www.cardsinternational.com Issue 553 / March 2018

CHECKMATE

IS CORPORATE AMERICA MAKING ITS MOVE AWAY FROM PAPER PAYMENTS?

COUNTRY SNAPSHOTS INSIGHT FEATURE

Essential data on the Technological evolution Biometric authentication European powerhouses of means the ATM remains a and how it can be made to France, Germany and Italy vital self-service channel work for payment cards

CI March 2018 553.indd 1 26/01/2018 10:50:58 contents this month

COVER STORY NEWS 13 05 / EDITOR’S LETTER 06 / DIGEST • Monzo to shut down prepaid card programme in April • New EC directives enable merchants to choose card processors • Mastercard study finds loyalty card opportunities in Asia • Visa partners with DragonPass • Next Group, Arbitrade Exchange to form prepaid cryptocard joint venture • Silver Lake, P2 Capital to buy Blackhawk Network for $3.5bn • Curve launches to UK consumers • Belinvestbank accepts JCB Cards • PenFed, Amex launch travel card US CORPORATE • Australia’s ME Bank turns to FIS • Canadians ready to give up passwords: Visa PAYMENTS • Sumitomo Mitsui Card and Dynamics to launch locking credit card in Japan • Visa goes contactless in Morocco • TransferWise rolls out ‘borderless’ Editor: Douglas Blakey Group Editorial Director: Director of Events: Ray Giddings +44 (0)20 7406 6523 Ana Gyorkos +44 (0)20 3096 2585 accounts [email protected] +44 (0)20 7406 6707 [email protected] [email protected] Senior Reporter: Head of Subscriptions: Patrick Brusnahan Sub-editor: Nick Midgley Alex Aubrey +44 (0)20 7406 6526 +44 (0)161 359 5829 +44 (0)20 3096 2603 [email protected] [email protected] [email protected]

Junior Reporter: Briony Richter Publishing Assistant: Sales Executive: Jamie Baker +44 (0)20 7406 6701 Joe Pickard +44 203 096 2622 [email protected] +44 (0)20 7406 6592 [email protected] [email protected]

Customer Services: +44 (0)20 3096 2603 or +44 (0)20 3096 2636, [email protected] Financial News Publishing, 2012. Registered in the UK No 6931627. ISSN 0956-5558 08 Unauthorised photocopying is illegal. The contents of this publication, either in whole or part, may not be reproduced, stored in a data retrieval system or transmitted by any form or means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. For more information on Verdict, visit our website at www.verdict.co.uk. As a subscriber you are automatically entitled to online access to Cards International. For more information, please telephone +44 (0)20 7406 6536 or email [email protected]. London Office: 71-73 Carter Lane, London, EC4V 5EQ Asia Office: 1 Finlayson Green, #09-01, Singapore 049246 Tel: +65 6383 4688, Fax: +65 6383 5433 Email: [email protected] follow CI on twitter @Payments_News

2 | March 2018 | Cards International

CI March 2018 553.indd 2 26/01/2018 10:51:36 contents march 2018

s to talk about cracking China, disrupting SWIFT,COUNTRY and leveraging SNAPSHOTS WeCha 16 / FRANCE The French payments market is mature and highly competitive, registering the highest turnover per card for 2017 among peers including the UK, the US, Germany, Italy, Spain and Canada 18 / GERMANY Germany has a strong economy and high levels of financial inclusion, despite a strong inclination towards cash for the majority of transactions due to consumers’ habits and a preference to spend within their means 20 / ITALY Despite being the fourth-largest economy in Europe in terms of nominal GDP, Italians have remained slow adopters of electronic payments, primarily due to a strong consumer inclination towards cash 18 16 FEATURES PRODUCTS 10 / BIOMETRICS 11 / WALLET CARD Fingerprint scanners are now commonplace, Having already scooped the Best of Innovation and since Touch ID was installed on the award at the Consumer Electronics Show in iPhone 5S, biometric technology has become January, Emirates NBD will launch the world’s part of consumers’ lives. Now, it is making the first battery-powered, interactive payment card move to cards. Patrick Brusnahan writes later this year. Douglas Blakey reports 12 / ENGAGE Exclusively available through local credit unions, an Engage account provides an alternative way to bank. Deborah Levy, MD of Contis Group’s Engage unit, tells Briony Richter about the products and services offered INDUSTRY INSIGHT 13 / MIGRATION FROM CHEQUES 22 / DIEBOLD NIXDORF US card issuers and networks see great The global ATM market is growing at a opportunities to migrate businesses away from significant pace, with the evolution of ATM cheques. A key development is the emergence technology, underpinned by wide acceptance of automated B2B procurement systems. that ATMs continue to be vital as a secure self- Robin Arnfield reports 10 service channel, writes Matt Phillips

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CI March 2018 553.indd 3 26/01/2018 10:51:48 HEAR ∤ NETWORK ∤ DISCOVER ∤ CELEBRATE SHAPE THE FUTURE OF PRIVATE BANKING Private Banking and Wealth Management Germany 2018 24th April 2018 ∤ Villa Kennedy, Frankfurt Our launch Private Banking & Wealth Management: Germany 2018Conference & Awards brings together private banks, family offices, independent wealth managers and intermediaries in an active discussion of the key issues facing the industry. The informative and inspiring keynote sessions and informal conversations provide setting for you to join other high-profile guests in engaging discussions.

Key Issues

∤ How is the regulation change set to challenge industry practices? ∤ What is the future of Europe without Britain? ∤ How can the private banking industry in Germany rival its neighbours? ∤ Is Germany the traditional wealth hub we all know or will it become the new FinTech centre? ∤ How can robo-advisors present opportunity to traditional wealth managers? ∤ How are FinTech start-ups rivalling the market? ∤ How can firms remain cyber safe and raise their security profile? ∤ Can collaboration between incumbents and FinTechs be the next big thing? ∤ Discovering Germany’s best kept investment secrets ∤ How can banks leverage technology to strengthen the human relationship? ∤ An insight into the next generation and how they are shaping the industry

Brand Sponsor Exhibitors Supported by

For more details please contact:

Page 3 Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580

CI March 2018 553.indd 4 26/01/2018 10:51:51 editor’s letter

HEAR ∤ NETWORK ∤ DISCOVER ∤ CELEBRATE SHAPE THE FUTURE media headlines overplay OF PRIVATE BANKING Private Banking and Wealth Management Germany 2018 US credit card losses 24th April 2018 ∤ Villa Kennedy, Frankfurt Our launch Private Banking & Wealth Management: Germany 2018Conference & Awards brings together private banks, family offices, Douglas Blakey, Editor independent wealth managers and intermediaries in an active discussion of the key issues facing the industry. The informative and inspiring keynote sessions and informal conversations provide setting for you to join other high-profile guests in engaging discussions. nother blinding quarter from JPMorgan Chase, anything to scare investors, and it remains confident the rate Bank of America continues to go from strength to will be in the 3.0-3.25% range in the medium term – again A strength, and a strong quarter at Citi would be a nothing to alarm investors or justify alarmist headlines in the quick summary of the main US banks’ full-year results. business sections of the consumer press. The fourth-quarter earnings headlines come with a crucial At Bank of America, its consumer credit card net charge-off

Key Issues health warning in the form of US tax reform. In brief: short- ratio increased slightly to 2.78% – again not cause for alarm. term bad, as banks had to write down expected deferred tax Spending levels on Bank of America’s debit and credit cards ∤ How is the regulation change set to credits. Once these time hits are out of were up 7% year over year, and it issued challenge industry practices? the way, however, the new tax regime is a 1.1 million new credit cards in the fourth ∤ What is the future of Europe without Britain? huge positive for future earnings. quarter, in line with the previous year. ∤ How can the private banking industry in Not all of the consumer press seemed In total, the US’s four biggest retail to quite understand that the changes banks wrote off just over $3bn in credit Germany rival its neighbours? mean the banks are big winners as a card debts in the fourth quarter, up just Is Germany the traditional wealth hub we ∤ result, and will become more profitable, over 15% on the year ago period. all know or will it become the new FinTech preferring to dwell on the short-term With the major banks’ credit card arms centre? negative of tax write-downs. earning a return on assets of around 4%, three times the rate ∤ How can robo-advisors present opportunity Nor do parts of the consumer press quite understand of return for retail banking, the overly negative headlines about to traditional wealth managers? the current dynamics of the credit card sector. “US banks credit card performance are wide of the mark. ∤ How are FinTech start-ups rivalling the suffer 20% jump in credit card losses,” screamed a number of market? headlines. Others pointed to sector-wide credit card balances TRANSFER WINDOW FIRST ∤ How can firms remain cyber safe and raise increasing to close to the all-time record of $870bn at the end It is just possible that Virgin Money, financial services partner their security profile? of 2008. of Manchester United Football Club, can claim a marketing first ∤ Can collaboration between incumbents and The US credit card sector remains in rude health and hugely by tying in a card promotion with the football transfer window. FinTechs be the next big thing? profitable. Headline increases in losses may look troubling at Virgin Money’s new Manchester United card (see image) was ∤ Discovering Germany’s best kept investment first glance, but they come from a relatively low base. Take designed by artist Stanley Chow and launched at a Manchester secrets Chase, for example: card sales and merchant processing United event within Virgin’s Manchester lounge. volumes were each up 13%, driven by continued strength ∤ How can banks leverage technology to To celebrate the fact the January Transfer Window is open, from new card products. In particular, Chase has scored a Virgin Money kicked off its own transfer offer just for fans. strengthen the human relationship? phenomenal hit with its Sapphire Reserve credit card range. New people signing up for the card before the transfer window An insight into the next generation and how ∤ Chase’s card net charge-off rate inched up in the fourth quarter closes – as every football fan knows, on 31 January – can they are shaping the industry by 10 basis points to 2.97%, in line with market expectations win special matchday experiences at the club’s Old Trafford and guidance from Chase earlier in the year. stadium, as well as one of 25 limited edition United Trinity At Citigroup, its branded cards unit posted revenue for prints signed by Stanley Chow. Brand Sponsor Exhibitors Supported by 2017 of $2.2bn, up slightly on the year with average loans As most football fans will recognise, the United Trinity refers growing by 6% and purchase sales up 10% year over year. Citi’s to Manchester United’s attacking trio of the 1960s: Bobby NCL rate in branded cards was 2.89% for the full fiscal – not Charlton, George Best and Denis Law. <

Get in touch with the editor at: [email protected] For more details please contact:

Page 3 Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580 www.cardsinternational.com | 5

CI March 2018 553.indd 5 26/01/2018 10:51:55 News | Digest

news digest

Monzo to shut down prepaid Mastercard study card programme in April finds loyalty card UK-based digital challenger bank Monzo application. They can sign up at any time opportunities in Asia has announced that it will shut down its until April 2018, and will receive a new debit prepaid Mastercard programme in early card by post within two days, the company April this year. noted. Customers can continue using Monzo The mobile-only banking platform first prepaid cards until they receive their new announced plans to withdraw its prepaid debit cards. card in October 2017. Customers who opt not to open a current Monzo’s existing prepaid card customers account will be given 60 days’ notice to close who wish to continue their association with their accounts. the bank have been advised to apply for a It is believed that the move will affect current account. around 450,000 prepaid card users, although Interested customers can sign up using over 200,000 have already upgraded, accord- A study conducted by Mastercard has the Monzo app, without having to file a fresh ing to Monzo. < revealed significant growth opportunities for loyalty cards in the Asia-Pacific region. The inaugural Achieving Advocacy and new EC directives enable merchants Influence in a Changing Loyalty Landscape study found that the loyalty markets to choose card processors in Australia, China, Hong Kong, India, Indonesia, Japan and South Korea are at The European Commission (EC) has issued other independent businesses that provide new rules that allow merchants to select processing services. different levels of maturity, depending on suitable processors for card transactions. The new rules, effective from 7 consumer expectations and needs. Aimed at promoting competition in February 2018, introduce detailed The firm used the Net Promoter Score card payment processing, and providing requirements pertaining to the separation (NPS) system to measure the value brought benefits to cardholders, the new of certain functions to ensure the by loyalty programmes to consumers. directives also seek to boost independence of processing NPS showed an overall possibility for the the independence status of activities within card promotion and influence on spending payment card schemes and schemes. habits of consumers in the region. processing entities. Payment card schemes The survey of 7,030 people revealed European Commissioner will now have to limit varied opinions between countries, Margrethe Vestager, in information exchange, with emerging markets such as China charge of competition maintain separate profit and and India showing more enthusiasm for policy, said: “Many consumers loss accounts, and separate the programmes than those with highly use payment cards every day in their corporate structures, competitive loyalty markets such as shops or online. The Interchange Fee including workspaces, management Australia and Japan. Regulation has capped fees charged by the and staff, and decision-making functions. The study also found that improved banks for these card payments, which are The partition of functions will allow digitisation, personalisation and ultimately paid by consumers. merchants to select the most suitable communication could potentially “The new rules will bring more processor for card transactions. aid in establishing successful loyalty competition to the processing of card The latest rules follow the 2015 programmes. payments, which should further reduce Interchange Fee Regulation, whereby Mastercard Asia-Pacific’s executive VP costs to the benefit of consumers and card schemes were ordered to ensure the of services, Felix Marx said: “The loyalty retailers.” independence of their own processing landscape in Asia-Pacific is a competitive When a consumer pays using a card, the activities from the rest of their operations. space, with many players battling to stay transaction is processed by a processing The EC said the rules aimed to prevent top of a consumer’s loyalty wallet. company which provides the necessary card schemes from favouring their “Loyalty programme providers now need communication and IT systems for the own processing entities over those of to move away from traditional earn-and- payment to be finalised. To process the competitors. They also prevent them from burn levers and invest in smarter initiatives payment, card schemes often offer their combining processing services with other that will influence consumer behaviour and own services and therefore compete with services offered. < ensure loyalty for the longer term.” <

6 | March 2018 | Cards International

CI March 2018 553.indd 6 26/01/2018 10:52:02 News | digest

Visa partners with DragonPass Silver Lake, P2 Capital Mike Lemberger, senior VP, products to buy Blackhawk and solutions at Visa in Europe, stated: “We are constantly looking for new ways Network for $3.5bn to add value for Visa cardholders, whilst simultaneously supporting the commercial interests of our clients. “Our new partnership with DragonPass is an excellent example of delivering a valued Visa has announced a partnership with service globally to differentiate our offering digital airport platform DragonPass, to offer and utilising mutual assets in doing so. enhanced experiences for cardholders at “We know Visa cardholders regularly airports. travel through airports, and this new The new Airport Companion Programme partnership will provide consumers in is now accessible to financial institutions Europe with a one-stop shop of exclusive across Europe. Whenever an institution benefits to enhance their travel experience signs up for the programme, cardholders worldwide,” Lemberger added. will be able to access exclusive services and Andrew Harrison Chinn, global MD discounts offered by DragonPass. for DragonPass, commented: “We are Financial institutions can also add delighted to team up with Visa to provide other features, such as transport, spa an innovative set of travel solutions visits, fast-track security, and digital designed to give more value back to Visa coupons for free meals or beverages. customers through enriched Visa payment The programme enables cardholders to propositions. manage memberships through banking “Our approach and services are always Private equity firm Silver Lake and New apps, allowing them to make payments and designed at simplistically linking an York-based hedge fund P2 Capital Partners receive recommendations. often complex and multifaceted airport have agreed to acquire Blackhawk DragonPass offers travellers access ecosystem to provide the customer with a Network, a company that operates in the to over 1,000 airport lounges, as well as more enjoyable travel experience.” prepaid, gift card and payments industries, restaurant discounts, airport limousines, The DragonPass offering uses the Visa in an all-cash deal worth nearly $3.5bn and meet-and-greet concierge services. Developer Platform, harnessing Visa APIs including debt. According to Visa, over 2 billion people to provide efficient and seamless account The transaction involves a payment of passed through Europe’s airports in 2016. verification, making it easier for banks $45.25 per share, with around $1.7bn The global duty-free industry is expected to bring the service into their own apps equity commitment from Silver Lake. On to grow to approximately $67bn by 2020, and offer more tailored services to their completion of the deal, Blackhawk will be from an estimated $45.7bn in 2016. customer base. < led as a private entity by its existing team. Blackhawk provides physical and digital gift card, prepaid payments, reward and Next Group, Arbitrade Exchange to form incentive technologies and solutions for more than 1,000 brands at more than prepaid cryptocard joint venture 244,000 retail distribution outlets and US-based technology services provider Next Group chief strategy officer Adiv online channels. Next Group has signed a letter of intent Baruch said: “This introduction of a prepaid Blackhawk Network CEO and president with Canadian cryptocurrency banking card that carries all the benefits of our Talbott Roche said: “This transaction business Arbitrade Exchange to form a Mio card – plus a secure gateway to the delivers immediate benefits and significant new joint venture for the launch of a co- cryptocurrency market – will change value to our stockholders. branded Mio-Arbitrade prepaid gift card the way millions of people manage their “Silver Lake and P2 Capital Partners with cryptocurrency capability. finances, from everyday purchases to bring the long-term focus, financial To be released at 30,000 SDI Next transferring assets to investment in their resources and technology expertise convenience stores in the US, the new futures.” that can enable us to accelerate growth cryptocard is designed to enable purchase Arbitrade Exchange executive Len initiatives globally and reach the company’s and transfer of cryptocurrency as well as Schutzman said: “Our new co-branded full potential.” purchase of gift cards, goods and services. Mio-Arbitrade prepaid gift card will allow Subject to customary closing conditions Arbitrade will be the clearing house unbanked and underbanked people – more and regulatory approvals, the acquisition is and exchange platform for cryptocurrency than 100 million in the US alone – to set to close in mid-2018. Blackhawk will be transactions associated with card, which purchase, move assets freely and securely, able to solicit, receive, evaluate and enter will be available in denominations ranging and to participate in the world’s fastest- into negotiations for other proposals until from $25 to $1,000. growing currency market.” < 9 February 2018. <

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CI March 2018 553.indd 7 26/01/2018 10:52:10 News | Digest

Curve launches to UK consumers Belinvestbank accepts JCB Cards Belarus-based Belinvestbank has started accepting cards issued by JCB International at its ATMs and POS terminals. JCB cardholders will now be able to make cash withdrawals and payments at Belinvestbank’s network of 500 ATMs and 7,300 merchants in Belarus. JCB International Eurasia general director Takashi Suetsugu said the launch is an important part of the business’s ongoing issuance projects for JCB and co-badged Mir-JCB Cards in Russia. Andrey Brishtelev, chair of In a bid to replace the traditional wallet, Other features in the app include instant Belinvestbank’s board said: “We are glad mobile app Curve has launched to speed notifications, a ‘lock card’ option, that Belinvestbank helps to establish consumers in the UK. and 24-hour support. comfortable conditions for staying in The service connects all of a customer’s There are also no hidden fees when used Belarus for JCB Cardholders who are debit and credit cards to one Curve overseas, and no hidden currency exchange visiting our country. Furthermore, we are Mastercard, a process through which it charges. expanding opportunities for cardholders hopes to simplify money management. Another key function is that users can of the Russian national payment system The card works like a normal bank switch payments between cards with a tap, MIR, as co-badged Mir-JCB cards will card anywhere in the world that accepts up to two weeks after making a purchase. be accepted in Belarus via the acquiring Mastercard cards – for contactless, chip- Curve believes that this Go Back in Time network of Belinvestbank.” and-PIN, magstripe, and ATM withdrawals. feature is the first of its kind in the world. JCB International has also partnered New customers can download the Curve Shachar Bialick, founder and CEO of with Vietnam-based Nam A Commercial app, add cards, and start spending from all Curve, said: “Most consumers want the Joint Stock Bank to licence the issuance of card-linked accounts with one card. benefits of using multiple banks, cards its cards, and acquisition of its merchants. Research from the company stated and services, so they can make the most In doing so, Nam A Bank has become an that the average UK consumer carries an of their money. But managing it all and official licensee of JCB’s credit, debit and average of eight cards in their wallet. Also, keeping on top of your spend isn’t easy. prepaid cards. < over half of consumers’ greatest fear when “Now, it’s as simple as downloading the out of the house is losing their wallet. Curve app and getting started – with one Users can set a default spending card in card for all your spending, and one app to Australia’s ME Bank the app, and change it any time by swiping. help you stay on track. It’s like having a More than 100,000 people signed ‘mission control for money’, in your pocket.” turns to FIS up during Curve’s beta phase, spending Curve is currently free of charge for ME Bank, an Australia-based branchless over £100m ($137m) in more than 100 new users, but a premium option, with bank, has selected financial services countries. There are currently over 50,000 additional Curve Rewards benefits, is technology developer FIS as its new debit people on the waiting list. available for a one-off cost of £50.< and credit cards platform provider. In addition to the platform, which covers card creation, processing and billing, the PenFed, Amex launch travel and rewards card collaboration will involve new credit card US-based PenFed Credit Union and Ameri- tion to a waiver of foreign transaction fees. products for the bank. can Express have introduced the new PenFed PenFed Credit Union’s executive VP ME Bank CEO Jamie McPhee said: Pathfinder Rewards American Express Card and president of payment systems, Kevyn “FIS’s cards platform will give us new with travel and reward benefits. Myers, commented: “The PenFed Pathfinder credit and debit payment capabilities and The card will allow holders to earn points American Express Card sets a new standard enable us to launch new products to grow on travel and everyday expenses without any for rewards cards by providing the most op- our business while staying current with caps, limits or annual fee. Holders earn triple portunities for cardholders to earn the most regulatory and compliance requirements.” points on travel purchases and quadruple for points on life’s everyday travel and purchas- FIS’s head of international markets, a PenFed Access America checking account es, all with no annual fee. Raja Gopalakrishnan, said: “We look or military personnel, while points are in- “This card provides market-leading value forward to helping the bank build its card creased by half for other purchases. to cardholders – more points on more business and provide superior services to The card offers other benefits, such as an purchases and the freedom to redeem those its cardholders through a state-of-the-art annual travel fund and insurances, in addi- points for anything they want.” < technology platform.” <

8 | March 2018 | Cards International

CI March 2018 553.indd 8 26/01/2018 10:52:14 News | Digest

Canadians ready to give up passwords: Visa Visa makes Moroccan transactions,” said Gord Jamieson, head of risk services at Visa Canada. contactless launch Customers in Morocco can now pay for “This makes it the ideal time to integrate purchases with contactless Visa cards. biometric technology into payments experi- Visa said the new technology being ences for customers. At Visa, we are invest- introduced in Morocco is protected by ing in the best ways to add these emerging layers of security to eliminate the risk of technologies to our products and services.” unauthorised transactions. According to the Visa study conducted by Sami Romdhane, general manager AYTM Market Research, 85% of Canadian of Visa International Morocco, said: consumers are interested in using biometrics “Contactless technology is becoming more to verify identity or to make payments, and widespread around the world. As a leader 59% are already familiar with biometrics. in electronic payment, we strive to provide Other highlights from the survey include: the latest digital payment technologies. It • Canadian consumers were most familiar also offers consumers a fully secure and with fingerprint recognition, with 57% transparent payment experience.” having tried it, and 25% using it regularly. Mikael Naciri, general manager of the By comparison, 39% have tried voice rec- Moroccan Interbanking Centre, added: We ognition, and only 10% use it regularly; already have more than 13,000 terminals • 65% of respondents find biometrics easier equipped with this system. The plan is that than passwords, and 57% consider it fast- by the end 2018, we want the system to er. Fewer than a third (31%) use a unique reach 20,000 terminals.”< password for each account; Canadian consumers will embrace biometric • 32% of Canadians have abandoned an authentication as a faster, easier and more online purchase because they could not TransferWise rolls out secure alternative to passwords, according to remember their password; a report released by Visa Canada. • 95% of consumers responded that the top ‘borderless’ accounts According to the survey, new forms of benefit of biometrics is eliminating the UK-based peer-to-peer money transfer biometric authentication, such as finger- need to remember multiple passwords or service TransferWise has launched a print, facial and voice recognition, can make PINs, followed by 44% who said biom- “borderless” bank account and debit card unlocking accounts and payments much etrics is more secure than passwords or to 1,000 of its customers. easier and more convenient than traditional PINs for verifying identity, and The service enables users to spend in a passwords or PINs, which are difficult to • 44% of consumers are concerned about choice of up to 28 foreign countries. type onto smaller keyboards, are easy to the risk of a security breach of sensitive Announced for businesses in May 2017, forget, and can be stolen. biometric information, and 43% are the solution is now available for a limited “Advances in mobile device technology are concerned that biometric authentication selection of private customers before a full increasing the speed and accuracy of biome- will not work well, or require multiple scale launch in the first quarter of 2019. < trics, such that they can be used for financial attempts. There are no set-up fees or monthly charges, and there is no cost for receiving payments in local currency. Sumitomo Mitsui Card and Dynamics to TransferWise chair and co-founder Taavet Hinrikus said: “The borderless launch locking credit card in Japan account is a game-changer for anyone Japan-based credit card business Cardholders will be able to make living or working between countries. Sumitomo Mitsui Card has partnered with both online and in-store payments at all “Opening a bank account abroad is US-based payment platforms provider merchants that accept Visa cards. incredibly difficult without a local proof of Dynamics to launch a credit card with a Sumitomo Mitsui Card executive officer address, but the borderless account can locking capability. Masao Kamino said: “We introduce the be opened in minutes. For expats, second Set to be released in Japan this year, the world’s most secure payment card planned homeowners, freelancers, sole traders and card will feature touch-activated buttons for introduction into the Japanese market. more the borderless account is invaluable.” to enter numbers, LED lights and an This new card has adopted an industry-first The move puts the company in LCD screen. The buttons can be used by system, and brings best-in-class security to competition with similar accounts offered customers to set a password to activate all payments in-store and online.” by Revolut and WorldFirst. However, both the card at each use. Once activated, Dynamics CEO Jeffrey Mullen said: TransferWise and Revolut are backed by the integrated LCD will display the card “Through this new card, we shall provide venture capitalist Index Ventures. number, with the magnetic stripe and IC new value to the Japanese consumer, and TransferWise was founded in 2011, and chip functions remaining active as long as together with Sumitomo Mitsui Card we £1.5bn ($2bn) is sent through its platform the number is displayed. will deliver further value into the future.” < each month. <

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CI March 2018 553.indd 9 26/01/2018 10:52:16 Feature | biometrics

biometric authentication: security at the user’s fingertips

Once an aspect of science fiction, fingerprint scanners are now commonplace. Since Touch ID was installed on the iPhone 5S, biometric technology has become part of many consumers’ day-to-day lives. Now, it is making the move to cards. Patrick Brusnahan writes

everal firms are bringing biometrics to “When you slide ours into the reader, it Kobos continues: “In the US, there could debit and credit cards. is powered by the connection to the EMV be a place for credit unions as they actually S Sweden-based biometrics company chip. If it’s contactless, it uses the radio waves encourage people to enter a branch. Fingerprint Cards is collaborating with Visa that it uses in the EMV transaction to power “They want to give that human touch to to deliver a trial of biometric payment cards the necessary microprocessor and fingerprint differentiate over the larger banks, which are in the US, in partnership with Mountain sensor. There’s no concern about battery life. considered impersonal. They welcome people America Credit Union. That’s one of our main differentiators.” entering the branch.” In addition, Gemalto is working with With fingerprint biometrics now on the Fingerprint Cards and Bank of Cyprus to issue majority of recent smartphone hardware, the FALSE POSITIVES a biometric EMV card that uses fingerprint technology has become commonplace. Surely recognition instead of a PIN to authenticate this means the consumer is ready for it on One of the most appealing aspects of the user. other devices. biometric security is in the name: the security Biometric cards have been a talking point in Kobos says: “I saw a statistic from Visa it brings. the industry for some time. Paul Kobos, SVP, Europe when it polled its customers and However, especially in the early days of the banking and payment at Gemalto, tells CI: seven out of ten said they wanted some technology, there were many cases of false “It’s been in development for a while. I think kind of biometric identification when they positives and negatives. While a false negative the idea is not specific to Gemalto. do payments, and 53% of them prefer is annoying, it can easily be fixed by using “It’s a no-brainer. Everyone in the industry fingerprint. the card naturally with a PIN. On the other sees people paying and getting access with “I think it’s definitely a good time, as people hand, a false positive can give an unauthorised their smartphone and doing things with are used to the technology and actually want person access. fingerprints and biometrics. This is logical. it, and see the inherent security value.” Kobos explains: “The performance of our The idea is a general idea and it’s being pushed While it is fair to say that there could be biometric contactless cards complies with by a couple of the card associations.” wide adoption for such a product, it is not international standard requirements, which guaranteed. There are some stumbling blocks are less than one in 10,000 for false acceptance OPTIONS to actually giving this product to a consumer. rate, and below 5% for false rejection rate. “Realistically, there are two hindrances,” “Additionally, the fingerprint sensor used Considering how logical the idea is, there Kobos says. “First of all, you have to go into on the card is based on capacitive technology. are many options available: as well as those a branch to register your fingerprint which is That offers stronger security, as it cannot be already considered, Mastercard is testing stored on the card. fooled by a 2D copy of a fingerprint, unlike biometric EMV cards in South Africa, and is “Going into the branch, particularly in the the optical sensors used in some smartphones hoping to launch them this year. US, is not something a lot of the big banks and tablets. However, Mastercard’s plans for this go as are interested in right now, and would prefer “It’s almost impossible for a fraudster to far back as 2014, and the business had hoped self-service. So there is limited adoption in the make a 3D copy of a fingerprint from the to launch them across the UK in 2015. short term. prints or traces left on a stolen card.” So with numerous options on the market, “If the larger banks were good at segmenting Kobos concludes: “It’s just up to the market what separates Gemalto’s offering? their portfolios into those who make higher- acceptance. If people see it and think that “I would say Gemalto’s spin is that we’re value transactions or those who are high net really adds some security, there could be some promoting the feature that it doesn’t have a worth individuals, they could offer it to them natural pull from the market. I think the battery,” Kobos explains. “Some of the other to limit fraud on high-value transactions. It first steps will be those with differentiated ones have a battery, which adds shelf life. could work for larger banks in that way.” portfolios.” <

10 | March 2018 | Cards International

CI March 2018 553.indd 10 26/01/2018 10:52:16 products | wallet card

wallet card enables battery-powered interactive payments

Emirates NBD will launch the world’s first battery-powered, interactive payment card later this year in the UAE. The Wallet Card has already scooped the Best of Innovation award at the Consumer Electronics Show in Las Vegas in January. Douglas Blakey reports

allet Card represents the world’s • A battery and organic recharging chip, best card technology, according so the card charges itself through normal Wto Emirates NBD’s senior operation. Wallet Card can last indefinitely, executive vice-president and group head without the need for the consumer to – retail banking and wealth management, perform any physical action; Suvo Sarkar. And it is coming to the UAE. • A card-programmable magnetic stripe, Wallet Card features include: EMV chip and contactless chip. At any • Fastest data breach response: If a data time a new card profile can be downloaded compromise occurs at a merchant, the to the card, so when that card is selected, bank can instantly delete the compromised the card’s magnetic stripe, EMV and card account number and replace it Consumers can also receive coupons contactless data is written to the associated immediately with a new card and account directly on their cards, or be notified of components, and number. This provides reduced fraud risk a suspicious purchase and click on ‘Not • A 65,000-pixel display and user interface, and peace of mind for the consumer with Me’ to have a fraud alert set and new card so cardholders can change between a new card; number issued. In another example, a different cards and informational screens. • Multiple cards in one: Consumers can coupon may be sent to the consumer. access debit, credit, prepaid, multicurrency, “Emirates NBD is a visionary bank that has one-time-use or loyalty cards on a single TECHNOLOGY enabled a visionary product with the award- card with the tap of a button; winning Wallet Card,” according to Jeffrey • Anywhere distribution: Wallet Card is the Emirates NBD has partnered with Pittsburgh- Mullen, CEO of Dynamics Inc. first instant, digital card platform. Banks headquartered Dynamics Inc., the tech “With Wallet Card, Emirates NBD will can distribute Wallet Card anywhere and provider behind the card. revolutionise the UAE payment experience at any time – such as in retail branches, Dynamics has three business units: to provide the fastest and most secure card during events, or even on flights, and intelligent card, value-added processing, and services and features in the UAE.” consumers can activate it immediately. phone payment technology. Sarkar adds: “As part of our commitment to Card information can then be download The intelligent card division has introduced offer an enhanced banking experience through through a secure, over-the-air cellular market-defining card products such as the innovation, we are bringing the best card connection; world’s first multiple account card (Canada), technology in the world to the UAE so our • Rapid card replacement: New cards can the world’s first password-protected card customers can have the best card experience.” be couriered directly to consumers within (Asia), and the world’s first multiple co-brand “Our customers will soon be able to hours. Consumers can then instantly card (US). download new cards, and receive remote card restore their wallets by downloading their The Wallet Card is the same size and notifications, directly onto their Emirates cards, and shape as a normal credit or debit card. With NBD Wallet Card. This will provide • Tighter connections between consumers, almost 200 internal components, the device unprecedented levels of choice, flexibility and issuers and retailers: Messages can be incorporates a number of cutting-edge security never before offered in the UAE.” sent to the Wallet Card at any time. For technologies, including: Wallet Card’s recent success at the example, after every purchase, a message • A cellphone chip and antenna, so data can Consumer Electronics Show represents the may be sent to notify the consumer of be transferred between Wallet Card and first time in the show’s history that a bank the purchase and their remaining balance the bank anywhere in the world and at any has been awarded the consumer electronics if they used a debit or loyalty card. time of the day; industry’s most prestigious award. <

www.cardsinternational.com | 11

CI March 2018 553.indd 11 26/01/2018 10:52:17 Feature | engage

an alternative approach to Banking

Exclusively available through local credit unions, an Engage account provides an alternative way to bank. Deborah Levy, MD of Contis Group’s Engage business unit, tells Briony Richter about the various products and services offered in the programme

he Engage current account has most population. These financially underbanked Engage also has over 1,600 online cashback of the features you would expect segments have significant challenges in being rewards, discounts and vouchers. The average Tfrom a 21st century bank account. able to access a basic bank account. Engage customer can earn £7-8 a month There is also a free mobile banking app and “Through the credit unions, our primary cashback from just doing their weekly shop, a contactless Visa debit card. goal is to fill that gap and give those people which goes directly into their account. Engage is unique in that its accounts can be the basic right to own a bank account and Asked why customers should pick Engage, accessed through a number of credit unions handle their money.” Levy says: “The unique selling point for the under the same brand, helping boost credit Engage programme is that we offer a variety of unions’ profiles and increasing the number of products and price points. customers joining. “We have our junior account programme Deborah Levy, who started her role in for children between the ages of eight and November 2017, tells CI: “I’m delighted to 16, with full parental control. I like to call it have joined Contis. The business has invested ‘contactless pocket money’. heavily to build a payments platform capable “The Classic account is specifically designed of supporting a wide range of products for the underbanked. We offer them a step with the potential to change the way that The Engage account allows customers to change in functionality but at a steady pace. underserved customers are able to manage set up standing orders, withdraw cash from Customers can choose between a monthly fee their money.” ATMs and transfer money. A customer or a per-transaction fee, depending on how The Engage current account functions can also have wages paid directly into their much the card is used. almost exactly the same as a normal high street account, and pay cash in at any PayPoint. “Then we have the current account which bank account, except it can only be accessed There is no overdraft facility, which means is the fully fledged, direct debit-enabled, through a customer’s local credit union. customers avoid overdraft fees, interest on alternative end-to-end bank account. There Levy states: “We have invested £20m borrowing, and potential penalty fees for is a charge on this as well, but again the ($28m) into the development of this platform. going over an overdraft limit. customer has the choice between monthly or It brings with it a real offering, without the Levy explains how she drives Engage’s per-transaction fees; that flexibility is crucial.” inflexibility of the traditional banking systems. message: “As it is unique to the credit union Also part of the programme is a money Engage is an incredibly powerful brand that sector, it has been about collaborating with management tool that helps customers budget has been specifically developed and designed the individual credit unions. We work at and handle their money. The setback is the for the credit union sector.” association level and regional level as part of cost, in the form of monthly per-transaction Traditionally, credit unions have specialised our roll-out plan. fees and, with the Classic account, a £0.75 in savings and loans, but have recently been “The customer demographics that will charge for ATM withdrawals. Levy highlights expanding the services offered. There are use Engage are, primarily, the financially that the majority of Engage customers recover around 450 credit unions in the UK, 35% of vulnerable. What we do is reach out, listen to their fees through the retail rewards. which are in Northern Ireland. It is a sector our customers and ask our client credit unions Although it can only be accessed through that has expanded significantly in recent years. what we can do to help further service their a credit union, Levy has her eyes set on Levy explains: “Approximately 150 credit clientele.” expanding the programme, strengthening its unions have signed up. Of those, 10 are in the The retailer rewards programme is a key UK base and venturing into the European top 25 credit unions in the UK. part of Engage. There are around 30 retailers credit union market. With all its products “We might be servicing, in one regional signed up to the programme, including Asda, and services, the Engage team wants to see it area, a predominantly underbanked B&Q, New Look and M&S. become an account for everyone. <

12 | March 2018 | Cards International

CI March 2018 553.indd 12 26/01/2018 10:52:18 Feature | migration from cheques

us issuers make moves to migrate from cheques to cards US card issuers and networks see great opportunities to migrate US businesses away from cheques. A key development is the emergence of automated B2B procurement systems where businesses pay suppliers using virtual cards or by automated clearing house (ACH), feeding invoice data into their accounts payable (AP) systems. Robin Arnfieldreports

nother driver is the US’s move to systems can drive higher growth and spending The AFP says the average company makes implement Faster Payment Systems share capture. “Expanded partnerships and an estimated 41% of its payments to major A offering real-time electronic new technology are moving the [commercial suppliers via cheque. 34% of payments to payments by 2020 under the Federal card] industry into the payables mainstream,” major suppliers are made using ACH Credits, Reserve’s aegis. he writes. and 13% via wire transfer. The Clearing House, which operates a “Purchasing cards, ACH debits and single- private-sector automated clearing house MARKET DATA use accounts are used for far fewer payments (ACH)/wire transfer network, has already to major customers,” the AFP says. launched a real-time system using technology The Federal Reserve Payments Study’s “In the past few years, most issuers’ primary from Mastercard-owned Vocalink. 2017 Annual Supplement says 17.8 billion focus has been consumer payments, reflected “In the absence of strong GDP growth commercial cheques were paid in the US in in strong increases in electronic transactions or major economic disruptions, the growth 2015, worth $28.8trn. and a shift from cash,” Aite Group senior of US-based spending on commercial cards Total commercial cheques, excluding US analyst Gilles Ubaghs says. has been fairly steady in the last few years,” Treasury cheques and postal money orders, “Commercial cards tended to take a back Steve Murphy, director of Mercator Advisory paid in the US fell 3.0% a year by number seat in most issuers’ modernisation plans and, Group’s commercial and enterprise payments from 2012 to 2015, but rose by 2.2% a year arguably, the great recession slowed down the advisory service, says in his The Drive Toward by value. growth and development of the commercial Mainstream Payables report. “Estimates for 2015 to 2016 show declines cards market. “There was a minor downturn in spending of 3.6% by number and 3.7% by value in “While consumer digital payment and in the second half of 2016 due to pre-election commercial cheques paid by a group of the banking services are relatively strong at most uncertainty and sector behaviour, but the largest US depository institutions,” the study FIs, the SME and corporate payments and industry managed to achieve continued good notes. “In 2015, businesses made about 19.7 banking space is playing catch-up after several growth overall. card payments per month, on average. The years of underinvestment. “The critical factor for commercial cards total value of business card payments was Ubaghs continues: “Aite Group research is to gain a faster rate of growth of share of quite small relative to other business payment found that 50% of SMEs make online B2B payables during the next five years, as the types such as ACH and cheques.” banking transactions on a daily basis, while changing e-payments environment presents The 2016 Association of Financial 36% make mobile banking transactions on easier, faster alternatives to paper-based Professionals Electronic Payments Survey, a daily basis. So many banks are investing solutions.” underwritten by JP Morgan, found that heavily in improving their digital capabilities “B2B payments portals offering ACH 94% of US organisations continue to pay targeting the SME and commercial space, and or card payments and integration with AP their major business suppliers by cheque. commercial cards are a big plank of this. systems have generated a lot of interest among It says: “Survey respondents also use other “The key is better integration and use accounts departments, as they save time and payment methods to reimburse those vendors, of data by banks, and helping to place money compared to cheques,” says Senior Aite including: commercial cards more squarely into the Group analyst Kevin Morrison. • ACH credits (cited by 83% of payables landscape. Murphy says growth rates for single-use respondents); “Procurement cards have been a major virtual commercial card accounts are triple • Wire transfers (79%); avenue for growth, particularly where cards those of traditional plastic card products. He • Purchasing cards (48%); can be closely integrated into broader payables adds that straight-through-processing (STP) • ACH debits (24%); infrastructure and ERP [enterprise resource payments solutions integrating cards with AP • Single-use accounts (8%).” planning] systems and help reduce operational

www.cardsinternational.com | 13

CI March 2018 553.indd 13 26/01/2018 10:52:20 Feature | migration from cheques

costs and the continued shift away from in 2016 on purchasing cards, corporate cards, DeSanctis says treasury executives expect paper. T&E [travel and entertainment] cards and prepaid cards, up 9.2% on 2015. issuers to offer a mobile capability. “To have are still a crucial part of the market, and, like “Globally, we offer traditional purchasing mobile account set-up and management payables, are seeing growth due to their closer cards and Virtual Payables our virtual card as a core part of your offering is now an integration into internal back-office systems solution,” says Jennifer Petty, head of global expectation,” he says. “But digital tools are less and the shift from paper.” card and comprehensive payables at BofA focused on mobile payments and more about “But overall business travel statistics are Merrill Lynch. service and mobile support for issues like static and not seeing major increases. Given “In the US, our largest market, we also controls and line management.” the growing use of teleconference and offer Paymode-X Connect, an ACH network telecommuting capabilities, I wouldn’t expect solution that can be deployed stand-alone or MASTERCARD any major increases in T&E card usage due with our Virtual Payables offering.” to shifts in travel behaviour on their own. But “In 2017, we introduced API connectivity Mastercard sees opportunities to work with many businesses nonetheless want a smarter, as an additional option for buyers to initiate banks, its payments technology partners and more digital program that they can have better virtual card payments. We also expanded large corporations to automate B2B payments, oversight and control of,” Ubaghs adds. the use of single-use account capability to says Colleen Taylor, Mastercard’s EVP of new “The commercial cards space will be a big streamline the payment and reconciliation payments business. beneficiary from the growth of US real-time process for buyers and suppliers,” Petty “Technology such as APIs and the Cloud payments. It’s likely the market may even continues. make it much easier to integrate payments move away from traditional cards-based with invoicing data, and will really drive systems to something more virtual and migration to electronic payments,” she says. account-based with a big emphasis on data- Mastercard also wants to help SMEs, rich messaging tied into transactions, and Taylor says. “Increasingly, we’re seeing small more nimble and configurable rule sets that business cards offering more data to help can be added to commercial card programmes. APIs and the Cloud business administrators, but corporate cards “The US has been a strange market in the and purchasing cards still offer more data for last few years due to the fact that cheque use, make it much accounts departments,” she notes. after years of steady decline, has started to “We’ve focused on the information needs plateau. But the shift to real-time payments easier to integrate of larger companies, but are seeing a trend will eat into that in a big way and help fuel for smaller businesses to want more data to the commercial cards market.” payments with manage their business. So we’re working with our partners to deliver to small businesses AMEX invoicing data more of the data we capture at the point of sale and from e-commerce transaction “American Express’s Global Commercial processors.” Services division offers payment and lending In June 2017, Mastercard launched the products to help businesses of all sizes gain “We see a growing demand for mobile Mastercard B2B Hub digital payment system financial savings, control, and efficiency,” says access and mobile technology by corporate for SMEs to manage invoices, payments, and Amex spokesperson Melissa Filipek. card accounts. We have cardholder-level alerts supplier relationships. The system, which “We provide solutions for travel and in place, and our card management systems offers card and ACH payments, is available to everyday business spending, cross-border are optimised for mobile use.” companies through their bank or commercial payments, global currency solutions and card issuer. AvidXchange, a provider of business financing.” CORNERSTONE ADVISORS automated invoice and payment processing, During 2017, Amex announced B2B was the first software vendor to partner with payments partnerships with AP systems “A major focus in the commercial market is Mastercard in the B2B Hub. providers MineralTree, Intacct, RegalPay working with clients to move their payments “Companies want the option of making and SAP Ariba to enable better integration from cheques to cards,” says Tony DeSanctis, supplier payments via different methods,” says between virtual Amex corporate cards senior director at Cornerstone Advisors. Taylor. “Sometimes, virtual card payments and AP systems. Amex also launched its “The efficiency and tracking capabilities that work fine, and sometimes it’s cheques or ACH enhanced Business Travel Account, which clients get from using cards are significant. payments. now incorporates virtual account numbers The ability to control categories of spend, “We’re partnering with AvidXchange and to centralise more types of business travel elimination of paper cheques, and reduced risk other payments players so that middle-market spending into a single account. Amex’s virtual of employee fraud are driving the migration. firms can give us their complete AP files and card technology generates a single-use card “The reduced processing costs, better make virtual card payments if their suppliers number for each transaction. reporting and tracking, and expense reduction accept virtual cards. opportunities make the migration an easy sell BOFA MERRILL LYNCH for most issuers. Most treasury executives are TWOFOLD OPPORTUNITY looking for opportunities like this to automate Bank of America Merrill’s commercial cards and simplify their payments and procurement “Cheques represent around 50% of US B2B business processed $56.3bn in US purchases processes.” payments, so the opportunity in B2B is

14 | March 2018 | Cards International

CI March 2018 553.indd 14 26/01/2018 10:52:21 Feature | migration from cheques

twofold,” says Taylor. “Helping companies on-boarding process for electronic payments. Visa travel card transactions, which allows move from cheques to efficient electronic It’s basically plug-and-play, requiring only a our business customers to make purchases payments such as single-use virtual cards, and couple hours of client IT time. with a phone via Apple Pay, Samsung Pay, providing improved levels of data so suppliers “Once they’re up and running, we offer and Google Pay [formerly Android Pay],” receiving electronic payments can move the our clients a program optimisation service Yankovich adds. associated data into their accounts receivable that helps them gain maximum value from “The capability is still in its infancy as system. their card programmes. This includes a people try to understand the functionality and “Mid-market and large companies want thorough analysis of their AP data, looking for where it is accepted, but we can say that the the convenience of mobile payment apps. So unrealised opportunities. people who use it love it. Mastercard is partnering with various players “We flag cheque payments to suppliers “A similar capability for Mastercard in the US and elsewhere to provide virtual we know accept more efficient methods. transactions will be rolled out shortly. We T&E card mobile apps,” Taylor continues. If one business line pays a supplier by card believe that mobile payments on purchasing “I expect some of today’s B2B cheque and another line of the company pays the cards will be next, though we don’t have an payments will move to real-time payment same vendor by cheque, we flag that too. We exact timetable. rails in the US, and others to slower ACH leave no stone unturned to make electronic “We’re rolling out B2B payment platforms payments. As the real-time payment rails payment an irresistible option,” Yankovich for our corporate and commercial cards on a use ISO 20022, there is more robust data, explains. continuous basis. Our corporate clients tell which facilitates invoicing information being “We leverage industry data to benchmark us they want to be able to perform the same sent with payments. However, banks have a client’s payment practices against functions anywhere in the world as they can to update their online business banking competitors of similar size. This helps identify sitting at their desks, and that’s our goal. apps to incorporate that data, as do the large opportunities and sizes the potential bottom- Yankovich continues: “Wider use of virtual companies’ ERP systems.” line impact to our clients if benchmark levels accounts is also happening, which allows users Taylor says Mastercard has not seen much of spend are achieved. Using all this data, we to both request an account and make a secure demand from businesses to be able to use map out effective supplier enrolment strategies payment directly from their mobile device. the Mastercard Send card-to-card payment for our clients. Our customer information portal, US Bank platform for B2B payments. “We find that year-over-year spending Access Online, has a mobile app that allows “We’ve seen demand for business- using electronic payments increases 9% with users to request and receive virtual account to-consumer card disbursement where ‘optimised’ clients, compared with under a numbers through their smartphones, and can corporations want to pay rebates to customers half-percent increase in everyone else. That take pictures of receipts to upload to their or send insurance refunds. Mastercard is also translates into better rebates and reduced expense reports. a big facilitator of Mastercard Send-based transactional cost for them.” “Longer term, we see communication from payments in the gig economy. For example, device to device – the Internet of Things – Lyft or Uber drivers have the option to get SMARTPAY making purchasing transactions ever easier their payment for rides via MasterCard Send. and more seamless. Our cars will be set up Taylor adds: “We’re also working with our “Our participation in the US General Service to be mobile devices, for example. Just tap a partner banks to extend Mastercard Send for Administration’s (GSA) SmartPay programme button on the steering wheel to pay for fuel.” making payments to micro-businesses such as is one of many factors driving our push for landscapers or contractors. But, due to their continuous innovation,” says Yankovich. VISA demand for more data integration with AP “US Bank has provided card payment systems, I don’t see Mastercard Send being programmes to federal agencies since 1986. In October 2017, Visa integrated its STP adopted by larger companies.” Last August, GSA selected US Bank as one of system into AP software firm Billtrust’s Virtual only two financial institutions to participate Card Capture tool. US BANK in the next phase of SmartPay, SmartPay 3. The partnership will enable suppliers to To prepare for this, we’re investing heavily accept virtual commercial card payments “Digitisation of corporate payments is in next-generation technology and product made by buyers in their accounting growing at an increasingly accelerated rate,” enhancements, in addition to continuously system, and automatically capture payment Peggy Yankovich, large market/public sector advancing cybersecurity. information for reconciliation. product and marketing manager at US Bank, “The use of digital tools in corporate In June 2017, Visa announced Visa Ready says. payments picked up quite a bit of steam in Program for Business Solutions, a framework “We distinguish ourselves in the 2017. Our total monthly transactions by B2B to help technology companies that integrate marketplace through our customer service and card had been inching up steadily for years, with Visa’s B2B payment services and data program optimisation. and then took a hockey-stick-like upward solutions to ensure they meet Visa’s standards. “Our service starts well before the first projection starting at the end of 2016 and Bora Payment Systems, Bottomline digital payment is transacted. For example, continuing all last year. During that same Technologies, CSI globalVCard, MineralTree many new clients don’t have the IT resources period, mobile logins to our Access Online and Priority Commercial Payments were the to set up virtual payment programs, or have card management tool essentially doubled,” first partners to obtain Visa Ready for Business barriers built into their systems making Yankovich notes. Solutions approval, and to launch Visa implementation challenging. We offer a “Last Spring, we were the first financial payments services for financial institutions’ universal ERP adaptor that streamlines the institution to offer mobile payments for commercial customers. <

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CI March 2018 553.indd 15 26/01/2018 10:52:21 country snapshot | france

FRANCE

country snapshot: france Prepaid growth curbed, contactless growth in prospect

he French payments market is due to the generally debt-averse nature of compatible terminals, driven in part by the mature and highly competitive, French consumers. French government’s efforts. Tregistering the highest turnover Many are still heavy users of cash, but A typical feature of France’s payment per card for 2017 among peers including those who do possess cards – particularly card market is the availability of multi- the UK, the US, Germany, Italy, Spain and debit and deferred debit cards – use them functional cards, whereby a single payment Canada. The average annual spend per card frequently at the POS. France has a highly card has more than one function, providing is also highest in France. developed POS infrastructure, with a access to several accounts on a single card. Debit and charge are the most popular large number of POS terminals overall as The most popular combination is debit and types of card, while credit card usage is low well as a large proportion of contactless- credit facilities.

value of credit tRanSfers value of cheque payments value of payment cards

bn bn bn , 1,

, 1, ,

1,

1, , 1

1 1 1 1 1e 1f 1 1e 1f 1 1e 1f

Source: European Central Bank, GlobalData Source: European Central Bank, GlobalData Source: European Central Bank, GlobalData

16 | March 2018 | Cards International

CI March 2018 553.indd 16 26/01/2018 10:52:34 country snapshot | france

LOW CREDIT CARD USE Debit card shares by issuer Debit card shares by scheme

Credit card use is low in France due to consumer aversion to debt, stringent card issuance guidelines, and the availability of Crdit Agricole mirates NBD private-label cards, which unlike bank- . . issued credit cards carry less stringent Others qualification requirements. Issuers . Others CB 1 collaborate with supermarkets, car repair Crdit utuel . Dubai Islamic 1. Bank 1. workshops and digital content retailers to issue co-branded private-label cards. Groupe irst Abu BC Dhabi Bank E-COMMERCE GROWTH 1. 1.1

The French e-commerce market is highly

developed, ranking fifth-largest globally in Source: GlobalData Source: GlobalData terms of spend behind China, the US, the UK and Japan. pay later shares by issuer pay later shares by scheme The e-commerce market posted a CAGR of 13% between 2013 and 2017, as consumers became more comfortable shopping online. French consumers use payment cards heavily online, driven by BN aribas Others .1 . comfort, convenience and security. Others . High online and smartphone penetration, rising consumer confidence and the presence of secure online gateways have Groupe BC CB driven e-commerce growth. . Crdit . With more than half of all internet users Agricole 1. in France involved in online shopping, lower levels of debt compared with other European countries, and a relatively young population, e-commerce will register strong Source: GlobalData Source: GlobalData growth between 2017 and 2021.

CONTACTLESS INITIATIVES personalised non-rechargeable gift cards LEADING BANKS DOMINATE targeted at people aged 12 and above that In 2016 the French government made can be preloaded with amounts ranging Crédit Mutuel dominates the market in it mandatory for businesses to install from €40 ($42.10) to €799. terms of transaction value, and signed terminals capable of accepting contactless Leading scheme provider CB moved into major electronic payment processing cards and NFC-based mobile wallets when the prepaid market in late 2005 with the contracts with distribution groups purchasing new POS terminals. launch of a gift card as part of its Carte Carrefour and Leclerc through the latter’s This move, designed to improve the Bleue product range. banking subsidiary, Edel, in 2008. adoption and use of mobile payments Unlike gift vouchers, which are largely In June 2016, Caisse Fédérale de Crédit and contactless cards, will also have restricted to use at an issuing merchant’s Mutuel signed an agreement with JCB a significant impact on terminal outlet, the CB gift card can be used at all International to expand acceptance of JCB manufacturers, which are no longer allowed CB partner merchants. cards in France. Merchants with a card- to sell contact-only devices. In December 2016 the government acceptance agreement with CIC or Crédit introduced a regulation placing restrictions Mutuel-CM11 can now accept JCB cards. LOW PREPAID PENETRATION on how cash and prepaid cards can be BNP Paribas collaborated with Ingenico used, in a move to curb the financing of Group in March 2016 to help enable online Prepaid cards are available for different terrorism, which has affected prepaid cards merchants to accept both international consumer segments and are accepted in France. and local payment methods. The solution almost everywhere. Cards are generally With effect from January 2017 the enables businesses in 14 European linked to a bank account, so transactions maximum limit for prepaid cards was set at nations to accept online payments in eight are easily traceable and funds can be €10,000. Prepaid card reloads through cash currencies. Its electronic payments are loaded conveniently. or anonymous e-money methods, and cash supported by domestic platforms in France, La Banque Postale has been issuing withdrawals made by prepaid cards were Italy and Germany, and a central platform prepaid cards since 2008. It offers limited to €1,000 per month. covering 13 nations. <

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CI March 2018 553.indd 17 26/01/2018 10:52:37 country snapshot | germany

GERMANY

country snapshot: germany Girocard maintains its dominance

ermany has a strong economy and option due to a combination of consumer card transactions by consumers in Germany high levels of financial inclusion, habits and preference for spending within was 2.4 in 2017, much lower than France Gdespite German consumers having one’s means. (12.4), Canada (9.0) and the UK (7.7). a strong inclination towards cash for the In terms of cards in circulation, Germany Payment cards are used sparingly at majority of transactions. is third-largest among its peers, behind the POS, with their primary use being to The German maxim is geld stinkt nicht only the US and the UK, but the market is withdraw cash from ATMs. As a result, (money does not stink), and consumers still far from recognised as a fully mature alternative payment methods are sharply still consider cash to be the best available market. The average number of monthly limited in both usage and consumer

value of credit tRanSfers value of cheque payments value of payment cards

bn bn bn ,

, , 1

, 1 1 , 1 1,

1 1 1 1 1 1e 1f 1e 1f 1 1e 1f

Source: European Central Bank, GlobalData Source: European Central Bank, GlobalData Source: European Central Bank, GlobalData

18 | March 2018 | Cards International

CI March 2018 553.indd 18 26/01/2018 10:52:47 country snapshot | germany

interest. The only main area of the German Debit card shares by issuer Debit card shares by scheme payments market in which alternative and astercard .1 emerging payment tools have gained any real traction is e-commerce. isa . German consumers use debit cards for Others most transactions. National debit card . scheme Girocard is the most frequently DSG used payment card, with payment . guarantees by all participating banks Deutsche making Girocard popular among retailers. Bank 1. Girocard Until a cap was implemented by the EU BR . in 2015, Girocard’s lower interchange fees . compared to international schemes gave it an edge over other providers. However, the new interchange fee rules have had little

impact on its dominance in Germany. Source: GlobalData Source: GlobalData

AVERSION TO DEBT pay later shares by issuer pay later shares by scheme

Pay later cards are not very popular in Germany, mainly due to a cultural aversion Others to debt. Credit cards represented only . 2.1% and 1.4% in terms of card transaction DSG volume and value respectively in 2017. .1

Almost 70% of credit card holders isa Others . pay off balances in full each month. The .1 Landesbanken astercard opportunity for revenue in Germany is 1. . therefore very limited, and there would need to be a seismic shift in German BR attitudes to debt to change this. 1. E-COMMERCE GROWTH

Source: GlobalData Source: GlobalData Germany is the third-largest e-commerce market in Europe, behind only the UK (€175.6bn) and France (€81.1bn), although Solutions launched the Real Time Payment anticipated to introduce SCT Inst in 2018 its population is much larger. This indicates Engine solution in October 2016. The and 2019. that Germans are less engaged with online system aids banks in processing real-time buying than French or UK consumers. payments while complying with the Second PREPAID GROWTH E-commerce’s growth has been Payment Services Directive. facilitated by high internet and smartphone In November 2017, the European The prepaid card market registered a penetration, and the availability of fast Payments Council launched a pan- decline both in terms of number of cards in broadband connections. Use of video European instant credit transfer scheme. circulation and transaction value during the and social media to enhance product SCT Inst will enable individuals to transfer review period. This was primarily because presentation and services in e-commerce is a maximum of €15,000 ($15,783.80) within credit co-operatives stopped issuing also fuelling growth. 10 seconds. Funds can be transferred Girocards with GeldKarte (contact-based) Compared to other European markets, instantly 24 hours a day, 365 days a year functionality, and also replaced expired payment cards are used infrequently, across all 34 SEPA countries. cards without GeldKarte. while online payment tools that hide users’ UniCredit started testing a real-time Girocards from local card schemes are payment details from merchants, such as payment platform in July 2017 to develop also available as prepaid cards in Germany, Sofort and PayPal, are more popular, driven a real-time payment method in Germany in two variants: GeldKarte and girogo by the perception that they are convenient alongside SCT Inst. (contactless). A maximum of €200 can be and secure. Around 600 payment service providers loaded onto prepaid cards at any one time. (PSPs) from eight countries – Austria, A GeldKarte card is a rechargeable INSTANT PAYMENTS Estonia, Germany, Spain, Italy, Latvia, prepaid card that can be used to make Lithuania and the Netherlands – rolled payments online and at more than 420,000 To foster the use of electronic payments out SCT Inst on November 21, 2017. PSPs POS terminals in Germany. The card can be and develop instant payments in Germany, from Belgium, Finland, Germany, Portugal, also used to pay for parking tickets, public financial technology company Dion Global the Netherlands, Malta and Sweden are transport, and tourist attractions. <

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CI March 2018 553.indd 19 26/01/2018 10:52:48 Country snapshot | italy

ITALY

country snapshot: italy Debit cards maintain dominance

espite being the fourth-largest accounts for 81% of payment transaction through a cap on cash transactions and economy in Europe in terms volume. the implementation of interchange fee Dof nominal GDP, Italians have The country has a comparatively low regulation resulted in a gradual increase in remained slow adopters of electronic penetration of payment cards, although it payment card transaction volume between payments, primarily due to a strong has a robust POS terminal network. The 2013 and 2017. Debit cards are the most consumer inclination towards cash, which government’s push for electronic payments used payment card at the POS, followed

value of credit tRanSfers value of cheque payments value of payment cards

bn bn bn 1,

, ,

1 , 1 , 1

1 1 1 1 1 1e 1f 1 1e 1f 1e 1f

Source: Banca d’Italia, GlobalData Source: Banca d’Italia, GlobalData Source: Banca d’Italia, GlobalData

20 | March 2018 | Cards International

CI March 2018 553.indd 20 26/01/2018 10:52:58 Country snapshot | italy

by charge cards. Italian consumers favour Debit card shares by issuer Debit card shares by scheme charge cards over credit cards due to their debt-averse nature. High banking penetration and the combined efforts of banks and government UniCredit Bank astercard 1. 1. bodies to promote electronic payments have helped drive debit card adoption. The gradual migration of low-value cash Others . Intesa Sanpaolo isa 1. 1.1 Bancomat payments to debit cards and the rising .1 adoption of contactless technology in debit cards has led to increased use of debit oste Italiane 1. cards at POS terminals. In addition to local residents, the government is focusing on bringing the immigrant population into the formal banking system, which will further

push debit card adoption in the country. Source: GlobalData Source: GlobalData

PAY LATER TRACTION pay later shares by issuer pay later shares by scheme

Pay later cards are not very popular among Others .1 Italian consumers, who prefer to pay for purchases with cash or debit cards. Charge cards dominate the pay later CartaSi 1. market, accounting for almost 80% of total pay-later card transaction value astercard in 2017. The debt-averse nature of Others Intesa Sanpaolo . isa .1 1. . Italian consumers will remain a barrier to widespread credit card adoption and usage. Agos 1. E-COMMERCE MARKET

The Italian e-commerce market is one of the fastest-growing in Western Europe. In Source: GlobalData Source: GlobalData terms of transaction value, e-commerce registered annual growth of 18% to reach €23.6bn ($24.8bn) in 2017. A range of prepaid card variants are The level of development of Italy’s POS Italy’s e-commerce market is dominated generally issued on the Visa or Mastercard infrastructure is surprising given that by PayPal, primarily due to its security networks, such as gift, travel, youth and debit and pay-later card usage is generally features. Other key drivers for its use are remittance cards. quite low in the region. However, as of comfort, convenience, and it being the BancoPosta offers a prepaid Postepay June 2014 it is a legal requirement in Italy cheapest option. Debit and credit cards kit, which consists of two Visa cards: one for merchants to own chip-and-PIN card together accounted for almost a quarter for sending and the other for receiving machines, and offer them as an option of online spending in 2017. Bank transfers money. Both can be used to make cash for all transactions over €30 in value, in rank third, mainly because many Italian withdrawals, and allow the holder to pay order to reduce tax evasion through cash sites offer this as the only payment option. bills, top-up other Postepay cards, and transactions. check balances and transaction history. Mobile POS (mPOS) terminals are PREPAID MARKET Banks are launching new products gradually gaining traction among retailers specifically targeting younger users. Intesa in Italy. iZettle, Ingenico, Verifone, Payleven Italy has one of the largest prepaid card Sanpaolo offers the Superflash card, which and Swish all have a presence in the markets in Europe, with 27.2 million open- is issued free of charge to customers aged country. According to Ingenico, as of March loop prepaid cards in circulation in 2017, 18–26. The card includes Masterpass and 2015, 45,000 merchants had adopted its and a CAGR of 5.9% then and 2013. PAyGO facilities. mPOS solution, accounting for a total of 1 A number of factors explain the million transactions. popularity of prepaid cards in Italy: CARD INFRASTRUCTURE In February 2016, Verifone launched consumers’ desire to control expenditure, the Verifone e265 mPOS terminal, which their debt-averse nature and conservative The number of POS terminals in Italy is compatible with any smartphone. As spending attitudes are all important factors. recorded a CAGR of 11.7% in the period of December 2015, Mercury Payment The anonymity of prepaid cards, and their 2013-2017, up from 1.6 million in 2013 to Services had installed over 53,000 mPOS bank-free nature are also important. 2.5 million in 2017. terminals in Italy. <

www.cardsinternational.com | 21

CI March 2018 553.indd 21 26/01/2018 10:53:01 industry insight | diebold nixdorf

as smartwatches can be used to withdraw cash through NFC-based mobile payment banking evolution and A services. Self-service machines enable access to Motor Finance user accounts through the device, effectively abolishing the need to carry a debit card. Another area that has made great strides is europe 2018 customer-centric biometrics, particularly in the UK. A recent 26th april 2018 l adlon Kempinski Hotel, Berlin, Germany article in the FT identified that UK consumers were the most open, of 11 countries surveyed, to replacing traditional passwords with iris The 4th annual Motor Finance: Europe Conference and Awards leverages insight future vision identification. and expertise from across the industry to deliver a programme that offers you the Biometric authentication integrates latest innovations, strategies and technologies driving the industry forward. We will The global ATM market is growing at a significant pace, technological advances – such as facial bring together the industry’s thought leaders, experts and challengers to discuss the key along with the evolution of ATM technology. This growth is recognition, iris scanning and fingerprint sensors – and the self-service channel, leading factors leading market growth and how to adapt to the ever changing marketplace. underpinned by wide acceptance among financial institutions to enhanced security and an improved that ATMs continue to be vital as a secure, trusted self-service consumer experience. channel, writes Diebold Nixdorf’s Matt Phillips Advanced ATM technology enables banks to deliver quicker, more streamlined services t is the year 2027 and you need cash. connection, alongside enhanced security in locations where customers demand them. You go to the closest ATM, but you do and authentication. With sleek, modern Certainly, our research shows that consumers Inot need to look for your bank card. designs and user interfaces, software-driven are embracing self-service technology because All you need is yourself, because this interactions can power intuitive functionalities of its convenience and ease of use. Eight- machine can look you in the eye. It scans your that consumers expect from interactive in-ten people (79%) agree that technology irises for a match before a 3D, augmented systems. This functionality has not gone will play an increasingly important role in reality-generated ‘robo-banker’ pops up to give unnoticed: our latest research into the bank branches, and 57% think improved you access to a wide range of banking services. expectations of UK banking customers shows technology in banks means they will spend The highlights include: This gives a taste of what we can expect that 57% value using self-service technology less time queuing. banking services to look like within the next to complete multiple tasks in one go. As we look to the future, developments in decade. After 50 years, the ATM continues to Accenture’s ATM Benchmarking Study 2016 technologies such as artificial intelligence will l the impact of digitalisation on the automotive be an important touchpoint in the customer concludes the “ATM will retain its importance continue to influence the delivery of banking industry journey but service delivery is changing. for banks and consumers alike in the services, with enhanced customer experience l complying with regulatory requirements There are currently over 3.1 million ATMs foreseeable future, but also that the untapped the ultimate objective. The Accenture Banking in operation around the world, and this is potential for cost optimisation and revenue Technology Visions 2017 reveals that 80% of l understanding your customer and adapting in set to surpass four million by 2020, and generation will lead, in the medium term, to bankers believe artificial intelligence will play real time more financial institutions are embarking an evolution of ATM operating models”. a significant role in accelerating the adoption l preparing to meet the requirements of the on programmes to update networks and of digital technology at the branch, providing GDpr associated legacy platforms. WINDOW OF OPPORTUNITY employees with the tools and resources to l Disruptive innovations in car financing With changing customer expectations better serve consumers. l captives of the future: old world vs new world driving new approaches to services, to what With ATMs increasingly able to perform more AI-enabled tools will help banks identify extent can we expect changes in the self- transactions than ever, there is a window of consumer preferences and we’re already l a car retailer’s perspective on the challenges service channel to impact the delivery of opportunity to turn customer interaction with seeing many large brands, including financial the dealer world faces banking journeys in the next few years? ATMs from transactional to an engagement institutions, integrating bots and AI into their l embracing the digital world and innovative As more consumers turn to digital or tool for new products and services. digital and customer care strategies, alongside distribution models self-service channels to complete everyday This, in turn, gives branch staff more their human agents. AI and machine learning tasks and transactions, financial institutions freedom to focus on customer services, is also used to develop the analytical ability of are transforming branch networks to reshape building relationships with customers and banks to spot non-standard behaviour patterns the customer experience. Bank formats are strengthening brand loyalty. and fraudulent transactions. becoming tailored to meet customer demands Channel integration is the vision for future The financial services industry is undergoing Headline Sponsor: Gold Sponsors: Silver Sponsors: Brand Sponsors: at individual locations. As part of this trend, banking services, allowing consumers to unprecedented change and more innovations some branches are becoming smaller and start a transaction on one device and finish are on the way. New technologies are helping smarter, and ATMs are critically important it on another. As a million more ATMs are banks to identify consumer preferences, to the branch modernisation process in this predicted to roll out worldwide, they will enabling them to respond with services connected banking environment. service populations that have adopted mobile that develop meaningful and personalised Exhibitor: Panel Hosts: Table Hosts: Supported by: Flexible technology can serve an devices as key part of daily life – so it is no consumer relationships. increasingly diverse range of purposes. surprise that we are seeing trends combining The challenge will be how quickly financial Everyday consumer banking transactions mobile technology with new ATM services. services can create and implement new are combined with new features, such as For example, innovation advances mean customer journeys, delivering the service 24-hour access to remote tellers via a video smartphones and wearable technology such consumers have now come to expect. < For more details please contact 22 | March 2018 | Cards International Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580

CI March 2018 553.indd 22 26/01/2018 10:53:05 Motor Finance europe 2018 26th april 2018 l adlon Kempinski Hotel, Berlin, Germany

The 4th annual Motor Finance: Europe Conference and Awards leverages insight and expertise from across the industry to deliver a programme that offers you the latest innovations, strategies and technologies driving the industry forward. We will bring together the industry’s thought leaders, experts and challengers to discuss the key factors leading market growth and how to adapt to the ever changing marketplace.

The highlights include:

l the impact of digitalisation on the automotive industry l complying with regulatory requirements l understanding your customer and adapting in real time l preparing to meet the requirements of the GDpr l Disruptive innovations in car financing l captives of the future: old world vs new world l a car retailer’s perspective on the challenges the dealer world faces l embracing the digital world and innovative distribution models

Headline Sponsor: Gold Sponsors: Silver Sponsors: Brand Sponsors:

Exhibitor: Panel Hosts: Table Hosts: Supported by:

For more details please contact Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580

CI March 2018 553.indd 23 26/01/2018 10:53:05 HEAR ∤ NETWORK ∤ DISCOVER ∤ CELEBRATE SHAPE THE FUTURE OF RETAIL BANKING Retail Banking: Nordics 2018 21st March 2018 ∤ Stockholm, Sweden

The brave new world of retail banking has arrived but are banks in the Nordics in a position to take advantage? From January 2018 PSD2 comes into force and with it the era of open banking begins. Traditional financial institutions and new entrants such as challenger banks, alternative lenders, crowd funding and P2P have to a greater or lesser extent been preparing for the new paradigm, but will they thrive or just survive? At this critical point, Retail Banking: Nordics 2018 will bring together more than 200 industry leaders from traditional and new banks, providers and other key industry stakeholders and influencers. This comprehensive and inclusive event will explore, through a series of keynotes, panel sessions and round tables the opportunities and challenges financial institutions face as they enter an era of truly digital banking.

Topics to be debated during the event will include:

∤ Open Banking: can banks win through collaboration based on open APIs and data sharing? ∤ PSD2: what happens next? ∤ Bank/Fintech collaboration: is it really possible? ∤ AI and machine learning: hype or reality? ∤ Digital identity and biometrics ∤ New and disruptive business models ∤ The evolution/revolution in customer expectations Join the debate at Retail Banking: Nordics 2018 to engage, discuss and meet the leading game changers in the industry and to formulate new strategies and business models to take you forward in this brave new world of retail banking.

For more details please contact: Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580

CI March 2018 553.indd 24 26/01/2018 10:53:07