Making Waves with Contactless

December 2016 Issue 538 www.cardsinternational.com

MAKING WAVES WITH CONTACTLESS

• SECURITY: Biometrics • RESEARCH: European Millennials • EVENT: Digital Banking Club • COUNTRY SURVEYS: Luxembourg, Lebanon & Kenya

CI 538.indd 1 02/12/2016 13:30:13 Untitled-2 1 02/12/201614/11/2016 13:5910:39 Cards International EDITOR’S LETTER

CONTENTS EDITOR’S LETTER 6 SECURITY: BIOMETRICS David Parker from Polymath A post-recession high: US credit Consulting argues that biometrics are not all people wish it to be. Alongside some risks with regards to card accounts hit 342 million personal data, it does not even work all the time ew US credit card mum contactless transaction Coutts, RBS plans a further pilot 7: EVENT DIGITAL BANKING CLUB accounts rose to 84.9 limit from £30 to £50? with retail banking customers in The Digital Banking Club’s latest million in the second Growth in card spending the New Year. debate, at the historic Law Society in London, honed in on the Internet quarter – the most declined slightly in September Simon McNamara, chief of Things and how it could aid N with an annual rate of 4.0% – administrative officer of recent quarter for which fig - financial services. A popular topic, ures are available, up 11% more than twice lower than a NatWest said: “The technology the discussion covered a number of subjects, including payments, from a year earlier according year ago (8.3%). that we’ve been able to deploy wearables and customer needs. to data released by the Ameri- As the UK Cards Association with the help of BioCatch has Patrick Brusnahan reports can Bankers Association. suggests, slower growth in card played a crucial role in strength- 10 RESEARCH: EUROPEAN This growth in new account spending could be linked to a ening our security systems.” MILLENNIALS opening contributed to a post- slight increase in the annual con- Saving the bank material loss- The millennial market is one of recession high of 342 million sumer price inflation rate. es, the system was able to stop the most sought after in the new technologically-savvy era. So how open credit card accounts. On a positive note, the annual fraudulent attempts to transfer can banks attract this bunch? Other positive stats included growth rate of the number of funds, identify remote-access tro- Patrick Brusnahan reports this snippet: the post-recession purchases (11%) continued to jans during an online session, and 11 PRODUCTS: CONTACTLESS high of 84.9 million new accounts outstrip that of spending, high- identify fraud attempts occurring According to Timetric research, the included only 20% of sub-prime lighting a consumer preference across multiple channels. global contactless card transaction accounts, down sharply from to use cards more frequently for Much is made of the need to value will almost quadruple between 2016 and 2020. Several regions have 28% in 2009. lower-value payments. optimise digital onboarding, accepted contactless as a member of The UK has also reported In the UK one of the most and rightly so. the financial family, but will it last? Patrick Brusnahan writes record statistics. Payment card interesting biometrics pilots The news that Fujitsu has spending amounted to £54.7bn is well underway at RBS. Its launched Smart Origination, 16 COUNTRY SURVEY: LUXEMBOURG ($68bn) in September, up by NatWest subsidiary has been customer onboarding technol- 18 COUNTRY SURVEY: LEBANON 0.6% on August. The number trialling Israeli tech startup ogy, enabling financial institu- 18 COUNTRY SURVEY: KENYA of purchases increased to reach BioCatch’s behavioural biomet- tions to collect, process and ver- 20 GUEST COMMENT: CHARGEBACKS911 a record 1.3 billion transactions. rics to authenticate customers’ ify documents in less than five Merchants are concluding final Predictably, September also online activity. minutes, is interesting. preparations to ensure that they make the most of the seasonal witnessed another contactless BioCatch uses a system that Fujitsu’s cooperation with surge. However, online retailers record: spending on contactless recognises users by how they ImageWare Systems, InAuth, must maximise the biggest opportunity of the year and avoid cards increased to £2.4bn (4% of physically use their computer or Intelligent Environments, Mitek the New Year chargeback hangover, the total value) with correspond- tablet, instead of usernames and and Trunomi operates across says Monica Eaton-Cardone ing purchases reaching 275 mil- passwords. multiple channels in an attempt lion (22% of the total volume). It captures more than 500 to increase conversation and That 22% figure for Septem- points of behaviour, including reduce the cost of new customer ber 2016 compares to 8.9% in hand-eye coordination, pressure acquisition, and is among the September 2015, and a mere and various finger movements more interesting news stories of 3.2% in September 2014. to create a unique user profile. the month. How long before the industry Following a successful pilot Douglas Blakey moves to increase the UK maxi- at RBS’s private banking unit [email protected]

Editor: Douglas Blakey Sub-editors: Patrick Fogarty, Nick Midgley For more information on Timetric, visit our Tel: +44 (0)20 7406 6523 website at www.timetric.com. Director of Events: Ray Giddings Email: [email protected] As a subscriber, you are automatically Tel: +44 (0)20 3096 2585 entitled to online access to Cards Email: [email protected] Financial News Publishing, 2012 Deputy Editor: Anna Milne International. For more information, please Registered in the UK No 6931627 Tel: +44 (0)20 7406 6701 telephone +44 (0)20 7406 6536 or email Email: [email protected] Head of Subscriptions: Sharon Howley ISSN 0956-5558 [email protected] Tel: +44 (0)20 3096 2636 Unauthorised photocopying is illegal. The Senior 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: Harry Hooker London retrieval system or transmitted by any form or Tel: +44 (0)20 3096 2586 EC4V 5EQ Asia Editorial: Xiou Ann Lim means, electronic, mechanical, photocopying, 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]

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CI 538.indd 1 02/12/2016 13:30:26 NEWS: DIGEST Cards International

PRODUCTS Alfa-Bank, Perekrestok bank’s website or via the My Perekrestok and MasterCard to launch app. co-branded cards Alfa-Bank executive board member and head of retail Mikhail Povaly commented: Alfa-Bank, MasterCard and Perekrestok, the “Our joint project with the Perekrestok supermarket chain operated by X5 Retail, chain is highly relevant for today’s Russia: have collaborated to launch three new This partnership between a bank and a food co-branded cards in Russia. retailer is unprecedented in the local market. The MasterCard-Perekrestok-Alfa-Bank “I am confident that the MasterCard- portfolio includes a reloadable card, a debit Perekrestok-Alfa-Bank cards will be popular, card and a credit card. as they provide savings and enable families to All cards feature MasterCard’s contactless get some goods at Perekrestok supermarkets technology, and cardholders can earn points for free. on purchases that can be redeemed against Prepaid cards can be recharged on “We have made the cards as user-friendly goods at Perekrestok supermarkets. Perekrestok’s website, the My Perekrestok as possible. With free transfers from cards X5 Retail Group said a prepaid card will mobile app and at the ATMs of Alfa-Bank issued by other banks, a free mobile app, earn two points for every RUB10 ($0.10) and its partners. and an attractive reward points system, we spent at Perekrestok, and one point for every The debit and credit cards can be obtained expect great demand and high levels of cus- RUB10 spent elsewhere. from any Alfa-Bank outlet, through the tomer satisfaction.”<

SECURITY Leumi Card taps SecuredTouch's size, touch pressure and touch surface. financial apps, due to the need for complex biometric solution for user By verifying the profile, Leumi Card will passwords. authentication be able to recognise in real time whether the “Integrating the technology in Leumi card owner is the one operating the app. As Card’s mobile app is aligned with regulator Leumi Card, a credit card subsidiary of the well as the initial login stage, the solution’s directives for digital banking communica- Israel-based Bank Leumi, is set to launch a identity verification scrutinises every in-app tions that require two forms of authentica- mobile security product featuring Secured- activity. tion.” Touch’s behavioural biometric technology. Leumi Card executive vice-president for The technology, which has successfully SecuredTouch’s technology will enable development and strategy Ohad Maimon passed a comprehensive experimental and Leumi Card to identify users based on their commented: “This is an international break- testing phase, will be made available to cus- unique personal profiles within their mobile through that enhances user experience while tomers over the next few months, Leumi devices, by checking attributes such as finger solving the problem of poor conversion in Card said.<

PAYMENTS Verifone announces European and devices are now available to small- to security, and multidimensional features for launch of Verifone Engage medium-sized businesses across Germany enhanced retail experiences and new levels through network service provider Inter- of personalisation with consumers. Payment technology firm Verifone Card, which was acquired by Verifone “The power, performance and quality of has launched its Verifone Engage in 2015. Engage are especially reassuring for our part- payment device in Europe, with Merchants can integrate Veri- ners.” the countertop solution Veri- fone Engage with a cash register, Anne Rueschenschmidt said: “We had fone V200c at German fashion or use it as a standalone solu- many customers using the new device dur- retailer Anne Rueschenschmidt. tion. ing our first weekend, and we were happy The Verifone V200c is part of Verifone Germany vice- to smoothly and quickly accept contactless the new Verifone Engage port- president and general manager payments. folio, and has an interactive user Markus Hoevekamp said: “The “We are now in the process of equipping interface and enhanced security. Verifone Engage family approach four more stores with Verifone to prepare for The V200c accepts all types of payment offers consistently high-quality and design, a busy holiday season.”<

PAYMENTS Chase launches new digital locations in the US, and nearly 1,400 Best said: “Chase Pay is special because it’s the payment solution Buy stores. first digital payments solution that benefits To make a payment, users need to down- both consumers and merchants. Chase, the consumer and commercial load the Chase Pay app and sign in using the “By focusing on merchant needs first – banking business of JPMorgan Chase, same user ID and password as they use on lower costs, zero fraud liability – we’ve got has launched Chase Pay, a new digi - Chase.com. The app will be preloaded with a real opportunity to break through the tal payment solution that will work in customers’ Chase Visa credit, debit and liq- mobile payments noise.” stores, in apps and online. uid cards. JPMorgan Chase also plans to launch the Customers can now use the mobile wallet Chase president of strategic alliances solution at Phillips 66, Conoco, 76, Walmart, at more than 7,500 participating Starbucks and loyalty solutions Jennifer Roberts ShopRite and The Fresh Grocer.<

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CI 538.indd 2 02/12/2016 13:30:39 Cards International NEWS: DIGEST

REGULATION European Commission forms Services and the Capital Markets Union said: task force to boost fintech “We see technological innovation in finance innovation as a development that we need to encourage and enable. It brings huge opportunities for The European Commission has created an consumers and industry. internal financial technology task force to “The TFFT will help us make sure that our assess and make the most of innovation in policy supports the pursuit of these opportu- this area. nities, while addressing any risks that may The Task Force on Financial Technology emerge. Efficient financial markets need to (TFFT) will bring together services respon- make the best possible use of the opportuni- sible for financial regulation for the Digital ties that technology presents, while also pre- Single Market. serving competition and making sure new It will engage outside experts and operating systems are safe.” stakeholders with the aim of formulating The TFFT will be co-chaired by Roberto policy-oriented recommendations in 2017. Viola, director general of DG Connect, and EC vice-president Valdis Dombrovskis, Olivier Guersent, director general of DG responsible for Financial Stability, Financial Fisma.<

MOBILE Google launches Android Pay in Poland became the first country in Central for Poland Bartosz Ciolkowski said: “Our Poland and Eastern Europe to introduce the service. MasterCard Digital Enablement Service tech- Customers in Poland can now use Android nology provides MasterCard cardholders Google has launched its mobile payment sys- Pay to make contactless payment at more with convenience and security. tem Android Pay in Poland. than 400,000 retail outlets. “Thanks to the high market share of At the outset the service will work with Commenting on the launch, MasterCard Android OS in Poland and our highly devel- MasterCard cards issued by Alior Bank, said: “It provides millions of MasterCard oped payment infrastructure, our country T-Mobile Banking Services and Bank Zach- cardholders in the country with yet another has the potential to widely adopt the tech- odni WBK. Other banks will be consecutive- innovative, fast and secure way to pay.” nology in a short time frame, as was the case ly deploying the Google service. MasterCard Europe country manager with contactless payments.”<

DISTRIBUTION UnionPay to expand card acceptance in Portugal Unicre has enabled 40,000 of its POS ter- Unicre CEO Luis Flores commented that minals to accept UnionPay cards, and Uni- Unicre will deepen its cooperation with UnionPay International has signed an agree- cre will extend the acceptance of UnionPay’s UnionPay International, in a move to allow ment with Portugal-based acquirer Unicre to cards at its remaining 40,000 POS terminals. more local merchants to accept UnionPay enable all merchants in the Unicre network China UnionPay chair Ge Huayong said cards. to accept UnionPay cards. the Chinese firm plans to enable all POS ter- The agreement will make access to finan- Around 40% of merchants in Portugal will minals in Portugal to accept UnionPay cards cial services more convenient for Chinese accept China UnionPay cards as a result. by the end of 2017. visitors to Portugal.<

STRATEGY Visa amends its EMV debit card The move follows new guidance from the on a debit card’s EMV chip to route a point- transaction-routing policies Federal Reserve, and addresses the concerns of-sale transaction to the debit network of of a Federal Trade Commission inquiry. their choice. Visa has made amendments to its chip debit With Visa chip cards, debit routing and The common AID supports not only the card transaction-routing policies in a move to processing are enabled by two payment Visa and MasterCard networks, but also help merchants and acquirers better under- application identifiers (AIDs) on the chip over a dozen PIN-debit networks. stand the implementation options relating to – the US Common Debit AID and the Visa Visa has clarified that merchants can opt the adoption of EMV chip technology in the Debit AID. An important modification by to use the Common Debit AID exclusively to US. Visa enables merchants to use only the AIDs route US debit transactions.<

PAYMENTS UAE theme park goes cashless The payment solution will enable mer- MasterCard’s senior vice-president and with launch of MasterCard chants to accept payments regardless of general manager for the UAE, Eyad Al Kour- payment service which device or payment brand is being used. di, commented: “In keeping with the needs Guests will be able to make simple tap- of millennials, our safe, simple and smart MasterCard has agreed a partnership with and-go payments, and benefit from a seam- Payment Gateway Services solutions pro- IMG Worlds of Adventure, a theme park less omni-channel payment experience using vide the technological framework and capa- in the UAE owned by the Ilyas and Musta- the IMG Worlds of Adventure mobile app, bilities that a state-of-the-art entertainment fa Galadari Group, to provide its Payment which works with MasterCard Payment destination like IMG Worlds of Adventure Gateway Services. Gateway Services. needs.”<

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CI 538.indd 3 02/12/2016 13:30:46 NEWS: DIGEST Cards International

STRATEGY Cardtronics renews ATM Cardtronics, a Houston, Texas-based provid- total spread across 32 states and 13 of Krog- services contract with Kroger er of ATM and financial kiosk products and er Co.’s local banner names. services, has entered into a long-term ATM Kroger personal finance president Kath- services agreement with The Kroger Co., a leen Kelly said: “With the broad geographi- grocery retailer in the US. cal reach of the Kroger family of companies, The contract will enable Cardtronics to Cardtronics is uniquely capable of being a continue to provide ATM services, while nationwide ATM services provider for many extending the relationship between the two of our grocery and convenience stores. companies that was first established in 2010. “Cardtronics has helped us make conveni- At present, Cardtronics owns and oper- ent cash access part of the Kroger shopping ates nearly 1,300 ATMs in the Kroger group experience since 2010, and will continue to of grocery and convenience stores, with that do so for many years to come.” <

PRODUCTS Dubai Islamic Bank and flydubai to enrol in Open, a newly launched reward ship with flydubai. This unique range of introduce co-branded cards programme from flydubai. Cardholders can credit cards caters to an extremely diverse earn Open reward points every time they use audience in the UAE who travel frequently Dubai Islamic Bank (DIB) has introduced a the DIB flydubai credit card for local and for business and pleasure. new collection of co-branded credit cards in international purchases. “Critically, DIB’s 1.7 million customer collaboration with flydubai. Customers also receive benefits including base provides us with excellent insights into New products include Classic, Platinum discounts at selected retailers, airport lounge the growing needs of regional travellers. and Signature cards that aim to meet the access, and travel privileges. Therefore, it was a natural step for us to part- needs of different customer segments. DIB group CEO Adnan Chilwan said: “We ner with flydubai and introduce a card that DIB said the new cards will allow travellers are delighted to have this exclusive partner- is both innovative and convenient to use.”<

PRODUCTS allpay designs first debit card for fully mobile challenger bank. begin customer trials and launch our new Starling Bank Starling Bank’s specific brief to allpay was banking concept in early 2017.” ‘to produce a new debit card that would allpay production director Ceri Davis com- make a real impression and be unique in the mented: “I am really pleased we could assist market’. Starling Bank with the creation of its new Despite a short eight-week deadline, allpay debit card. stated it was successfully able to facilitate “Our aim was to deliver the modern, crea- development quickly and effectively. tive and innovative design in keeping with allpay also provided consultancy services the bank’s brief and timeline. on chip profiles and chip personalisation ver- “While we are well regarded for our range ification completion, which enabled Starling of payment collection services, we have Bank to issue its cards as scheduled. quickly established a solid reputation for Starling Bank COO Julian Sawyer said: producing strong, effective print-based com- “We have collaborated closely on the print munications material. and technical development of our card to “Our successful foray into card production produce an impressive and distinctive result. only highlights our broad range of services, UK-based payment specialist allpay has pro- “We are looking forward to the continua- and we look forward to future collabora- duced the first debit card for Starling Bank, a tion of our successful partnership when we tions.”<

REGULATION Visa lambasts new EU online transaction authentication rules online transaction worth €10 will have to ley said: “These new proposals threaten to go through additional steps such as enter- seriously disrupt the way we all shop online. Visa has warned that the proposed European ing passwords or codes, or using a card “The plans will bring a host of complica- Strong Customer Authentication rules on reader. tions and inconveniences, with little – if any e-commerce will threaten to disrupt online The payment processor pointed out that – benefit to consumers. shopping and cause inconvenience to con- 61% of European consumers said that “We completely support strong security sumers. increased checkout steps will cause them to measures. However, managing payments is Lambasting the European Banking Author- abandon purchases. Visa believes that half of always about balancing security with con- ity’s ‘one-size-fits-all’ approach to tighten the all European consumer e-commerce will be venience. authentication rules for online transactions impacted as a result of the rules. “The planned one-size-fits-all approach over €10 ($10.57), Visa cautioned that the Visa added that the new rule will affect the tips the balance too far one way, making it new rule will lead to a rise in the volume of operations of express online checkouts and difficult for consumers to make purchases transactions declined, complicated checkout automatic in-app payments where cards are wherever, whenever and on whatever device systems, and more abandoned purchases. already stored. they want. It will annoy consumers and dam- According to the proposed rules, each Visa chief risk officer for Europe Peter Bay- age business.” <

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CI 538.indd 4 02/12/2016 13:30:52 Cards International NEWS: DIGEST

PRODUCTS Lotte Card taps Gemalto’s It also doubles as a credit card for online venient alternative way of paying for daily contactless sticker for payments shopping, and can be applied for directly expenses. in South Korea from Lotte Card’s website, or through Lotte “Market response has been overwhelming Group’s department stores. with close to 300,000 cards issued since the South Korea-based Lotte Card has selected Equipped with an antenna and an initial launch in April.” Gemalto’s Optelio contactless stickers to ena- advanced shielding technology, the sticker Gemalto’s president for Greater China and ble users to make payments at 35,000 stores. reduces the interferences common in many Korea, Suzanne Tong-Li, said: “Lotte Card Designed to adhere to the surface of any smartphones. is committed to innovation, and the sticker mobile phone, the tiny sticker is around one- Lotte’s smart business team leader, Kim card has proven to be an effective way of third of the dimensions of a standard bank- Byung-jun, said: “Featuring five fashionable quickly introducing mobile contactless paying card. designs, the Lotte Sticker is a fun and con- ments to users.”<

DISTRIBUTION Barclays to launch contactless Barclays is set to release the UK’s first is for the customer to tap their phone on a mobile cash service in the UK contactless mobile cash service, allowing contactless reader to withdraw the cash, usu- customers to withdraw money by tapping an ally within a maximum of 30 seconds. NFC mobile phone or contactless debit card. The contactless mobile cash service The service, currently being piloted in the removes the risks of magnetic card skimming north of England, will enable customers to and distraction fraud. withdraw up to £100 ($124) in-branch. Barclays UK CEO Ashok Vaswani said: Planned to be launched in over 180 bank “We are always looking for new ways to branches in 2017, the service will be enabled make our customers’ lives easier and their on over 600 in-branch machines. finances even more secure. Customers can pre-select the amount “Our customers now expect to be able to they wish to withdraw through the Barclays use their smartphone to make everyday pur- Mobile Banking app. All that is then required chases.”<

RESEARCH Cash is king in Canada, for now According to the report, which focuses Since 2011 the use of cheques has Cash and other paper transactions such as on trends between 2008 and 2015, the pay- decreased by 25%. Although the payment cheques still dominate the Canadian payments market grew to 20.9 billion transac- method continues to decrease, the value has ment system, according to a report released tions and was worth more than CAD8.9trn been buoyed by Canadian commercial enter- by Payments Canada, a payment clearing ($6.6trn) in 2015. Contactless payments rose prises, and grew by more than 2% on aver- and settlement system. by 70% in terms of both the value and vol- age each year. The Canadian Payment Methods and ume of transactions in 2015. Payments Canada chief risk officer and Trends report highlights the changing pay- Cash continues to account for the highest vice-president Carol Ann Northcott said: ment behaviours of Canadian consumers and transaction volume. However, since 2011 the “The report is an important window into the businesses, and points out that new payment use of cash has decreased by 20%. future of payments technology in Canada. channels are growing at a substantial pace. Online transfers are the fastest-growing “While paper-based payment methods These trends underpin the requirement for method, accounting for an estimated 120 continue to decline, emerging technology Canada to adapt its payment systems as the million transactions worth CAD45bn in is shaping the Canadian landscape of the global payments ecosystem changes. 2015. future.” <

PRODUCTS Majid Al Futtaim Finance Using cloud-based technology that can be Majid Al Futtaim Finance CEO Rasool launches credit card for travel accessed from a desktop, tablet or mobile, Hujair said: “We are excited to bring Cor- and entertainment expenses the new card offers increased efficiency porate to the market, as we are bridging the and tangible savings to firms, and provides travel and expense management processes Majid Al Futtaim Finance, a financial solu- cardholders with an effortless way of manag- with a premium credit card. tions provider and the dedicated financial ing travel and expense budgets. “Corporate matches the requirements of arm of Dubai-based holding company Majid As well as offering a 25% average sav - modern businesses with a product that will Al Futtaim, has launched a credit card to ing on costs, the card helps to cut the time ultimately save time, money and effort in a help enterprises manage travel and expense spent on expense reconciliation, and mini- way that directly impacts the bottom line. programmes. mise human error margins and out-of-policy “At Majid Al Futtaim Finance, we work Known as Corporate, the card is expected transactions. towards providing efficient, smart solutions to transform the way businesses manage Additional benefits include access to more for businesses and consumers. their travel and entertainment processes than 650 airport lounges, complimentary “This programme epitomises this by offer- by combining a premium credit card with travel insurance, VAT recovery, emergency ing a digital experience that revolutionises an online travel booking tool and expense- assistance, and discounts at selected Majid how companies manage and control their management system. Al Futtaim partners. travel and expense programmes.”<

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CI 538.indd 5 02/12/2016 13:30:54 SECURITY: BIOMETRICS Cards International

Biometrics: Is it really the secure future of which so many of us dream? If you work in the payments space, you would need to have been behaving like an ostrich with its head in the sand to miss the increasingly large barrage of persuasive arguments from those with supposed expertise in the area proclaiming the new messiah of biometrics. David Parker writes

iometrics, in one form or another – So there we have it, a nice and simple slam- where you can edit people’s voices: Adobe and they range from palm vein scan- dunk: consumers want biometric authentica- has announced it is working on an audio ver- ners and heart beat recognition to tion. However, there are always two sides to sion of Photoshop. B facial identification and brain wave any research story. The software was announced at this year’s pattering – are forecast to be the perfect GMX research found that more than 60% Adobe Max event, headed by developer Zeyu security future. of the UK public would rather use passwords Jin. After analysing 20 minutes of speech than biometric logins, while more than 40% from a given source, VoCo can accurately Why are biometrics the perfect future? do not want companies to have any access recreate the source’s voice, and configure that They offer great security that cannot be beat- to their biometric data. In total, 41% of voice into new words and phrases that were en; after all, no two of us are the same. respondents said they are afraid that a mal- not present in the original clip. This promises a future where, using our function in biometric technology will leave By using a simple text box, users can add unique traits, we can log in and authenticate them locked out of their own accounts, while new words into the speech, seamlessly recre- with financial institutions safe in the knowl- 33% of people said they are concerned that ating a voice to edit a given clip in any num- edge that they know it is the right person. their biometric information could be com- ber of ways. The most important question to ask is: promised by criminals. So voice biometrics, already launched by What do consumers think of this nirvana? In the US the picture is similar. Research Barclays and HSBC, now starts to look rath- After all, the first question about anything from Email.com found that 42% do not er less than 100% secure. After all, the point new is: Will your customers use it? If you want companies to collect, save and use per- of this is to stop you having to go through introduce it, will your customers switch to sonal data. Some 42% were worried about some of the rigours of normal security ques- another service they find easier to use? not being able to access their online accounts tions, but if the person talking could be any- As ever with the research and analysis of in case of a malfunction, and 30% were con- one, then you are back to square one and potential consumer behaviour, not everyone cerned about online criminals thwarting bio- need full security and passwords. agrees. But as one might expect, Visa and metric authentication methods. Finally, 9% Criminals are, in many ways, brilliant busi- MasterCard have been strong supporters in said that they find the use of biometric data ness people. They assess the effort required their research: free of risk. versus the potential reward, and make a sim- • MasterCard: 90% of participants in a pilot ple business decision: Are the rewards greater indicated that they would like to replace So do consumers want it? than the effort? As was shown by the recent their password with biometric identifica- Choose your answer and there is research to Tesco hack, where NFC-enabled phones tion definitively. Almost 75% of users support it. However, picking up on the point were used for the transactional element, they were convinced that biometric payments of criminals and risk is key to the second will exploit any flaw. will decrease fraud. issue. Does biometrics provide the security? The point that I think a lot of biometric • Visa EU: 68% of consumers want to Well, it took only days for the Apple 5S fin- solutions miss is: do you trust an organisa- use biometrics as a method of payment gerprint scanner to be hacked. tion to collect and authenticate your infor- authentication. If we look to voice biometrics, surely that mation? Perhaps even more importantly: There have also been other supporters. is foolproof as we are continually told how How do they know the biometric data they Research by Telstra Global highlighted that unique each person’s voice is. Well yes and collect is actually for the person they say it the majority of US consumers using mobile no. You see, those nice people that brought is for? banking applications prefer mobile devices you picture editing software have announced Someone could steal my ID uses it to create to feature biometric authentication instead they are working on a similar programme biometric data on themselves. This then gets of passwords and usernames. passed around to other parties; all of a sud- It also found that 66% of US consumers den my biometric security is compromised. feel that biometric authentication would be The issue is how to ensure the biometric more secure and help decrease the risks of data captured in the first place really is attrib- fraud, while 25% stated that they would utable to the person whom it says it is for. even consider sharing their DNA with their The hurdle the payments industry faces is financial institution in exchange for a more that – with consumers in many respects still simplified authentication process. highly sceptical of biometrics – if any one Socure also carried out research and found solution is launched and significantly com- that 52% of customers would rather use promised, how far back will it set the whole biometrics as an alternative to traditional process of creating new forms of biometric passwords. identification?<

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CI 538.indd 6 02/12/2016 13:31:08 Cards International EVENT: DIGITAL BANKING CLUB

How can the Internet of Things improve the banking experience? The Digital Banking Club’s latest debate, at the formidable Law Society HQ in London, honed in on the Internet of Things and how it could aid financial services. The discussion covered a number of trends, including payments, wearables and customer needs. Patrick Brusnahan reports

efore an enthusiastic full house and commented: “In [BBVA’s] open platform, was connected, burglary would be nearly a high-level panel comprising the one of the most popular APIs was payment impossible.” newly published Digital Banking stats. You can do a lot with data. Shashi Bhat, head of EMEA digital bank- Club Power 50 and Rising Stars, “Banking has always been about data. The ing at Citi, warned that banks should not B analytics have changed and the IoT allows us get ahead of themselves when applying this the latest Digital Banking Club live debate focused on just how the Internet of Things to do the same things better as well as new technology. (IoT) might benefit financial services. things.” “We need an air of caution. Success and While the IoT may seem to some as a con- Frankish added: “Data is difficult because failure are not based on certain use cases, cept straight out of science fiction, Simon we have so much of it. It’s about getting the but on standards. Mobile payments became Cadbury, director of strategy and innovation right mix. competitive and never really got standards at Intelligent Environments, says the reality “What has worked in the IoT has been going,” he says. is closer than many think. solving the problem of inconvenience. What Cadbury concurred: “The biggest barrier He stated: “The IoT is not the future, it is if everything can be done with your thumb- will be if consumers don’t trust the IoT.” the here and now. Banking was one of the print at home?” Ankit Chhajer, digital lead, customer expe- first industries involved with the IoT, via the Richard Rowntree, outgoing head of spe- rience design and sales innovation, at Royal ATM. There are exciting opportunities out cialist banking at RBS Williams & Glyn, and Bank of Scotland (RBS), said it could be used there that will be realised. Payments are obvi- shortly to assume the role of MD mortgages for a multitude of applications. ously an area with a lot of opportunity.” at Bank of Ireland, said: “There’s a genera- “The fundamental truth is that it’s about Kate Frankish, head of payments strategy tional issue. You need multiple channels for what customers want. The IoT collects a at Tesco Bank, agreed: “Payments are an different customers. You need a wide service real-time view. It makes customer pinpoint- essential part of the IoT.” offering. To convince people, it’s about what ing better,” Chhajer explained. Teppo Paavola, chief development officer they miss if they don’t have the IoT.” Bhat added: “The benefit of being a large and general manager of new digital busi - Rowntree continued on the benefits, stat- company is being able to play in all spaces. nesses at BBVA and the Digital Banking Club ing: “We will be the last generation to know There are some stunning use cases. We are all Power 50’s Personality of the Year 2016, so little about our health. And if every house consumers of the IoT, if anything.”

A chance to experiment? In November last year, BBVA agreed to purchase a 29.5% stake in digital-only UK startup Atom Bank. The chair of the debate, Douglas Blakey, asked Paavola if Atom gave BBVA a chance to experiment with the IoT. Paavola said: “I hope both BBVA and Atom have learned, and can learn, from each other. Every bank needs an opinion on open banking. “But it wasn’t just Atom that attracted us, it was the UK. The UK is digital-friendly; digital adoption is quick.” The banking sector is often described as one of the most trusted industries, but how long will this last? “In the UK, people hate the banks, but they also trust the banks. People do not really own their data. We’d like to, but this is a con- tinuing discussion. How is all of this going to be controlled?” Paavola continued. “It’s too easy to sit back and assume we have the trust. When you work with all of ❙❙David Webber, managing director of Intelligent Environments the big technology companies, they will eventually be trusted. They’ve seen that.

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CI 538.indd 7 02/12/2016 13:31:12 EVENT: DIGITAL BANKING CLUB Cards International

“Also, don’t think that banks are so much out there. The best have cutting-edge tech- somehow reach all that and add social media better at security because the top technology nology. as well you can make everything much easier” companies are very good at security. Banks “The idea that banks have the best technol- Chhajer continued. will eventually get their security from them. ogy is long gone. We do offer challenges in “Only 25% of our customers, maybe a “If they have this agility, and if our great terms of scale; that face does attract technol- maximum of 30%, will have a happy experi- security is just a perception, they will be ogy companies.” ence opening an account.” trusted because they know so much about Have banks tried to hire experts from tech- Rowntree added: “It gets interesting as me and they do it in a nice way. It might be nology companies? Is that the way forward, utilising data and the IoT starts to remove only a matter of time.” to make banks more like fintech start-ups? barriers to switching. If the IoT simplifies “Younger generations understand the pit- Simon Cadbury stated: “You can try to the application process, it opens the door to falls of data,” explained Frankish. “Data recruit specialists, but technology is chang- account switching.” protection could, however, become more ing so fast, it’s better to find someone with complex than it already is.” the right mindset and the ability to learn, as Will we be allowed to do this? Rowntree added: “There will be privacy they can adapt and move on.” One final point revolved around consent concerns that scare people. You’d be sur- “Over the last five years, we have noticed – mainly users’ consent in how banks and prised the amount of information that people it has to be an amalgamation of different other companies use their data. give away.” skills,” Frankish added. Frankish stated: “Banks have to adhere to However, despite the risks, Rowntree fully conduct regulations. Conduct is about how believes that the IoT is something that banks Signing up for an account we treat these people and their data. It has needed to take up. “There is a completely One area the IoT would make drastically opened up into a wider capability. new opportunity out there. If we don’t do easier is identity verification or account “We’re not sure we need to change the way this, competitors will,” he argued. sign-up. we do things, but we need to understand the Frankish said: “Imagine a world where a wider implications of data and how that fits The payments space customer has a digital passport that tells peo- into conduct.” A comparison began to grow between the ple who you are. You can go onto an applica- Rowntree joked: “I don’t think we need to IoT and payments, both on how their devel- tion and tick it and then it instantly knows it think about it too much because the regula- opments were similar, and on how they could is that person. It’ll save reams of paper trails. tor thinks about it a lot.” link. There is so much data out there, we expect Cadbury concluded: “It’s a good point and Bhat summarised: “A lot of non-bank banks to be clever about it.” it’s a point that can get quite complicated. players invaded the payments space first, but “You’ve got so much. You’ve got device It’ll take them time to work these things out are working into the IoT now.” profiling, you’ve got geo-location, if you can though.”< A number of industries have embraced it. Cadbury said: “Insurance is the industry Simon Cadbury: The internet of billions benefitting most from the IoT at the moment. Auto-finance is ripe.” If you think that the IoT sounds like the future Analysts expect the size of the IoT to swell to 20 “I’d like to see more collaboration between then you are not alone, but you are too late; it billion or even 30 billion things by 2020, and fintech and medical technology,” Rowntree is already here and it is already twice the size of contribute more than 10% of the data – some added. the global smartphone network. 4.4 zettabytes – in our digital universe. Frankish said: “It will help with education, There are more than 2.6 billion smartphone Within 10 years it could create as much as financial and otherwise.” subscribers in the world and, while growth in However, Bhat believed that its full poten- “$11.1trn a year globally in economic value”. that market is levelling off, Gartner expects the tial had not yet been realised. “Payments IoT to grow by 30% in 2016 to 6.4 billion ‘smart’ According to Forrester, 19% of organisations in appear to have the biggest use case for the objects, with spending on IoT hardware exceed- the financial services and insurance sectors are IoT,” he said. already using or offering IoT applications, and “It would be arrogant to think that we can ing $2.5m a minute. That’s 5.5 million new con- compete with the best technology companies nected things every day. another 27% are planning to do so.<

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CI 538.indd 8 02/12/2016 13:31:15 Cards International EVENT: DIGITAL BANKING CLUB

The panel

Douglas Blakey Douglas Blakey is group editor, consumer finance at Timetric, chief of judges for the annual Retail Banker International Awards, and lead market advisor for Timetric’s retail banking research division. Timetric produces and maintains more than 50 market-leading research reports, and has undertaken bespoke consultancy projects for banks, vendors and their advisors. Blakey practiced as a solicitor in Scotland before moving into business information and analysis. He maintains an editorial advisory board of leading bank executives, and is a regular guest banking analyst with the BBC, the New Statesman and other leading media outlets.

Shashi Bhat, Citibank Shashi is head of digital banking for Citibank in London, and is responsible for digital functionality and customer engagement. He has worked extensively in the digital arena for over a decade in India, Germany and the UK, across marketing, content and platforms for retail banking, launching apps, payment gateway products and next-generation internet banking solutions. He has a background in sales, which has given him extensive experience in process digitisation and the customer experience. He is experienced in program management, e-business, operations, business development and sales.

Ankit Chhajer, RBS Ankit is digital lead, customer experience design and sales innovation, at Royal Bank of Scotland. He delivers compelling, sustainable digital experiences, propositions and proofs of concept. He also helps to inform and direct the future strategy for the bank. He is an agile practitioner, transforming digital and mobile journeys, and an experienced omni-channel and user experience enabler. Prior to RBS, Chhajer graduated from GECRC with a B.Eng. in engineering, and was vice-president of operations – global graduate internship programme at AIESE.

Kate Frankish, Tesco Bank Kate has worked in various financial services roles for over 20 years, and has been with Tesco Bank for the last five. She successfully managed the product development of Tesco Bank’s personal current account, from its initial ideation stage through to delivery of the final customer proposition. In the PCA programme, she led the development of the business case and managed the commercial team to deliver all aspects of the target operating model. Frankish now heads up the payment strategy and authorisa- tions team. The optimisation of payment journeys is a key remit of her team, and includes working closely with the fraud team to understand pain points for customers to enact positive change.

Teppo Paavola, BBVA Teppo has been at BBVA since May 2015 and is head of investing and launching new digital businesses. Before joining BBVA, he was head of global businesses and mergers and acquisitions at PayPal. He was vice- president and general manger of mobile financial services at Nokia, was director of Respect Ventures Group, and is an experienced finance specialist. As a founder and CEO of five startups, his finance experience stems from different positions at GE Capital in London, Stockholm and Helsinki. He specialises in business development and general management, and has lived in several countries.

Richard Rowntree, Future Williams & Glyn, RBS (Bank of Ireland from November 2016) Richard is the outgoing head of specialist banking for Williams & Glyn. Previously, he headed up the mortgage business at three major UK banks. Rowntree began his career with Halifax, before moving to Lloyds. Prior to his current role, he was national director for Santander’s mortgage business. An expert in Mortgage regulation and advice, Rowntree shapes thinking across the industry. He has built good relationships with regulators, trade bodies and the fintech sector. In November he will join Bank of Ireland as MD, UK mortgages.

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CI 538.indd 9 02/12/2016 13:31:31 RESEARCH: EUROPEAN MILLENNIALS Cards International

Europe’s millennial shift is real, but is it important? There are constant discussions on how to attract the millennial market, and as the sector – roughly aged between 18 and 35 – is now coming into the peak of its purchasing power and economic productivity, the debate is more intense than ever. So how can banks attract this bunch? Patrick Brusnahan reports

escriptions of millennials are many could not live without their smartphones, What does this all mean? and varied. One of the most com - and 68% of their Dutch counterparts agreed. While the results from this survey suggest mon adjectives used is digital-savvy, In total, 61% of UK and 54% of German that millennials are looking towards tech- a huge group that cannot live with- millennials believed they could not live with- nology for their banking and payments solu- D out their device. out their smartphones to hand. tions, it does not get any more specific than This is particularly important consider- There are many reasons for this. In the that. ing the spread of mobile phone technology UK, 75% of millennials liked technology Depending on the country, there could be across the world, both in developing and that allowed them to tailor things to fit any number of options. Some 65% of Ital- developed economies. their needs, while 80% of Italian millenni- ians agree that they prefer to be able to man- Payment systems company VocaLink sur- als agreed that smartphones and laptops give age all their accounts via one mobile app or veyed over 4,000 millennials to understand them more freedom of mobility. website, while a mere 36% of German mil- how technology and social media influences lennials feel the same way. their lives, and how this affects their view of Millennials and their money Similarly, 64% of Italians agree that they payments. The majority of millennials’ banking is done wish they had more control over the way online, particularly via laptop or PC. In the people pay or reimburse them, while only Inseparable from technology Netherlands, physical or voice interaction 29% of Dutch millennials agreed with that Samsung is the millennials’ choice of phone with banks seems to be almost dying out, statement. in Germany, Italy and the Netherlands, according to VocaLink. These varied opinions even sway into the according to VocaLink, with respective mar- While cheques remain stubbornly popu- security side of things, with 42% of Dutch ket shares of 44%, 41% and 39%. However, lar in the US, it is a different story in Europe millennials preferring to use fingerprint scan- in the UK, iPhone ownership eclipses Sam- where many now scan cheques online. ning to pay by mobile, while 42% of UK and sung with a 46% share of the market com- In the Netherlands, 27% of millennials German millennials prefer eye scans to verify pared to 30%. who deposit cheques now do so using a lap- payments. Rather than reaching for tablets, millen- top or PC, and 27% use mobile phones. Only While the millennial shift is in no particu- nials continue to prefer laptops and PCs. In 6% of Dutch millennials use cheques. lar direction, what it does highlight is that total, 68% of German millennials continue In fact, one UK millennial, aged between there is a desire for more options. to use a laptop or PC, while only 41% use a 18 and 25, said: “I sent my brother a cheque Whether that is instant payments or bio- tablet. In the UK the gap is smaller, with 65% last year, but purely as a joke to make him metric authentication, there are factors that of millennials using a laptop or PC while wait for his money.” influence how millennials bank and make 52% use a tablet, the largest proportion of While cash and bank transfers are still the payments. these being iPads. most popular forms or payment, 13% of Choice is crucial. The report states: “Mil- Wearables have not received the same Dutch and 14% of Italian millennials have lennials seem to resent anything that requires amount of success. While one in five US millen- adopted mobile payments. Some 32% of them to pay or be paid in a particular way.” nials own some form of wearable technology, Italian millennials use PayPal to make inter- Banks need to be able to offer everything in the four European countries that VocaLink national P2P payments, compared to 29% and offer it well. Otherwise, this market, surveyed, none of them broke 10%. of German, 27% of UK and 17% of Dutch which is still growing, is going to aim its Some 71% of Italian millennials said they millennials. sights elsewhere. <

n GERMAN MILLENNIALS ON SOCIAL MEDIA, n DUTCH MILLENNIALS ON SOCIAL MEDIA n ITALIAN MILLENNIALS ON SOCIAL MEDIA

Snap- Facebook chat Twitter Snapchat Twitter Twitter 7% 13% 8% 17% 8% Snapchat 14% Instagram Facebook 12% Facebook Instagram Facebook Instagram 68% 58% 29% 79% 19%

Source: VocaLink Source: VocaLink Source: VocaLink

10 y December 2016 www. cardsinternational.com

CI 538.indd 10 02/12/2016 13:31:47 Cards International FEATURE: PRODUCTS: CONTACTLESS

Contactless technology making waves

According to Timetric research, the global contactless card transaction value will almost quadruple between 2016 and 2020, while the global mobile NFC transaction value will grow more than fivefold. Why is contactless affecting the payments world with so much vigour? Patrick Brusnahan takes a closer look

ecent Timetric research predicts commonplace in the UK. The number of a rapid increase in the global adoption of that, in the mid-term, contactless contactless card transactions in the UK rose contactless card payments. cards are set to dominate the global by 212.2% year on year in January 2016. contactless payment environment. The number of bank-owned contactless History and progress R POS terminals in the UK reached 309,706 in However, smartphone penetration is Contactless has certainly come a long way destined to increase, causing mobile NFC December 2015, representing roughly 17.8% from its origins. The first incarnation of capability becoming more widespread, pos- of the overall number of POS terminals. contactless was launched in the US in 1997 sibly leading to mobile NFC overtaking As of May 2016, there were a total of through Speedpass. Introduced by Exxon contactless card payments. 460,000 contactless POS terminals in and Mobil, it was a key chain powered by A number of European countries, as well the country, equivalent to a 50% annual Radio Frequency Identification (RFID). as Australia and Canada, are outpacing the increase. Technological advances, the shift from rest of the world in terms of adoption of Contactless card shipments more than cash to electronic payments, media attention contactless; these countries currently account trebled between 2012 and 2015, indicating and an evolving retail environment have all for most of the world’s contactless payment activity. n n Europe is also ahead of the US in terms EMV CARDS AS A PROPORTION OF TOTAL EMV/NFC CAPABLE-POS TERMINALS IN THE CARDS IN THE US, 2012-2016 US (MILLION), 2012-2016 of contactless adoption. According to % m MasterCard, contactless transactions in Europe grew by 150% in 2015 from the pre- 50 8 vious year. 7 Global demand for NFC acceptance is 40 6 accelerating, and in May 2016 Visa Europe reported thee billion contactless transactions 30 5 on both cards and mobile devices. In addi- 4 tion, one in five in-store Visa-processed card payments were contactless during the 12 20 3

months to April 2016. 2 Visa reported 165 million contactless cards 10 in circulation and 3.2 million NFC-enabled 1 POS terminals in Europe, and has mandated 0 0 that all Visa-accepting POS terminals should 2012 2013 2014 2015 2012 2013 2014 2015 be NFC-enabled by 2020. 2016E 2016E Contactless payments have become Source: Timetric Source: Timetric

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CI 538.indd 11 02/12/2016 13:31:57 FEATURE: CONTACTLESS Cards International

of the world’s most valuable brands, includ- Canada leads in North America n CONTACTLESS CARD CIRCULATION IN EUROPE ing the ‘Pays’, instantly raised consumer awareness of new payment technology. 2014 2015 Growth The decision by Apple – seen by Forbes as Romania 1.1m 2.5m 127% the world’s most valuable brand – to adopt Netherlands 8m 15m 88% contactless was a huge boost. The attention Finland 2m 3.3m 61% gathered by anything launched by Apple is huge, and Apple Pay directed a huge spot- Switzerland 4.6m 7.1m 53% light onto contactless. Italy 10.2m 15.1m 49% Croatia 1.4m 2m 43% The US Austria 6.4m 9m 40% Contactless cards may have missed their Contactless has quietly become a golden opportunity in the US. Due to a lack UK 58m 79.3m 37% mainstream payment method in Canada. of migration of cards to EMV in the US, Spain 7.8m 10.4m 34% During 2015 contactless transactions in mobile payments have picked up the slack. Ukraine 1.1m 1.5m 33% Canada grew by one percentage point a Main players in the US payments indus- Hungary 3.7m 4.8m 30% month on average to reach around 10% of try are focusing on mobile NFC payments. total domestic card transactions at the end This could lead to the region going straight Turkey 17.7m 23m 30% of the year. to mobile NFC payments, leapfrogging France 31.5m 40m 27% The Canadian government has been contactless cards. Czech Rep. 6.6m 8.1m 23% fully supporting this, which has helped Acquirers and card schemes have taken contactless to gain traction. Slovakia 3.2m 4m 23% various initiatives to expedite the migra- According to Visa, the average proportion tion process and support merchants. For Portugal 4.5m 5.5m 22% of in-store contactless purchases rose from example, to promote EMV adoption among Poland 25.7m 28.1m 9% 12.1% in June 2014 to an estimated 25% in merchants, schemes announced that if more June 2015. Source: Timetric than 75% of merchants’ Visa or MasterCard MasterCard has also captured a significant transactions originated from EMV-compliant lic transit systems to push contactless cards, market share, with 27% of its in-store POS terminals which support both contact but with so many different state systems and purchases in September 2015 being contactless. and contactless, they may apply for relief of a general cultural preference for driving over PCI audit requirements. public transport in most US states, there has The launch of Apple Pay achieved a higher Many want an accelerated rate of NFC not been a push for contactless cards. profile in Canada than in the US, and this only helped the contactless market to acceptance expansion. Bundled deals are However, mobile NFC has taken the initia- grow.< being offered by POS vendors and acquirers tive once again. In a recent announcement, so merchants can simultaneously upgrade the Metropolitan Transport Authority of contributed to the rise of contactless from its terminals to EMV and NFC. New York launched a mobile ticketing app, humble beginnings. As a result of the US EMV liability shift eTix, enabling commuters to use smart - However, in terms of use case, mass public in October 2015, EMV adoption rates grew phones to buy tickets and board transit on transport has proven to be a crucial catalyst from 7.7% in 2014 to 42.3% in 2015. certain routes on the system. Apple Pay and for adoption wherever it has been imple - MasterCard were recently added to the app. mented. What is stopping contactless cards? This is likely to accelerate growth in EMV migration is another key driver. Mer- Companies such as Ingenico and VeriFone mobile NBC, particularly if similar initiatives chants, PSPs and schemes can take advan- have already distributed thousands of EMV- are taken up in the rest of the US. tage of a mandated upgrade to terminals by enabled POS terminals in the US, the major- In addition, from a merchant perspective, matching it with an upgrade to NFC-capable ity of which are equipped with contactless terminals. In many cases, the shift from EMV technology. n NEW SMARTPHONE SUBSCRIBER ADDITION to contactless is a simple software upgrade. Merchants can also benefit by making a BY REGION (MILLION), 2015-2021 As a default, many major POS terminal single investment that would result in the manufacturers such as VeriFone and Ingen- delivery of combined EMV and NFC pay- North ico are integrating contactless technology in ments. Also, as consumers increasingly make Latin America America 90 all newly distributed EMV POS terminals. payments using mobile wallets, merchants 230 could actually lose customers if mobile-based The smartphone factor contactless options are not available. Europe Smartphones are another crucial factor. As a result, banks and issuers are not push- 290 According to the Ericsson Mobility Report ing contactless cards to customers; instead, 2016, there are more than 3.2 billion smart- they are promoting NFC-enabled mobile Asia-Pacific phone subscriptions worldwide, equivalent payments. Middle East & 1,700 to around half of the world’s total popula- The price of NFC chips is offputting for Africa 730 tion; the figure is expected to reach 6.3 bil- banks. In addition, the huge level of mar- lion in 2021. keting from mobile players highlighting Following the adoption of smartphones NFC solutions has eclipsed campaigns for was the launch of the ‘Pays’, Apple Pay, Sam- contactless cards; there is little incentive for sung Pay, and Android Pay. banks to roll out contactless EMV cards. The entry of payment solutions from some More work also needs to be done with pub- Source: Ericsson Mobility Report 2016

12 y December 2016 www. cardsinternational.com

CI 538.indd 12 02/12/2016 13:32:05 Cards International FEATURE: CONTACTLESS

Mexico and Banamex chip by walking near someone’s wallet with Brazilian potential an RFID card reader. This has caused much concern among consumers and has likely driven banks and issuers away from contactless technology on plastic products. The heightened security of mobile NFC is still heavily advertised, and is expected to push consumers and issuers alike towards the solution. Contactless payment cards have actually been available in the US since 2009. Unfor- tunately a lack of contactless-enabled POS terminals meant adoption was not high. Banamex, the Mexican arm of Citibank, first According to estimates, only around 2% A number of factors mean the potential for introduced contactless payments in 2012. of POS terminals were contactless-enabled in contactless payments in Brazil is huge: As part of the launch it upgraded 30,000 the US in 2013. However, with the launch of • Brazil has an unbanked population of merchant terminals with VeriFone devices. the ‘Pays’ from 2014, the proportion of ena- more than 65 million over the age of 15. The number of contactless terminals has bled terminals has since increased to around • Around 80% of the adult population since increased, reaching 70,000 in 2016. 20%. use some type of card for 30% of all In February 2016, Banamex and MasterCard, household expenditure, according to launched a new digital wallet in Mexico and Brazil now ready for contactless the Brazilian Association of Credit Card developed a mobile contactless payment Brazil is no stranger to adopting payment Companies. app for Android smartphones. Banamex was systems into its infrastructure. Various • In 2015, Brazil had more than 2 million the first bank in Mexico to implement this multi-plank strategies to further increase contactless-enabled POS terminals. technology. contactless penetration and capture the • Around 15.3 million smartphones unbanked population have been undertaken. Mexico was also the first country in which were NFC-enabled in Brazil in 2015, Citibank and MasterCard launched a digital Banco Santander has issued more than representing 15% of total smartphones. wallet using HCE technology as part of three million Santander University Smart • Around 37% of Brazil’s 278 million active their global digital payments initiative cards with Gemalto, using MasterCard’s mobile phones were smartphones in agreement. < PayPass features. 2015. < The cards include digital IDs to access uni- contactless was not a priority when upgrad- versity facilities, enable users to make low- and contactless payment infrastructure in ing terminals ahead of the October 2015 lia- value purchases for everyday needs, and offer many areas. bility shift. This was attributed in part to the discounts and other student services. Contactless was introduced in 2013 when higher costs of hybrid EMV and contactless Due to high rates of robbery and theft in banks started EMV migration with dual terminals. the country – Brazil ranks ninth in the world upgrades, making terminals simultaneously The marketing and promotion of NFC in terms of fear of crime – Brazilians prefer to contactless-enabled. via the ‘Pays’ has driven more merchants to not carry cash; secure transactions are there- As a result, NFC payments on mobile focus on EMV and NFC device capabilities. fore a strong consumer preference. phones have entered the market. Banks and A fair amount of coverage has been given In addition, Brazil is undergoing an eco- schemes, in conjunction with the Banco to the risks of contactless cards. Particularly nomic recession and political upheaval, Central do Brasil, have steadily introduced given the ability for card skimmers to extract which may challenge payment companies various payment products to gain market personalised card data from the contactless already struggling with an unstable internet share.<

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CI 538.indd 13 02/12/2016 13:32:29 COUNTRY SURVEY: LUXEMBOURG Cards International

Luxembourg: contactless use rises but growth in alternative payments is slow

Home to a wealthy population and a number of high-value corporations, Luxembourg’s payment cards market is mature, with a high penetration rate of 3.9 cards per inhabitant. However, while contactless technology is gaining traction, the growth rates of alternative payments have been slow

uxembourg’s payment card market isation and a growth in the e-commerce and the majority of banks offer private bank- grew in terms of both transaction market. ing, wealth management and asset manage- value and volume during 2011–2015, Luxembourg is home to a number of ment services. A favourable tax regime and Lsupported by infrastructure modern- wealthy individuals and large corporations, bank-privacy legislation have enabled the financial services sector to become a primary n VALUE OF CREDIT TRANSFERS ($BN) IN n VALUE OF PAYMENT CARDS ($BN) IN growth leader. LUXEMBOURG, 2011–2015 LUXEMBOURG, 2011–2015 Payment cards are cross-sold to customers as part of bundled offerings. In the matured market, attention is now gradually turning

2.0 10 towards serving niche consumer segments such as online shoppers, students, the young population, travellers, women and SMEs. 8 1.5 Adoption of secure payment technology 6 Several banks offer enhanced security features on payment cards to comply with SEPA 1.0 regulations, and reduce instances of fraud. 4 Consequently, banks discontinued Bancomat in 2011, and adopted V Pay debit cards with 0.5 2 the inclusion of chip-and-PIN technology. All payment cards issued in Luxembourg are now Europay-, Mastercard- and Visa- 0 0.0 compliant. 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Banks began offering the 3D-Secure Code services to customers from 2012, to increase the security of online transactions. With the Source: Central Bank of Luxembourg and Timetric Source: Central Bank of Luxembourg and Timetric adoption of advanced security features, the

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CI 538.indd 14 02/12/2016 13:32:39 Cards International COUNTRY SURVEY: LUXEMBOURG

use of payment cards is expected to rise fur- n LUXEMBOURG’S DEBIT CARD MARKET SHARES n LUXEMBOURG’S DEBIT CARD MARKET SHARES ther between 2016 and 2020. BY ISSUER (%), 2015 BY SCHEME (%), 2015

Alternative payments gain prominence Alternative payments are gradually gaining traction among consumers, with the avail- ability of Digicash, Cashcloud wallet, Yapital and Seqr. Others BCEE Banks, payment companies and technol- 34.1% 28.5% ogy providers are investing to offer customers a choice of payment options, whether in- Visa store, at home or digitally. 100% The country’s four major banks – BGL BGL BNP Paribas BIL BNP Paribas, Banque et Caisse d’Epargne de 22.3% 15.1% l’Etat Luxembourg (BCEE), Banque Interna- tionale à Luxembourg (BIL) and Post Lux- embourg – all offer the Digicash platform, which allows users to make payments to merchants associated with the Digicash network. Seqr was introduced in July 2016. Source: Timetric Source: Timetric The growth of alternative solutions is likely to intensify competition in Luxembourg’s alternative payments market. n LUXEMBOURG’S PAY LATER CARD MARKET n LUXEMBOURG’S PAY LATER CARD MARKET SHARES BY ISSUER (%), 2015 SHARES BY SCHEME (%), 2015 E-commerce offers growth prospects E-commerce recorded robust growth due to a rise in online and mobile penetration, an Others increase in consumer confidence in online 7.4% transactions and the presence of online gateways. E-commerce grew from $458.3m (€329.7m) in 2011 to $672.1m in 2015, at a Others 41.7% MasterCard compound annual growth rate of 10.05%. 24.1% Security developments in Luxembourg’s BGL BNP Paribas Visa online payment systems also supported 59.3% 68.5% growth. With a rising number of online shoppers and growth in online retailing, banks offer payment cards for individuals who frequently purchase products or services online. BGL BNP Paribas, BIL, Banque de Luxem- bourg and ING Luxembourg all provide dedicated cards for online payments to improve Source: Timetric Source: Timetric transaction security, reduce online fraud, and comply with the ECB’s recommendations for Economic factors offering mobile banking services, as they online payments, which came into effect on 1 According to the International Organization are a cost-effective and convenient means to February 2015. for Migration, immigrants accounted for serve their customers. BCEE, BGL BNP Paribas, BIL, ING Lux- 44% of Luxembourg’s population in 2015. Growth in the manufacturing sector, embourg, Post Luxembourg and Raiffeisen Migrant workers often use bank accounts exports, and an increase in the domestic con- Bank introduced a new solution called Token and payment cards to remit funds to their sumption of goods and services helped the to make online transactions more secure. The home countries. country’s real GDP to rise by 2.6% in 2011. Token service generates a dynamic code every In 2015, outward remittances stood at However, due to turbulence in the glob- 30 seconds, and is offered free of charge. $11.1bn (€10bn), and are anticipated to al financial markets and a slowdown in increase to reach $13.5bn (€12bn) by the eurozone, the country’s financial services and Preference for contactless year 2020. manufacturing sectors were severely impact- Contactless technology is gaining traction, Internet penetration rose from 90% in ed, and as a result the economy entered into with banks and payment companies intro- 2011 to 95% in 2015, primarily as a result a recession in 2012. ducing new solutions to gain market share. of improved infrastructure and the increased The economy emerged out of a recession Retailers are installing contactless POS ter- internet use, mainly by the young population. in 2013, due to economic recovery in parts minals to benefit from the trend. According With a high internet penetration, Luxem- of the eurozone and was supported by strong to Visa Europe, there were 7,000 POS termi- bourg’s e-commerce market is expected to domestic demand for goods and services. nals with contactless functionality in Luxem- grow, benefitting the payment cards market. With economic growth, more investment bourg as of September 2016. All major bank Mobile penetration is also high and stood can be expected in the cards and payments now offer contactless payment cards. at 148.4% in 2014. A number of banks are industry. <

www.cardsinternational.com December 2016 y 15

CI 538.indd 15 02/12/2016 13:32:43 COUNTRY SURVEY: LEBANON Cards International

Lebanon: infrastructure continues to dampen growth of electronic payments

Card growth in Lebanon has been restricted by high fees and a lack of infrastructure. However, there are signs of positive growth as a result of moves to allow tax and utility bill payments by debit or credit card, and the rising popularity of prepaid cards for the purposes of social and humanitarian assistance

ash remains a popular mode of transaction fees charged on card-based cards per 100 individuals in 2015 – lower payment in Lebanon, particularly payments have restricted the growth of than regional peers such as Iran (316), the in rural and suburban areas. Inad - electronic payments. UAE (147.3), Kuwait (108.3), Bahrain C equate infrastructure and high Payment card penetration stood at 45.8 (106.6), Israel (103.2), Oman (91.4) and Saudi Arabia (82.9). n VALUE OF CHEQUE PAYMENTS ($BN) IN n VALUE OF PAYMENT CARDS ($BN) IN However, with the government’s finan- LEBANON, 2011–2015 LEBANON, 2011–2015 cial inclusion initiatives and the adoption of advanced technology such as EMV and contactless, penetration is expected to rise. 80 5 In December 2015 the government introduced a new system, allowing Lebanese resi- 70 dents to pay utility bills, business licenses and 4 60 property tax by debit or credit card. The percentage of the population aged 15 50 3 or above with a bank account rose from 37%

40 in 2011 to 49.8% in 2015, according to the World Bank’s Global Findex survey. Rising 2 30 banking penetration is anticipated to support the growth of debit cards in Lebanon. 20 1 10 Reward programmes Lebanese banks began offering credit cards 0 0 in 1995 to serve high-income consumers and 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 frequent travellers. However, the introduc- tion of a revolving credit facility in 2002 pushed credit card market growth through Source: Timetric Source: Timetric the concept of mini-loans, which provided

16 y December 2016 www. cardsinternational.com

CI 538.indd 16 02/12/2016 13:33:02 Cards International COUNTRY SURVEY: LEBANON

temporary liquidity solutions to consumers. n LEBANON’S DEBIT CARD MARKET SHARES BY n LEBANON’S DEBIT CARD MARKET SHARES BY Credit card penetration in Lebanon is still ISSUER (%), 2015 SCHEME (%), 2015 very low, at 12.3 cards per 100 individuals in 2015. Banks mainly focus on offering reward programmes and value-added services to encourage credit card use. These incentives are considered a driver of credit cards in Bank Audi MasterCard Lebanon, with cashback, loyalty and mile- 7.4% 25.3% age reward points being the most successful Others programmes. 49.0% Byblos Bank launched the World Blom Bank Visa MasterCard credit card in May 2016. 14.6% 73.7% Cardholders are offered free membership of the World MasterCard Travel Program, pro- Credit viding discounts at hotels and restaurants Libanais worldwide. 10.9% Similarly, Bank Audi partnered with Mid- dle East Airlines to launch the Corporate Cedar Miles card in July 2015. Cardholders Source: Timetric Source: Timetric are offered benefits such as travel cover, a purchase protection programme, corporate deals, and savings on hotel bookings. n LEBANON’S PAY LATER CARD MARKET SHARES n LEBANON’S PAY LATER CARD MARKET SHARES BY ISSUER (%), 2015 BY SCHEME (%), 2015 Emergence of contactless technology Contactless technology is slowly gaining prominence in Lebanon. Creditbank offers contactless cards equipped with either Visa Others payWave or MasterCard PayPass technology. 11.7% The bank also offers contactless stickers, Bank Audi which can be attached to a mobile phone or Others 30.0% identity card and be used to make payments. 40.0% Visa Visa MasterCard50.0% Bank Audi launched cards with contactless 33.3% 55.0% functionality in 2013, and in June 2014 it partnered with Visa to launch debit cards with Visa payWave technology. Blom Bank Bank Audi partnered with MasterCard to 20.0% launch Tap2Pay NFC wearables in March Fransabank 2015. The bank offers NFC watches and 10.0% bracelets, each allowing consumers to make up to 10 transactions per day.

Source: Timetric Source: Timetric E-commerce to support card payments E-commerce grew in value from $133.5m in 2011 to $435.7m in 2015, at a compound internet gateway, providing a secure payment May the same year and permitted banks to annual growth rate of 34.41%. Growth was processing service for merchants. issue prepaid cards to customers who are driven by the presence of secured electronic Similarly, Blom Bank provides the eBlom already account holders and therefore have payment solutions. online payment gateway. In partnership with a financial history. International issuers are Banks and payment providers also sup- Net Commerce and the Ministry of Finance, also permitted to issue prepaid cards for use ported the growth of e-commerce by offering Credit Libanais provides an e-service that in social and humanitarian assistance at the customized payment solutions. enables citizens to pay property tax online central bank’s approval. Bank Audi partnered with MasterCard using Visa and MasterCard cards. and Visa to launch security tools for online Regulation payments in March 2016. The bank offers Prepaid cards record robust growth The central bank of Lebanon is responsible 3D-Secure and Tokenization services. While Lebanon’s prepaid card market has grown for supervising and developing the banking the 3D-Secure service offers a password for rapidly since 2011 in terms of both the num- sector. online transaction, Tokenization replaces ber of cards in circulation and the total value In 1967, the Banking Control Commission the cardholder’s 16-digit card number with a transacted. To prevent money laundering (BCC) was created within the central bank. token number for use in online transactions. and the misuse of prepaid cards, the central It is an independent commission which regu- Bank Audi and Credit Libanais introduced bank issued a circular in March 2016, direct- lates banks and ensures their compliance e-commerce programmes in collaboration ing financial service providers to discontinue with legal provisions. The BCC manages the with online payment gateway Net Com - issuing and marketing prepaid cards. records of all banks. Islamic banks are able merce. Bank Audi offers the Audi e-payment However, the circular was amended in to establish branches in Lebanon. <

www.cardsinternational.com December 2016 y 17

CI 538.indd 17 02/12/2016 13:33:07 COUNTRY SURVEY: KENYA Cards International

Kenya: prepaid soars and infrastructure investment pays off

In a country still dominated by cash, M-Pesa continues to break records in Kenya. However, the share of the adult population with a bank account has risen sharply in recent years, and while card-based payments declined sharply in 2014, there are signs of large-scale growth potential in the prepaid sector

ayment card penetration in Kenya ence on cash, the limited acceptance of Cash accounted for 91.1% of the country’s stood at 25 cards per 100 individu - payment cards at merchant locations, and payment transaction volume in 2016. als in 2016. The low uptake is part- the growth of mobile payment solutions P ly a result of the country’s depend - such as M-Pesa and PesaPal. M-Pesa Card-based payments declined by nearly one- n VALUE OF CHEQUE PAYMENTS ($BN) IN n VALUE OF PAYMENT CARDS ($BN) IN KENYA, fifth in 2014, due to the convenience and cost KENYA, 2012–2016 2012–2016 efficiency of mobile-based retail payment solutions. As of March 2016, M-Pesa had 100,744 agents, 24 million registered users, 30 1.5 more than 252,000 active retail outlets and 54 customer service desks in Kenya. 25 Unlike banks, mobile payment solution 1.2 providers offer services to smaller merchants

20 and charge low processing fees. Safaricom 0.9 charges retailers a 1% transaction process-

15 ing fee on the Lipa Na M-Pesa service which is much cheaper that the average fee of 3% 0.6 for bank card payments. 10 In July 2016, Safaricom piloted a payment 0.3 card linked to a consumer’s M-Pesa account. 5 The card is NFC-enabled and uses chip-and- PIN technology. 0 0.0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Agency banking model Banks in Kenya have adopted an agency banking model in an attempt to bring more Source: Central Bank of Kenya and Timetric Source: Central Bank of Kenya and Timetric people into the formal banking system.

18 y December 2016 www. cardsinternational.com

CI 538.indd 18 02/12/2016 13:33:13 Cards International COUNTRY SURVEY: KENYA

According to the Central Bank of Kenya, n KENYA’S DEBIT CARD MARKET SHARES BY n KENYA’S DEBIT CARD MARKET SHARES BY 35,789 agents from 16 commercial banks ISSUER (%), 2016 SCHEME (%), 2016 carried out 58.2 million transactions worth $3bn in 2014. Barclays Bank partnered with the Postal Corporation of Kenya (PCK) to launch agency banking in March 2016. The service enables customers to make cash withdraw- Others Equity Bank als, bill payments and balance enquiries at 37.7% 32.6% PCK outlets. MasterCard Visa 50.0% These outlets also serve as collection points 50.0% for funds transferred via the bank’s money transfer service, Cash Send. PCK plans to introduce its agency banking service in phas- KCB Co-operative es, initially offering them at 182 outlets and 10.9% Bank 18.8% servicing the remaining 218 outlets by the end of 2016. KCB, Equity Bank and Co-Operative Bank also offer agency banking services. The portion of the population aged 15 Source: Timetric Source: Timetric or above with a bank account rose from 54.6% in 2012 to 81.4% in 2016, according to the World Bank’s Global Findex survey. n KENYA’S PAY LATER CARD MARKET SHARES BY n KENYA’S PAY LATER CARD MARKET SHARES BY An increase in banking penetration drove ISSUER (%), 2016 SCHEME (%), 2016 demand for current accounts and debit cards. Others Islamic banking 2.5% Demand for Islamic banking is rising in Kenya, and as of 2015, Sharia-compliant products accounted for 2% of all banking Barclays products. Others 28.8% MasterCard To capitalise on this trend, KCB launched 40.6% Visa Visa an Islamic Banking unit, KCB Sahl Banking, 36.0% 50.0% Visa50.0% at six of its branches in April 2015. In March 61.5% 2014, Standard Chartered Bank launched Co-operative its Islamic banking service, Saadiq, offer- Bank 22.1% ing the Fatwa current account, the Saadiq KCB All-in-One account and the Saadiq Hifadhi 9.5% account.

Growing payment infrastructure The number of POS terminals in Kenya rose Source: Timetric Source: Timetric from 18,478 in 2012 to 27,854 in 2016, and is expected to reach 55,400 by 2021. Uptake of prepaid cards viders and aims to ensure that service pro- Most POS terminals have switched from The number of prepaid cards in Kenya rose viders conduct their businesses prudently and landline to mobile technology. As merchants from 27,558 in 2012 to 2.3 million in 2016. in accordance with the law. The act grants recognise the benefits of switching from tra- The transaction value grew from $7.9m in the central bank the power and authority to ditional POS terminals to ones with more 2012 to $9.4m in 2016. oversee all operational payment systems. features and mobility, the industry registered Banks serve various consumers – such as Prior to the commencement of business, an increase in the uptake of mobile POS students and salaried individuals – through an electronic payment service provider must (mPOS) terminals. prepaid cards. In July 2016, Equity Bank apply to the central bank for authorization In February 2016, Barclays launched its launched its MasterCard-branded prepaid by submitting an application in the form of mPOS terminal in Kenya, which can be used card for Maseno University students, ena- a First Schedule. The application must be to make payments for transport, home deliv- bling them to receive loans, conduct transac- accompanied by the following: eries and entertainment products using Visa, tions and withdraw cash from ATMs. Registration documents, including a Cer- MasterCard or American Express. The bank In September 2015, Ecobank launched the tificate of Incorporation, a memorandum partnered with Pewin Cab Company to test Visa SalaryXpress prepaid card, which ena- and articles of association the device through a pilot project. bles Kenyan employers to load salary pay- For a mobile payment service providers, a In February 2013, MasterCard, Equity ments for employees. certified copy of a license from the Commu- Bank and Ezetap partnered to launch a nication Commission of Kenya mPOS solution in the form of a card reader Regulatory Framework The concerned institutions are required to that can be plugged into a tablet or smart- The National Payment System Act 2011 continuously monitor all complex, unusual, phone. regulates payment systems and service pro- suspicious or large transactions. <

www.cardsinternational.com December 2016 y 19

CI 538.indd 19 02/12/2016 13:33:16 GUEST COMMENT: CHARGEBACKS911 Cards International

Chargeback fraud drowning Black Friday As online shopping reaches its 2016 peak, merchants are concluding final preparations to ensure that they make the most of the seasonal surge. However, online retailers must maximise the biggest opportunity of the year and avoid the New Year chargeback hangover, says Chargebacks911’s Monica Eaton-Cardone

uropean shopping volumes often peak between 7 and 11 December, as customers reach the last date to E guarantee the on-time delivery of Christmas gifts. Last year in Germany, consumers spent an estimated €517m ($549m) on 7 December, with €341m spent in France within the same 24-hour period. In the US, Black Friday represents the busiest online period as consumers make the most of the famous pre-Christmas sales following the Thanksgiving holiday. A stagger- ing $2.72bn was spent online in 2015, following the $1.73bn spent on Thanksgiving Day itself. an additional €15 fee for all chargebacks stop ‘friendly’ fraud. Like a lot of US culture, Black Friday has they accept without filing rebuttal, and up to Although ID fraud is often highlighted now spread across the Atlantic to the UK €30 if a non-compliant response is filed. Issu- as the greatest threat facing merchants, the and Europe. Last year, UK sales tipped over ers are also penalised, but with the reverse truth is that around 70% of chargebacks the £1bn mark and Cyber Monday – which incentive. are actually attributable to friendly fraud, extends the Black Friday into a weekend- Poor chargeback management is coming 20% to merchant error, and 10% to crimi- long retail festival – brought the total sales under fire, and better governance is becom- nal fraud. up to £3.3bn. ing ever more critical in terms of cost sav- It is essential that merchants understand Yet, total Black Friday and Cyber Monday ing. As the biggest shopping days of the year chargebacks and the damage ineffective risk sales in Europe and the US are dwarfed by approach, those merchants who lack a dis- mitigation causes to revenue, relationships Singles’ Day, China’s very own online spend- ciplined chargeback policy are likely to be and reputations. Merchants not only lose the ing frenzy. The relatively new event, held on more vulnerable than ever before. cost of the sale and the merchandise, but also 11 November, is often extended into a week The greatest problem we see around the the additional fees and consequences, par- or even a month’s worth of sales. This year festive period is snap decisions on the side of ticularly if they exceed allotted chargeback saw CNY121bn ($18bn) spent through Ali- customers, and subsequent buyer’s remorse. thresholds. baba, China’s largest ecommerce site. Under pressure to buy now while stocks and Adhering to best practices reduces the risk While these headline-grabbing, record- sales last, customers become click-happy of chargebacks; however, superior results are breaking sales figures generate huge levels of before finding a better deal or product else- obtained through methods which use both excitement among consumers and merchants where. This surge of regret is fertile ground in-house and outside expertise. alike, statistics reveal a serious undertone for chargeback fraud. A series of studies conducted by Charge- that cannot be ignored: rising chargebacks. Similarly, customers who feel that mer- backs911 revealed that merchants using a chants underperformed during this busy peri- combination fraud-management strategy The dangers od are more likely to initiate a chargeback. recorded an improved performance within Chargebacks have rippling implications A new report from Radial indicated that every fraud detection tool, and reported a among the industry and consumers at large. 71% of shoppers expect their online orders gain on average of 22.4% over those who Although we often think of merchants as to arrive within five days, while 51% would did not use a layered approach. the principal victims, the evidence suggests stop shopping with a retailer if their order Merchants should never think of charge- that they are not the only group struggling arrived later than the promised delivery date. backs as just another cost of doing business. enough to act. Merchant liability often hits in the weeks With comprehensive management strategies, MasterCard recently took steps help following the shopping holidays – around 90 merchants can maximise the benefits of the reduce its own encumbrance by introducing days after the purchase – tripping merchants seasonal shopping surge without incurring its new Dispute Administration Fee , which is up after they have already calculated their unjustifiable costs.< handed out to all merchants hit by customer seasonal profits. chargebacks unless a successful dispute is The biggest shopping days, such as Black Monica Eaton-Cardone is the co-founder of processed. Friday, disrupt normal customer shopping Chargebacks911 and Global Risk E-commerce merchants can expect to pay behaviour, making it challenging to find and Technologies.

20 y December 2016 www. cardsinternational.com

CI 538.indd 20 02/12/2016 13:33:24 Multichannel digital solutions for ﬁ nancial services providers

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