa. reward their customers for healthy behaviour emergency cash when its customers lose their HalCash North America expects to have like joining a gym, by sending them prepaid wallet,” says Witkowski. signed up two Canadian ATM acquirers to rewards cards, and they’re interested in using enable their networks for Pin4 in Q1 2016. Pin4 instead of mailing prepaid cards,” says AML “In addition to the US and Canada, we will Witkowski. “One of the biggest US health HalCash only works with licensed MSBs, as be rolling out the platform in Mexico,” insurers mails 20 million prepaid cards a year they have an obligation to comply with AML says Witkowski. “But, due to the unique worth to its customers to incentivise them laws, says Witkowski. “We make sure they nature of the Mexican ATM and POS ter - into a healthier lifestyle. The problem is that have all the information they need to comply minal markets, we will be working with an 40% of these cards are never redeemed.” with AML laws,” he says. additional HalCash licensee in Mexico.” HalCash has a toolkit on its back-end Witkwoski says his company is inter - Launch system that tracks Pin4 transactions by cell- ested in offering Pin4 in Australia, the UK, HalCash North America is currently talking phone number on behalf of Pin4 order send- Africa and Asia. to ATM network operators and major ATM ers. It reports on how many orders go to a manufacturers about enabling their ATMs cellphone number and, where there is a lot of Consumer promotions for its service. Its first ATM network partner high-value activity linked to a specific num- In the US and Canada, HalCash intends is Louisville, Kentucky-based Payment Alli- ber, can restrict or block these transactions to focus heavily on the rewards market. ance International (PAI) which manages over until they have been verified. “We also bar Replacing rewards, prize and rebate 70,000 ATMs. numbers that are on a cellphone blacklist,” cheques and prepaid cards with card - HalCash says that consumers will be able says Witkowski. <

www.cardsinternational.com March 2016 y 11

CI 529.indd 11 29/02/2016 16:29:39 FEATURE: CONTACTLESS IN AFRICA Cards International

Africa blazes the contactless transport trail Although Europe has made significant steps in developing contactless payments for public transport, the rest of the world has lagged behind. Another small country is pioneering this technology. Commuters in Kigali will now have access to a card for public transport and Africa is interested. Alexander Atkins reports

n the last ten years, Africa has found public transport system will be cashless,” he in Kigali, it’s estimated that 800,000 of those ways of using technology to conquer adds. are using public transport. the financial challenges surround - Each bus has been fitted with an onboard One operator that has signed on is Kigali ing its unique environment, most bus validator that will read the contactless Bus Services (KBS). The company began I card when users swipe on it and so far two of notably with its growing mobile money operations in 2006 and had earlier intro- schemes which represent important devel- Kigali’s three bus operators have signed on duced a similar tap-and-pay network, based opments in its push for a cashless society. to the scheme. on the system used in Hong Kong with the However, it is in the small nation of Rwan- The initial cost to the commuter will be Octopus card. da, that a further development has been around $1 for the smart card and they can Brendan Maguire, on the board of direc- taken. be topped up using mobile money schemes, tors for KBS, states that the biggest challeng- The capital, Kigali, a vibrant city in the such as Tigo Cash, and through a network es the new scheme faced were public uptake centre of the country with a population of of mobile agents along the bus routes and at and access to top up facilities. just over 1.1 million, has recently experi - the bus stops. This is not his first encounter with tap- enced new technology on its public buses in However, Buchana has plans to make and-pay technology however, as he previ- the form of contactless pay-as-you-go cards. topping up even easier. “Soon we are going ously worked with the Hong Kong based The cards, similar to the ‘Oyster’ card to also have standalone vending machines TaptoPayLtd on similar projects in Kampala developed by Transport for London (TfL) where someone will be able to purchase and and Nairobi, although the systems face more for use on the city’s public transport system, top up a card at any time by themselves,” he different and complex challenges in those can be used in the same format on the buses explains. markets according to Buchana. around Kigali. Yet Maguire is confident that this is only The company behind them is the AC Becoming the new norm the beginning and that the next step will be Group, a Rwandan technology firm provid- However, for the people of Kigali, this new to put in place EMV based technology to ing smart transport solutions. system won’t be a choice. For now, the bus allow contactless debit and credit card pay- The CEO and vice-chairman of the group, companies are accepting both cash and ments. Patrick Buchana, talking to CI, believes that smart card but by May, anyone wanting to Until then, however, all those involved the new system will hugely benefit both the use Kigali’s public transport will have to pur- stress that the benefits of the current project bus services and the customers using them. chase a card. will be numerous. “Allowing passengers to “Together with the government of Rwan- “The cards have been greatly subsidised so load tickets or credit in advance of travel will da, we have launched a cashless public trans- people can afford them and at the moment, speed up boarding times and reduce queues port system where every commuter using those using the cards are entitled to a 10% massively,” says Maguire. public transport is obliged to use a card,” discount unlike those using cash,” he says, Buchana agrees that this will be a major says Buchana. “People will be required to adding that this provides a strong incentive advantage. Previously, the handling of cash buy the card and by May this year, the entire to become a card holder. Of the 1.1 million meant that customers would have to queue

12 y March 2016 www.cardsinternational.com

CI 529.indd 12 29/02/2016 16:29:45 Cards International FEATURE: CONTACTLESS IN AFRICA

up to buy tickets, delaying the buses. n AFRICA’S ROAD TO A CASHLESS SOCIETY “With the smart card, boarding the bus is faster and means buses can be properly Apr-07 Africa’s first major mobile money scheme, M-Pesa, set up in Kenya scheduled and the regulator can better moni- tor bus movements,” he says. Nov-12 Durban and Cape Town get Africa’s first transport smartcard system However, there is also a more unusual benefit. Previously, bus operators were los- Oct-14 Kenya Commerical Bank distribute contactless bank cards ing almost 40% of their revenue, according to Buchana, due to drivers stealing some of Dec-14 Five African countries sign up with ‘The Better Than Cash Alliance’ the fares, a problem entirely solved with the use of smartcards. Dec-15 Rwanda capital Kigali implements transport smartcard system Buchana also insists that as important is the data that they have been able to gather Feb-16 Sierra Leone creates mobile money regulations to oversee growing mobile money whilst piloting the project. schemes “The bus companies didn’t have any informed data and their decisions about how May-16 Kigali transport will become cashless many buses to deploy on which routes and at Source: Cards International what times were all based on estimations,” he explains. payment card issued by Standard Bank, but In transitioning towards a cashless soci- With the data collected through smart not restricted to Standard Bank customers. ety, Maguire believes Africa is in some ways card usage, the AC Group has been able to “The scheme enables those living in the ahead of the West: “This is true especially provide information on how many buses are city of Durban to pay for transit fares with concerning mobile payments where the needed, at which locations they are required no need for cash or a separate travel card,” mobile payment, rather than the computer, and at what specific times they must be there, says Paul Opie, field marketing manager for is the platform,” he says. figures which have proved crucial in the Africa at Gemalto. “Even with Apple’s new NFC systems, operator’s decision making. “It was designed with careful attention to they are mostly online and not offline peer- the safety of its users, as the cards are pro- to-peer, something that is less suitable for Looking abroad for inspiration tected against theft, and are authenticated Africa where the internet is so unreliable,” Whilst new to Rwanda, this system is in with a pin number of the customer’s choice,” he adds. use in various cities around the globe and he adds. This is contrasted to mobile money Buchana admits that they looked to cities like The project was planned over two years schemes such as M-PESA which relies not London and Hong Kong for inspiration. “As and implemented in 2012. Opie states that on internet for P2P payments but simply on we moved on in the pilot, we took what we in planning the concept, they did look to network coverage. could from those cities and we adjusted quite TfL’s system, searching for an interoperable However, Buchana reminds us that there a number of things,” he says. solution such as the one implemented across is in a long way to go to a cashless society in “We want to keep improving the expe - London’s various modes of transport. other respects. rience for our clients and so the vending As with the project in Kigali, Opie admits “Support from governments in crucial machines and other ideas are steps in doing that a major challenge lay in challenging in schemes such as this, and without it, it this,” he adds. people’s mentality about contactless pay- makes things very difficult,” he explains. “In However, Buchana and the AC Group are ment cards. Rwanda, we have had a lot of support from already looking beyond Kigali. The compa- “Whilst there are so many benefits of the government who are keen for a cashless ny is also hoping to apply this technology to using contactless cards, such as saving time system as they believe it will be very helpful long distance transport throughout Rwan- and not having to worry about taking cash for society.” da. Their horizons have further expanded out, people are so used to using cash for Opie has a similar opinion: “Cash is still beyond the small nation in East Africa, payments, especially for travelling,” he says. king in Africa and naturally there will be as Patrick states that they have received a However, the success of the scheme can be some resistance to change, with public trans- request from the government of Ivory Coast seen in it uptake in other cities. Although dif- port drivers particularly wary of systems that to begin a test pilot there. fering in name and sometimes issuing bank, can monitor the actual value of transactions “The conditions will not be so different similar projects have sprung up in Johannes- on a daily basis. to those posed by Kigali, but it is certainly a burg, with the Bus Rapid Transit System, and The next step for card issuers is to encour- bigger market which in itself is a challenge,” in Pretoria and Cape Town, with My Citi, age Africa’s citizens to embrace the transi- says Buchana. involving banks such as ABSA and Barclays tion from cash-based payments to digital But Rwanda is not the first in Africa to Africa as well. wallets.” try to implement smart card technology for “The project is currently in its early stages Whilst both markets still have many chal- transport. In South Africa, commuters were but is already seeing great interest so far,” lenges ahead, the spread of contactless travel introduced to the Muvo Card, a similar sys- says Opie. “We’re moving towards a cashless payments in such a diverse and tricky con- tem for public bus transport in Durban. society, and the Muvo card helps take South tinent for transport methods is promising. The project was developed in conjunction Africa one step closer towards it.” Yet with more development on the horizon, with South Africa’s National Department However, Opie admits there are still chal- as well as the spread of the scheme to other of Transport and Standard Bank, with help lenges ahead, namely interoperability, ‘which parts of Africa, it bodes well for a society that from international digital security company, has not been achieved between different cit- continues to come up with new substitutes Gemalto. ies yet, but we’re confident this will happen for cash in an environment with such unique The resulting card is an anonymous EMV eventually’. factors. <

www.cardsinternational.com March 2016 y 13

CI 529.indd 13 29/02/2016 16:29:47 COUNTRY SURVEY: SWEDEN Cards International

Sweden keeps innovating When looking at the financial sector in Sweden, innovation is always at the forefront of one’s mind. As the central bank of Sweden tries to tackle deflation through consumer spending, new technology has a big part to play through contactless technology, rising e-commerce levels, and a robust retail sector

he Swedish payment cards market is increased use of these cards between 2010 segments such as students, young popula- highly developed. Average month- and 2014. The Swedish government’s policy tion, high-income consumers and small and ly card transactions and average for a cashless society and prevailing negative medium-sized enterprises (SMEs). annual spend per card are higher in interest rates are anticipated to further drive T payment card transaction volumes and val- Sweden than in other European markets Central bank measures to tackle deflation such as the UK, the Netherlands and Ger - ues from now to 2019. are driving consumer spending many, although they lag behind Sweden’s In Sweden, payment card transactions The central bank of Sweden is using the repo Nordic peers, Denmark, Norway and overtook ATM cash withdrawals in 2002. rate to tackle deflationary pressure. The repo Finland. The increase in POS terminals has been par- rate was gradually reduced from 1.25% in Payment card use in Sweden has been alleled by a substantial increase in the use December 2010 to 0.00% in October 2014, driven by concerted efforts by the govern- of payment cards, with the volume of card a rate that was maintained until the end of ment and banks, and consumer willingness transactions at POS terminals increasing 2014. With the low repo rate, bank lending to adopt them. As a result, payment cards are substantially to reach 2.6 billion in 2014, grew, resulting in an increase in consumer gradually replacing cash, and are now used accounting for 91.3% of the overall payment spending and economic growth. even for small-value transactions at newspa- card transactions, indicating a rising prefer- To combat deflationary pressure, the cen- per vendors, homeless magazine sellers and ence for cashless payments among Swedish tral bank decreased the repo rate to -0.10% for church donations. Overall, the payment consumers. for the first time in February 2015, and to cards market grew at a CAGR of 6.87% The Swedish government has taken initia- -0.35% in November 2015, resulting in neg- between 2010 and 2014 in terms of transac- tives to bring the entire population into the ative returns on savings and deposits with tion volume, and 5.66% in terms of transac- banking system. According to the World commercial banks. The move led consumers tion value in the same timeframe. A similar Bank’s Global Findex survey 2014, the per- to spend rather than save money in banks. trend is anticipated over the next five years. centage of the Swedish population aged 15 or The rise in consumer spending is expected to Payment cards have gained popularity at above with a bank account reached 99.7% further drive payment card transaction vol- the expense of cash payments and cheques, in 2014. This resulted in high penetration of umes and values. particularly among small businesses. Con- bank accounts and products such as debit sumer preference for card payments, the cards. Banks in Sweden are therefore look- Contactless technology still at a nascent increased supply of different types of card ing to differentiate their product offerings, stage of development product, and growth in the number of retail- and card customisation is gaining attention. Despite consumers being prolific users of ers accepting payment cards resulted in the Marketing strategies include serving niche payment cards, the adoption of contactless

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

7 2300 150

6 140 2100 5

4 130

1900 3 120 2 1700 Note: Cheques were 110 1 discontiued from 2013 onwards 0 1500 10 0 2010 2011 2012 2013 2014 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013

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 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

14 y March 2016 www. cardsinternational.com

CI 529.indd 14 29/02/2016 16:29:48 Cards International COUNTRY SURVEY: SWEDEN

These measures are anticipated to reduce n SWEDEN’S DEBIT CARDS MARKET SHARE BY n SWEDEN’S DEBIT CARDS MARKET SHARE BY online fraud. ISSUERS (%), 2014 SCHEMES (%), 2014 According to a 2014 central bank study on the payment behaviour of Swedish con- sumers, credit cards were the most preferred payment method for online purchases. Pay- ment cards accounted for 39% of the overall Swedbank MasterCard e-commerce transaction value in 2014. 24.5% 24.1% Swedish consumers still prefer to use tra- ditional payment methods such as payment Others cards, credit transfers and direct debit to pay 41.3% for online purchases. These three instruments Nordea Visa accounted for 64% of the total e-commerce 17.6% 75.9% transaction value in 2014. However, emerg- Svenska ing payments such as digital wallets and m-payments – including mobile wallets and carrier billing – are also increasingly being 16.6% used for e-commerce transactions.

Increasing retail sales and POS terminal Source: Timetric Source: Timetric installations to drive card-based payments Sweden’s retail market is well developed n SWEDEN’S CREDIT CARDS MARKET SHARE BY n SWEDEN’S CREDIT CARDS MARKET SHARE BY and dominated by a small number of large ISSUERS (%), 2014 SCHEMES (%), 2014 retail chains. The retail market is driven by a strong economy, steady population growth American and rising disposable incomes. Retail sales Svenska Others Express in Sweden increased from $77.3bn in 2010 Handelsbanken 1.1% 1.4% 9.7% to $94.9bn in 2014. Another driver of retail sales growth is the rise in shopping tour- Swedbank ism. Increasing acceptance of cards at POS 7.9% terminals, rising consumer demand for high- quality products, and growing urbanisation Visa resulted in increased use of cards at retail Nordea Others 26.9% stores. 7.7% 74.7% MasterCard The number of POS terminals recorded 70.6% a CAGR of 1.84%, rising from 203,117 in 2010 to 218,509 in 2014. Expansion in the organised retail sector is expected to lead to growth in the number of POS terminals, reaching 238,872 in 2019. The growing retail sector encouraged Source: Timetric Source: Timetric POS terminal manufacturers to introduce low-cost terminals in the market. For instance, in September 2015, mobile POS cards is still very low in Nordic countries E-commerce market offers growth (mPOS) terminal manufacturer SumUp including Sweden in comparison to other prospects launched its proprietary card terminal, European countries such as the UK and The e-commerce market grew from $6.7bn PIN+ Card Terminal, for SMEs in Sweden, France. At the end of 2015, there were only (SEK48.4bn) in 2010 to $12.4bn in 2014, at enabling merchants to accept card pay - 100,000 contactless cards, equivalent to a CAGR of 16.48%. Rises in internet and ments from consumers using smartphones 0.4% of all payment cards. smartphone penetration, and investment in or tablets. According to Timetric analysis, the low online payment infrastructure supported Svenska Handelsbanken, in partnership adoption of contactless technology is because e-commerce’s growth. with Point, a VeriFone company, offers banks have not been pushing for it, although To make online payments more effi - mPOS terminals allowing micro merchants ICA Banken has issued contactless cards and cient and secure, the European Banking and other small businesses to accept cards has NFC-enabled terminals. ICA Banken Authority (EBA) published final regula - through the Apple iPad, iPod touch, iPhone plans to issue 560,000 contactless cards by tions on the security of online payments or other smartphones and tablets. the end of 2016. in December 2014. The guidelines are American Express and iZettle launched a With the rising number of small businesses applicable to all 28 EU members, includ - mini chip-card reader and app in May 2012, and street vendors accepting payment cards ing Sweden, for implementation from which turns a smartphone into a mobile for small-value transactions, the introduc- August 1, 2015. These include strong credit card payment terminal. This chip-card tion of contactless technology is anticipated authentication measures to verify cus - reader meets EMV standards, and complies to further drive payment card transaction tomer identity, customer awareness pro - with the Payment Card Industry Data Secu- volumes over the next five years. grammes, and consumer data protection. rity Standard (PCI-DSS).<

www.cardsinternational.com March 2016 y 15

CI 529.indd 15 29/02/2016 16:29:50 COUNTRY SURVEY: NORWAY Cards International

BankAxept and MasterCard keeping Norway strong

The strength of Norway’s cards industry is the result of a robust economy, an efficient domestic debit card scheme (BankAxept), and an increasing consumer appetite. The average number of monthly card transactions, and the average annual spend per card are higher in Norway than in more developed markets

lectronic payments (e-payments) adoption of Europay, MasterCard and Visa launch of a combo card product, which would have gained ground during the last (EMV) standards supported the growth of pay- feature both debit and credit card functional- 10 years, as the government has ment cards over the past five years. This trend is ity. This approach has already achieved success invested substantially in building anticipated to continue between 2015 and 2019. for MasterCard in both the Danish and Finnish E markets. long-term infrastructure for cashless payments. Affordable and widely avail - BankAxept maintains its stranglehold able financial products, a consumer Debit card use primarily grew in Norway, as E-commerce market driving Norwegian preference for e-payments, a competitive BankAxept’s acceptance network created a payment cards market marketplace and a transparent business convenient payment method with tight security. E-commerce posted a CAGR of 14.68%, environment will aid the move towards BankAxept cards were used 1.48 billion times increasing from $6bn (NOR36bn) in 2010 to cashless payments. in 2015; an increase of 3.6% over the whole $10.3bn in 2014. High internet and mobile The use of cash is declining among Norwe- of 2014. penetration, economic growth, a large young gian consumers. Cash transactions are largely BankAxept is the sole scheme provider of debit population, consumer confidence in online confined to rural areas and senior citizens. cards in Norway, and accounted for 100% of the transactions and the presence of secure online Banks such as DNB Bank and Nordea Bank debit card transaction value in 2014. Domestic gateways are driving e-commerce. Norge are making their branches cashless and debit transactions run through the BankAx- According to a 2012 survey on e-commerce are closing down ATMs to further reduce the ept network, while overseas spending on cards in Norway by DIBS Payment Services, online country’s dependence on cash. is done via Visa. BankAxept is also offering purchases from foreign sites were more popular Cheques have almost been phased out in contactless cards and m-payment solutions to than from domestic sites. The survey indicated Norway, primarily due to the associated pro- consumers to maintain its dominant position. that travel and services, clothing and sportswear cessing costs. Due to the availability of low-cost BankAxept, however, is likely to come under were the most popular online purchases among and secure e-payment instruments such as pay- greater competition from both of the main Norwegian consumers. Consumers prefer to ment cards, credit transfers and direct debit, the international schemes, Visa and MasterCard. shop on foreign sites to benefit from the exemp- use of cheques decreased significantly between Although Visa has its co-badging relationship tion of the 25% value-add tax (VAT) on goods 2010 and 2014. with BankAxept, the company has been work- and services valued less than $25.40 purchased A rise in the economically active population ing hard on building its own acceptance net- abroad. and per capita disposable income, the growing work in Norway. When making an online purchase, Norwe- popularity of online shopping, the increased MasterCard is also looking at introducing a gian customers prefer conventional payment acceptance of cards at retail outlets and the debit card into the market. It is considering the instruments such as payment cards and credit

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

100 2400 2.0

2300 90 1.5 2200

80 2100 1.0

2000

0.5 70 1900

1800 60 0.0 2010 2011 2013 2014 2010 2011 2012 2013 2014 2012 2010 2011 2012 2013 2014

Source: Central Bank of Norway and Timetric Source: Central Bank of Norway and Timetric Source: Central Bank of Norway and Timetric

16 y March 2016 www. cardsinternational.com

CI 529.indd 16 29/02/2016 16:29:51 Cards International COUNTRY SURVEY: NORWAY

MasterCard-branded contactless cards featur- n NORWAY’S DEBIT CARDS MARKET SHARE BY n NORWAY’S DEBIT CARDS MARKET SHARE BY ing an integrated fingerprint sensor in 2016. ISSUERS (%), 2014 SCHEMES (%), 2014 The project is still in the pilot stage, and is being developed in partnership with the Norway- based company Zwipe.

Rising POS terminal installations to drive card-based payments DNB Bank The number of POS terminals in the coun- 30.1% Others try recorded a CAGR of 3.81%, rising from 55.6% 123,491 in 2010 to 143,398 in 2014. The expansion of the retail sector is expected to lead BankAxept to growth in the number of POS terminals over 100% Nordea the next five years, to reach 155,553 in 2019. Bank The installation of POS terminals at retail out- 7.7% lets is expected to increase the potential of card- Danske based payments. Bank iZettle offers two types of mPOS terminals: 6.6% Lite and Pro. Lite was introduced in February 2015. The terminal can be connected to a tablet Source: Timetric Source: Timetric or mobile phone, while Pro can be connected wirelessly via Bluetooth. Pro also has a separate n NORWAY’S CREDIT CARDS MARKET SHARE BY n NORWAY’S CREDIT CARDS MARKET SHARE BY built-in screen. Lite is offered free of charge, ISSUERS (%), 2014 SCHEMES (%), 2014 while Pro is available for $118.90 (NOK749), excluding taxes. Others To compete with iZettle, Nets launched its 1.5% mPOS terminal, Nets Miniterminal iCMP, in 2015, which works via an app on a smartphone and tablet. The mPOS terminal is available for Others Visa $206.30. The Nets Miniterminal iCMP mPOS 27.2% 16.4% terminal accepts BankAxept, Visa and Master- DNB Bank Card-branded cards, while iZettle mPOS ter- 45.3% minals accept Visa, MasterCard, VPay, Maes- tro, JCB and Diners Club, but do not accept EnterCard MasterCard BankAxept. 12.1% 82.1% SEB Retail and tourism sectors supported payment Bank cards market 15.4% Retail sales in Norway increased in the past five years, going from $60.6bn in 2010 to $67.9bn in 2014. Growing optimism regarding the Source: Timetric Source: Timetric economic growth, coupled with a steady rise in household income and supported by lower interest rates, led to a growth in retail sales transfers for online purchases. However, alter- and MeaWallet are some of the options avail- between 2010 and 2014. With banks offering native payments such as digital wallets, mobile able to Norwegian consumers. instalment facilities and flexible repayment wallets and carrier billing are gaining more To benefit from the growing m-payments options, the retail sector is anticipated to gradu- prominence. market, Danske Bank launched a new m-pay- ally grow in the near future. However, retailers ment service – MobilePay – in September 2015, in Norway are facing stiff competition from Digital and m-payments are gradually gaining partnering with 100 retail outlets. e-retailers, as they are able to offer products and prominence services at lower prices. For online purchases, Norwegians mostly use Contactless payments to increase scope of The country recorded an increase in the num- conventional payment instruments such as pay- card payments ber of outbound trips and expenditure in recent ment cards and credit transfers. Payment cards The ease of making quick payments using history. Outbound trips increased from 7.6 accounted for 65.3% of the total e-commerce contactless cards has grown in popularity million in 2010 to 9.2 million in 2014, and are transaction value in 2014, followed by credit among both consumers and retailers in Nor- anticipated to reach 10 million in 2019. In line transfers with 11.5%. way. To benefit from this trend, DNB Bank, with increase in outbound trips, expenditure Alternative payments, such as digital wal- Danske Bank and Svenska Handelsbanken are increased from $13.5bn to $18.3bn between lets, mobile wallets and carrier billing, are now offering contactless cards. 2010 and 2014. Over the next five years, the gaining prominence among online shoppers. To increase their uptake, banks are trying to growth of the tourism industry will be driven by Collectively, they accounted for 7.7% of the differentiate their product offerings by introduc- the relatively stable state of the economy, and total e-commerce transaction value in 2014; an ing new features. In May 2015, Danske Bank promotional activities by the Norwegian tour- increase from was 5.2% in 2012. Seqr, mCash announced that the bank is planning to rollout ism authority.<

www.cardsinternational.com March 2016 y 17

CI 529.indd 17 29/02/2016 16:29:52 COUNTRY SURVEY: FRANCE Cards International

Say bonjour to innovative payments France is one of Europe’s largest payment cards markets, accounting for 11.5% of Europe’s total transaction value in 2014, and 14% of its transaction volume. France’s payment cards market is mature, with a high penetration of payment cards, at 1.3 cards per inhabitant as of 2014

he average annual spend per card the first ‘digital only’ bank in France in June September 2015, registering a staggering rise is very high in France compared to 2013, allowing its customers to conduct bank- of 218% over September 2014. o t h e r E u r o p e a n m a r k e t s s u c h a s t h e ing via mobile phones or tablets. Likewise, Between August and September 2015, the UK, Germany, Italy and Spain. the German-based financial service provider number of contactless payments increased T Number26 launched the ‘mobile only’ bank A typical feature of France’s payment cards by 20.8%. As of September 2015, there market is the availability of multifunctional in France, Greece, Ireland, Italy, Slovakia, and were 332,169 retailers with POS terminals cards. A single payment card is integrated with Spain in December 2015. equipped with contactless technology; an debit and credit functions. Multi-functionality Orange France acquired a 65% stake in increase of 44% over September 2014. cards are attracting French consumers by pro- the French bank Groupama Banque in Janu- The ease of making quick payments using viding access to several accounts via one card. ary 2016, with plans to launch a ‘mobile only’ contactless cards has grown in popularity The most popular combination of functionali- bank in early 2017. The services offered will among both consumers and retailers in France. ties is debit and credit facilities. Crédit Agricole cover all standard banking products such as An increase in the number of retail outlets is offering MasterCard Dual Action, a credit savings, loans, insurance services and payment accepting contactless payments enabled con- card which can be used as a debit card by select- cards. sumers to opt for contactless card payments. ing the 'Cash' option at payment terminals. In France, social media has been used by The number of contactless cards increased The volume and value of payment card banks to help enable consumers to transfer between 2010 and 2014, going from 3.4 mil- transactions grew largely due to the familiarity funds quickly and securely via a social plat- lion in 2010 to 50 million in 2015, which rep- of their use, the availability of infrastructure, form. From October 2014, all Twitter users resented 60.1% of all French payment cards in and the emergence of contactless technology. in France, no matter who they bank with, can circulation. However, to capture a larger share of the tweet money to one another through BCPE. The number of contactless cards and trans- market and increase their customer base, action volumes are expected to follow the same mobile operators and technology providers Contactless payments to increase scope of trend over the next five years. are introducing quicker and more efficient dig- card payments ital payment platforms such as Orange Cash, The French payment cards market recorded a E-commerce driving card-based payments Hype and SlimPay. large-scale uptake of contactless technology E-commerce in France posted a CAGR of The focus of banks in France has now shifted during the between 2010 and 2014, accord- 16.40%, growing from $41.1bn (€31.0bn) on providing banking and financial services ing to the French Association of Contactless in 2010 to $75.4bn in 2014. High online and through low-cost channels such as online Mobile (AFSCM), the number of contactless mobile penetration, increasing consumer con- and mobile banking. BNP Paribas launched transactions increased to 21.9 million as of fidence in online transactions, and the presence

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

610 35000 2500

34000 2300 33000 570

32000 2100

31000 1900 530

30000 1700 29000 490 1500 28000

27000 1300 450 2010 2011 2012 2013 2014 2010 2011 2013 2014 2012 2010 2011 2012 2013 2014

Source: European Central Bank and Timetric Source: European Central Bank and Timetric Source: European Central Bank and Timetric

18 y March 2016 www. cardsinternational.com

CI 529.indd 18 29/02/2016 16:29:54 Cards International COUNTRY SURVEY: FRANCE

$1,110.80 cannot be accepted by merchants. n FRANCE’S DEBIT CARDS MARKET SHARE BY n FRANCE’S DEBIT CARDS MARKET SHARE BY Similarly, card issuers are not allowed to issue ISSUERS (%), 2014 SCHEMES (%), 2014 prepaid cards without consumers submitting a valid proof of identity. While this is expected MasterCard to encourage electronic payments in general, Visa 2.3% 3.6% growth in prepaid cards market is likely to be challenged.

Credit Agricole Growing POS terminal installations 21.2% The number of POS terminals recorded a CAGR of 2.98%, rising from 1.4 million in Others 2010 to 1.6 million in 2014. This was support- BPCE Group 47.2% ed by an increase in the number of POS termi- 16.3% Cartes Bancaires nal installations at smaller retail outlets, ena- Crédit 94.2% bling the growth of card-based payments. POS Mutuel-CIC terminals are expected to reach 1.9 million in 15.2% 2019, owing to an increase in the number of retailers installing POS terminals supportive of contactless payments. A range of mPOS solutions are available in Source: Timetric Source: Timetric France. In May 2015, iZettle launched a card reader exclusively for small merchants, allow- n FRANCE’S CREDIT CARDS MARKET SHARE BY n FRANCE’S CREDIT CARDS MARKET SHARE BY ing them to accept m-payments by connecting ISSUERS (%), 2014 SCHEMES (%), 2014 the device to a smartphone. The card reader is offered free of charge, Visa but merchants pay a fee which ranges from 5.4% 1.5–2.7%, depending on the volume of trans- MasterCard actions put through the reader. Similarly, 5% medium and large businesses can opt for a pro BPCE Group reader for a one-time fee of $87.70. Others 25.4% Payleven and SumUp are other mPOS solu- tion providers in France. Payleven’s mobile 42.1% Others 89.6% card reader can be connected via Bluetooth, and is compatible with the iOS and Android BNP operating systems. The reader costs $76.60, Paribas and the company charges a fixed fee of 2.7% Credit 19.7% on transactions. SumUp offers PIN+card read- Agricole er for a one-time fee of $87.70, with a flat-rate 12.8% transaction fee of 1.75%.

Growing popularity for private label cards Source: Timetric Source: Timetric A characteristic of France is the popularity of private label cards. Unlike bank-issued credit cards, these cards have less stringent qualifica- of secure online gateways drove this growth. Payment cards remain the most popular tion requirements for applicants. One of the contributing factors to the payment method among online shoppers. In addition, a number of benefits are growth of e-commerce was an increased focus Issuers such as BNP Paribas, Crédit Mutuel attached to these cards, such as discounts, on customer retention tactics used by retailers, and Banque Accord offer benefits such as rewards, instalment facility, flexible pay- which included customised e-mails to consum- cashback, reward points, discounts, purchase ment options, and other promotional offers ers based on their buying patterns, display ads protection insurance, extended warranty, zero to make these cards more appealing to con- about products and services on their social card fraud liability and flexible repayment sumers. These factors partially contributed networking pages, and on-site personalisation options on their cards when purchases are to the low penetration of bank-issued credit features offering them an enhanced shopping made online. cards, consequently affecting their transac- experience. tion values and volumes. These initiatives have led to a healthy rela- Prepaid cards market is likely to be In France, private label card issuers collabo- tionship with customers, and resulted in repeat challenged due to the French government rate with merchants from different categories purchases. regulation such as supermarkets, department stores, car With slightly more than half of all internet In wake of terrorism activities in the coun- repairs, car manufacturers, electronic and users in France involved in online shopping, try, the French government in March 2015 digital content, entertainment, home furniture with lower levels of indebtedness compared introduced a regulation laying restrictions and home improvement to issue co-branded with other European countries, and a relatively on the usage of cash and prepaid cards to curb private label cards. Some of the prominent pri- young population, banks and card issuers have any form of terrorism financing. Under the vate label issuers in France are: Cetelem, Fran- a platform for growth. new regulation, any cash transaction above finance, Sofinco and Cofinoga.<

www.cardsinternational.com March 2016 y 19

CI 529.indd 19 29/02/2016 16:29:55 COMMENT: GEMALTO Cards International

How spending “green” can become more green Without even mentioning the actual paper it takes to print currency, there are a significant number of ways that the amalgamation of banks, other financial institutions, payment providers and processors can make the long-term effect of payments and banking much more eco-friendly. William Tran of Gemalto writes

efore getting into the ‘how’, we the expectation that the total value of mobile transactions and peer-to-peer money trans- should consider the ‘why’. Those payments transactions in the U.S. alone is fer services are increasingly replacing paper reasons may be painfully obvious going to rise 210% in 2016. Banks have checks and tangible receipts. Online and auto for some. In the case of plastics been doing a commendable job of encourag- bill pay keeps consumers from receiving and B sending back as much paper material. Even required to make credit cards, roughly ing customers to sign up for those all-digital eight million tons of plastic pollution services, however physical credit and debit many credit card applications, which have gets washed into the world’s oceans every cards will clearly be sticking around for quite historically needed to be handwritten and year. a while. physically submitted, can now be completed In the case of paper, like that used to mail While mobile payments continue to gain online. bank statements, issue new cards or send traction, millions upon millions of credit promotional offers, discarded paper accounts cards expire, are lost or are periodically Options available for about 35% of municipal solid waste (by replaced every year across the globe. All of Although there are junctures where paper is weight). That’s certainly not to say that the those cards either need to be properly dis- still seemingly unavoidable, as with fulfilling financial industry is the sole contributor posed of or end up contributing to the record credit cards, there are arrangements that can to those extensive pollution tallies, but the hauls of plastic waste. be made to minimise an institution’s eco foot- issues have some serious credence. As the old Given that reality, our company has print. When things do absolutely need to be adage goes, if you aren’t part of the solution, developed cards made from corn PLA mate- mailed, they can be distributed using 100% you’re part of the problem. rial that are carbon neutral, biodegradable, recycled paper. Taking things one step fur- The good news is that technological inno- recyclable and able to be safely incinerated. ther, vegetable-based inks that are not toxic vation and the dawn of digital financial ser- Even the metal EMV chips embedded for to the environment when trashed or inciner- vices promise to mitigate those issues, even enhanced security can be removed and recy- ated can be utilised. if we have quite a way to go on awareness cled at a separate facility. All of this work and overhauling of exist- and adoption of some of the possibilities. At We’ve recently been helping two model ing card portfolios and supply chains doesn’t a high level, so-called ‘green banking’ is part financial institutions, Banco Popular Domin- have to be done out of purely altruistic of a broader movement called sustainable icano and Coop Bank Denmark, transition motivations or intentions, though. Financial banking. That concept is twofold: One angle cardholder portfolios over to these sustain- institutions stand to gain by making these looks at a bank’s social and environmental able cards. Coop Bank Denmark opted for changes. When those businesses offer more programs and donations, while the other these types of cards with full contactless environmentally-friendly options, they gar- is focused on the internal initiatives of the capabilities built in. ner trust, favorability and parallel commit- bank, like its selected materials, waste prac- These two banks and others running simi- ment from their customers. tices, technology and processes. lar initiatives will realise the long-term ben- That earned goodwill applies to all cor- efits before they know it. They will be more ners of the sustainable banking realm where The demand for eco-friendly solutions renowned global citizens and will have no banks can impact the environment in a Organisations such as the Global Alliance for more burden than any other bank in replac- positive way – and that impact can add up Banking on Values (GABV) and the World ing cards; they will just happen to be doing in an exponential hurry. In fact, as early as Bank’s Sustainable Banking Network (SBN) so with biodegradable ones. 2012, a GABV report suggested that sustain- offer a number of relevant best practices for The flexibility and quality of this new able banks were ‘outperforming traditional sustainable banking. As alluded to, there are breed of cards means neither banks nor con- mainstream banks in many areas, including varying degrees of participation from finan- sumers will have to give up security measures financial indicators such as return on assets, cial institutions, but many that are actively like EMV chips, durability, card customisa- growth in loans and deposits, and capital practicing sustainable banking see advantag- tion or special marketing features. strength’. es in the long term on both the environmen- Beyond cards themselves, actions currently In summation, allowing consumers to tal and business fronts. being taken by banks and financial institu- access their funds and accounts in conveni- A discussion around how to make credit tions most commonly combat the paper ent, secure ways doesn’t have to take a toll cards greener inherently requires potential problem. Online banking and e-statements on Mother Earth. But financial institutions alternatives. Mobile payments and other card cut down on the paper needed for custom- must lead the way in ensuring we’re being not present transactions are on the rise, with ers to keep tabs on their accounts. Online green while spending green.<

20 y March 2016 www. cardsinternational.com

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