www.cardsinternational.com Issue 568 / june 2019
LEADING LIGHTS
VISA AND MASTERCARD STAND OUT AS THE MOST VALUABLE PAYMENT BRANDS
INNOVATION ANALYSIS COUNTRY SNAPSHOTS
Mastercard and Visa go Is Amazon’s new card really Key payments market data toe to toe with Apple and the way forward for people and analysis for Austria, Amazon in voice activation with low credit scores? Finland and Slovakia
CI June 2019 568.indd 1 01/07/2019 15:25:04 contents this month
COVER STORY NEWS 14 05 / EDITOR’S LETTER 06 / DIGEST • Razer expands payments reach with Visa partnership • Mastercard, Treezor partner to support fintech growth in Europe • Apple starts expanded trials of upcoming credit card • 23% of US drivers claim to be skimming victims • Columbia Care launches medical cannabis card • American Express teams up with Andy Murray • US digital challenger CARD on track for 1.5 million new accounts in 2019 • Chinese embassy in New Zealand adds UnionPay support • Rappi taps Visa to offer prepaid cards in Brazil BRAND VALUES • Crédit Agricole launches biometric payment card trials
Editor: Group Editorial Director: Director of Events: Douglas Blakey Ana Gyorkos Ray Giddings 08 +44 (0)20 7406 6523 +44 (0)20 7406 6707 +44 (0)20 3096 2585 [email protected] [email protected] [email protected]
Senior Reporter: Sub-editor: Head of Subscriptions: Patrick Brusnahan 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]
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2 | June 2019 | Cards International
CI June 2019 568.indd 2 01/07/2019 15:25:34 contents june 2019
COUNTRY SNAPSHOTS 16 / AUSTRIA 20 Cash remains the preferred payment instrument in Austria. However, payment card use has been growing in line with rising consumer awareness of electronic payments, and an increase in the banked population 18 / FINLAND Finland is moving quickly towards a cashless society, with the central bank expecting it to be fully cashless by 2029. Consequently, cash’s share of the total payment volume fell from 33.5% in 2014 to 27.7% in 2018 20 / SLOVAKIA Cash is mainly used for day-to-day low-value transactions; despite its dominance, however, consumers are gradually shifting towards card- based payments, supported by government initiatives to increase financial inclusion INNOVATION ANALYSIS 10 / CURVE CASH 11 / AMAZON Curve, the card-consolidation smart card and E-commerce giant Amazon has launched a app, has launched Curve Cash, which features credit card for people with low credit scores. 1% instant cashback to customers. Patrick While it has services that could aid such Brusnahan speaks to the business to find out consumers, is another card really the best way more about how it works out? Patrick Brusnahan writes 12 / CRYPTERIUM FEATURE Crypterium has launched what it claims is the world’s first global crypto card, allowing 14 / BRAND VALUES holders to pay with cryptocurrencies at any Visa is now valued as the world’s fifth-most- retailer, anywhere in the world. Will anyone valuable brand, up a whopping 22% in the actually use it? Patrick Brusnahan writes past year. Meantime, Mastercard is the world’s 12th-most-valuable brand, following a 30% 13 / VOICE ACTIVATION rise in its brand value, reports Douglas Blakey Voice-enabled support is the newest buzz in the industry. AI-focused assistants have been rolled out by Apple and Amazon, while 12 Mastercard and Visa are also expanding their 16 voice-enabled services. Briony Richter reports INDUSTRY INSIGHT 11 22 / FLYWIRE The past few months have seen enormous deals in the payments sector. Giants like Mastercard and Visa in particular have been acquiring new challengers, but is this the road to payments ‘utopia’? Flywire CEO Mike Massaro writes
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CI June 2019 568.indd 3 01/07/2019 15:25:50
editor’s letter
US market will be a tough one to crack for European challengers
Douglas Blakey, Editor t has been a busy month for European digital Meantime, N26 has its own great-sounding tagline: the challengers plotting product launches in the US. As world’s first global mobile bank. TransferWise and Monzo have I CI goes to press comes news that the TransferWise beaten N26 in the race to launch in the US. In 2017, N26 said debit card is now live in the US. it would aim to open in the US “soon”; that suggested a 2018 Earlier in June, digital challenger Monzo launched in the US or early 2019 launch date. N26 will also use a US partner bank with grand ambitions to take on its incumbent retail banks. to get around pesky US regulations – no matter: consumers And since its most recent capital raising, Monzo has deep will be assured by the FDIC credentials of its partner. The enough pockets to make a proper go of it. German peer N26 latest word from N26 is that it will enter the US within “the also has funds to target the US. It raised $300m in January in next few weeks”. a series D financing round, in part to plan its US launch. At the time, that financing round valued N26 at almost $3bn. Customer growth: Monzo 2 million, N26 3.5 million Monzo only became a unicorn last October. In the interim, While Monzo has grown to two million customers in the UK, its value has doubled, but it remains a long way off breaking N26’s 3.5 million customers are spread across more than 20 even in the UK. For the 12 months to end February 2019, European markets. Monzo reports a loss of £47.2m ($59.6m); this compares to a It is safe to assume that the three European raiders will all loss of £30.6m for the year-ago period. The suspicion remains offer great customer service. The apps will work well and users that Monzo is on the money in claiming to be the UK’s fastest- will receive instant spending notifications. The ability to offer growing bank – it is, after all, growing UK customer numbers P2P payments is a given. Bill-sharing and fee-free spending at the rate of 200,000 per month. However, numbers actually abroad can be taken for granted. For PFM tools, the service switching their primary account to Monzo remain modest. will be top notch. And there will be a lot of buzz and activity on social media. Expect to hear a great deal about the bank’s Monzo US waiting list live community and willingness to take feedback on board – not Monzo will introduce itself to the US market via launch events to mention some impressive-sounding numbers when details in Los Angeles. A Monzo US website, inviting consumers to emerge of the Monzo waiting list. join its waiting list, is also up and running. A Monzo Mastercard The mega question is: will N26, Monzo and TransferWise debit card will be issued by FDIC-licensed Sutton Bank, a succeed in the US? Chase, Citi, Wells Fargo, Bank of America seven-branch-strong bank headquartered in Ohio. et al do mobile banking pretty well. Citi is a class leader when At TransferWise, there is no end of great soundbites. The it comes to rewards. Bank of America and Chase, among company’s borderless account has reached $10bn in deposits others, feature cardless ATM withdrawals – not a feature after experiencing rapid growth in Europe. The card first associated with Monzo. launched in April 2018 in the UK and Europe, since when US consumers have remained pretty loyal to incumbents cardholders have made more than 15 million transactions. such as Chase, Wells Fargo and Bank of America, even among After success across Europe, the TransferWise debit card is the millennial segment. If Monzo, N26 and other potential hitting the streets of the US, with a mission to support those European raiders check out customer numbers for US players who want to travel, spend and send money internationally. such as Moven and Simple, they are in for a shock. Also, if the A business card is slated to roll out later in the year. At the US was such a great potential market for a mobile-only player, same time, TransferWise is plotting to launch in Asia-Pacific. one might have expected one or two major Canadian banks The Mastercard debit card enables users to send and receive to have launched a mobile offering there. The there is the money around the world quickly and securely. experience of Chase with its Finn sub-brand, which was pulled The firm’s ambitions are laudable. Simply put, TransferWise after less than a year. aims to offer bank details for every country in the world By the by, I hope I am proved embarrassingly wrong and through one borderless account. And it makes for a great that in the medium term – it will surely take three to five years soundbite: the world’s first global account. minimum – the European raiders turn a profit in the US. <
Get in touch with the editor at: [email protected]
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CI June 2019 568.indd 5 01/07/2019 15:25:54 News | Digest
news digest Razer expands payments reach with Visa partnership Razer has partnered with Visa to enable of consumers, connecting them to an which stands at over 438 million, according its users to access 54 million merchants extensive network of merchants globally. to a KPMG report. on Visa’s network. The alliance also brings This partnership with Visa significantly Chris Clark, regional president for Asia- Razer’s fintech unit into Visa’s fintech fast- extends Razer Fintech’s position as the Pacific at Visa, said: “This announcement track programme. The virtual Visa prepaid largest offline-to-online digital payment reaffirms Visa’s commitment to the fast- solution will now be integrated into the network in the region.” growing and digitally savvy Southeast Asia Razer Pay e-wallet, enabling Razer users to Initially, the offering will be available region. Together, Visa and Razer Fintech pay wherever Visa is accepted. in selected Southeast Asian countries, have the opportunity to transform the Razer co-founder and CEO Min-Liang with plans in place for a global roll-out at payments experience for not only the Tan said: “We are incredibly excited with a later date. Razer also aims to use the gaming community, but many of Southeast the opportunities that this innovative move to gain access to the unbanked and Asia’s unbanked and underserved payment solution serves to millions underserved population in Southeast Asia, consumers as well.” < Mastercard, Treezor partner to support fintech growth in Europe and innovation, building on the Mastercard “Our ambition is to position Treezor’s processing platform (MPTS). platform among the best references in Banking-as-a-service platform Treezor Eu rop e .” facilitates payment management, with more The new joint offer makes numerous pre- than 500,000 cards issued since inception. mium benefits available to cardholders who The expanded partnership now encompasses wish to supplement their cards with val- card transaction processing and manage- ue-added services; these include cashback, ment systems. Using MPTS, Treezor will op- concierge services, airport lounge access and timise card payments in foreign currencies, in-flight Wi-Fi. in turn opening the international market to Mastercard France manager Solveig Treezor’s 40 neobank and fintech clients. Honore Hatton said: “The strengthening of Treezor CEO Eric Lassus said: “Master- our partnership will contribute to improve card’s ability to provide Treezor rapidly with Treezor’s agility and add new services to Mastercard has agreed to strengthen its the whole range of its value-added services neobanks and fintechs. technological partnership with Société to reinforce the centralisation of its payment “Treezor can count on Mastercard’s team Générale Group subsidiary Treezor. processes on a unique platform for France support in both France and other European The collaboration aims to assist the and other European markets was a decisive countries to accelerate its development in European fintech companies with growth factor in our choice to implement MPTS. new geographies.” < Apple starts expanded trials of upcoming credit card Apple has reportedly expanded testing The Apple card, which is digitally of its upcoming credit card before its connected to the user’s iPhone, offers scheduled launch later this year. higher cashback on Apple purchases and According to a Bloomberg report, the all transactions made with Apple Pay. US technology company has launched Goldman is responsible for payment an internal beta programme for the processing, credit obligations, disputes and Apple Card. It will involve Apple’s retail customer services. employees and help the company to assess Apple is also in talks with financial performance before commercial launch. regulators to introduce the offering in The initiative is also the first major trial Europe, according sources familiar with the of the card, co-developed in partnership project. with Goldman Sachs Group. During the Goldman has assigned at least 30 trial, Apple employees may use the card The digital version of the card is already employees to the Apple card project, while publicly to make purchases, but are asked available, with the physical card expected Apple’s efforts are led by the Apple Pay not to discuss the card. to be available in the summer. and Wallet app teams. <
6 | June 2019 | Cards International
CI June 2019 568.indd 6 01/07/2019 15:26:01 News | digest
23% of US drivers claim to be skimming victims of concerns around skimming; last year, the figure stood at 38%. Also, 37% of drivers said they are more worried about skimming now than they were a year ago. Skimming is where a user’s card data is stolen by attaching a small device to a pay- ment terminal or ATM. The devices capture and store card data, which is then sold on or used to carry out fraudulent purchases. Matt Schulz, chief industry analyst at CompareCards, said: “Card skimming at the pump has become more common because it is a low-hanging fruit for bad guys, and things might get a little worse before they get better. “Fraudsters know that their work will become much harder once gas stations upgrade their terminals next year, so they’re likely to do whatever they can to take advan- tage of the opportunity. That’s yet another reason why it’s so important for Americans A new report has found that nearly a quarter icant increase from the 15% figure reported to build regular fraud checks into their of US drivers believe their card information a year ago. financial routine, starting today.” has been stolen at gas stations. Rising concerns over card skimming have Card skimming has been a major issue According to the report by Compare- forced many drivers to change payment at US gas stations for several years. Stations Cards, 23% of respondents said they suspect methods at the pump, the report added. are now required to upgrade their payment that they were victims of card skimming at Around 51% of respondents said they have terminals by October 2020, in an attempt to a gas pump in the past 12 months – a signif- changed the way they pay for gas as a result tackle the problem. < Columbia Care launches medical cannabis card Columbia Care, a multi-state operator in the medical cannabis industry, has launched a national credit card programme in the US. The Columbia National Credit (CNC) Card programme enables Columbia Care to accept a credit card for purchases of medical cannabis. The launch follows a pilot in New York in the second half of 2018, during which Columbia Care noted an 18% jump in the average basket size for in-store purchases using the CNC Card compared with other forms of payment. It also saw an increase in repeat visits, and increased utilisation of home delivery and automatic fulfilment. Commenting on the launch, Columbia “If given the choice to pay with credit unique to cannabis, and are proud to once Care CEO Nicholas Vita said: “By or cash, consumers prefer credit, and again lead the way as the first company to launching the first credit card in the until now, the cannabis industry has solve this fundamental issue.” country that can be used by consumers been predominantly cash-based due to Availability of the CNC Card programme and industry participants to purchase restrictions on the use of credit cards for has been extended to Delaware and cannabis products, we now exclusively cannabis purchases. Pennsylvania, as well as New York, and offer an important capability that will serve “Through our exclusive network of is scheduled to expand further to Illinois Columbia Care’s national growth initiatives, partners and painstaking attention to and Arizona in June. It is expected to be including home delivery, automatic detail, we successfully navigated the available in all Columbia Care markets by fulfilment and e-commerce. complexities of the financial industry the end of the year. <
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CI June 2019 568.indd 7 01/07/2019 15:26:06 News | Digest
American Express teams up with Andy Murray American Express has formed a partnership with UK tennis star Andy Murray, in a pro- gramme to support fans at Wimbledon. The partnership is part of a multi-year agreement with the All England Lawn Tennis Club, which sees American Express become the official payment partner of the Wimbledon championships. Amex card members attending the event will have access to a range of exclusive of- ferings, as well as additional benefits outside the tournament venue for small merchants and American Express corporate clients. All visitors will also be able take part in Champion’s Rally, an immersive virtual re- ality challenge that gives fans the chance to practise on court alongside Andy Murray. Additional on-site card member benefits will include: Deborah Curtis, vice-president of global Curtis continued: “We’re also excited • Access to a dedicated card member experiences and partnerships at American to leverage the partnership at a busi- lounge; Express, commented: “Our partnership with ness-to-business level, supporting our small • In-ear radios featuring live broadcasts Wimbledon is an important example of how merchants in the Wimbledon area and from Centre Court, No.1 Court and the we’re backing customers and tennis fans bringing a pop-up activation to several of Wimbledon Radio Channel, and around the globe with unique experiences our UK corporate clients, so they can truly • A card member offer, whereby fans and benefits. immerse themselves in the experience of the spending £120 ($152) cumulatively at the “Building on our heritage of supporting championships.” event on an enrolled eligible card will re- tennis in the US, this partnership will be Murray added: “I’m excited to be working ceive £20 credit on their next statement. supported by a 360-degree marketing cam- with American Express ahead of my return paign that highlights the many advantages to the tour. The company has also commissioned a of being an American Express card member “I had good fun working on Champion’s new space in the Southern Village at Wim- at the championships, and delivers an en- Rally, and I’m looking forward to seeing bledon, as part of its partnership with the hanced event experience for card members everyone have a go on Centre Court – so All England Lawn Tennis Club. that reflects the best of our brand.” long as they don’t beat my score!” < US Digital challenger CARD on track for 1.5 million new accounts in 2019 everyone and help customers attain their financial goals.” CARD plans to introduce additional financial services later this year. It currently offers custom-branded cards with a mobile app and text alerts for customers who prefer mobile banking. CARD customers can also access their pay cheques quickly with the Early Direct Deposit facility. In total, CARD offers 8,000 personalised card designs; popular choices include images of NFL players, consumer brands, US digital challenger CARD’s customer CARD CEO Tim Coltrell said: “We’re TV shows, rock bands, artists and numbers are on track to exceed 1.5 million really excited with customers’ acceptance designers. by the end of the year. of our brand partner images. This makes Visa and Mastercard-branded CARD Affinity-branded prepaid issuer CARD their mobile banking account unique and prepaid cards are issued by the Bancorp says it has now signed up over 600,000 personal to them. Bank and Central Bank of Kansas City. new accounts, with customer deposits now “At the same time, consumer banking In April, CARD formed a strategic in excess of $3bn. Year on year, CARD’s has failed to keep up with the market’s partnership with US prepaid industry rate of customer acquisition is almost changing needs. Our aim with our founder Meta, which sponsors nearly half double that of last year. m-banking account is to make it easier for of all retail or non-bank ATMs in the US. <
8 | June 2019 | Cards International
CI June 2019 568.indd 8 01/07/2019 15:26:13 News | Digest
Chinese embassy in New Zealand adds UnionPay support The Chinese embassy in New Zealand Chinese embassies and consulates in the second-largest tourist source country has added support to accept multiple 37 countries, including Russia, Australia, for the Oceanic nation. UnionPay payment methods. Malaysia and Switzerland. UnionPay International has also The move will enable Chinese citizens The step is expected to benefit Chinese collaborated with the New Zealand to pay all consular service charges at tourists and students visiting New Zealand, Immigration Service to introduce an the embassy using a UnionPay card or as well as Chinese citizens who have no express service for UnionPay Platinum the UnionPay QR code payment facility. local bank cards. cardholders, enabling them to apply for The embassy will also support UnionPay In New Zealand, more than 60,000 a New Zealand visa without submitting contactless and QuickPass payments. All merchants accept UnionPay payments, financial certificates. payments made through UnionPay require while around 80% of local ATMs support UnionPay recently announced plans no currency conversion. UnionPay cards and around 22,000 to issue debit and credit cards in Europe, Following the latest addition, UnionPay POS terminals support UnionPay mobile partnering with UK-based back-office payment methods are now accepted by QuickPass. According to UnionPay, China is technology start-up Tribe Payments. < Rappi taps Visa to offer prepaid cards in Brazil Colombia-based on-demand delivery start- up Rappi is reportedly partnering with Visa to offer a prepaid card in Brazil. The prepaid card will be linked with a digital wallet, enabling customers to pay for services with money saved in the app. The company has already launched similar offerings in Colombia and Mexico. Rappi Brazil co-founder Ricardo Bechara was quoted as saying: “It is the first of many financial solutions we plan to offer to our users.” While Bechara did not elaborate on the other solutions it plans to offer, he added that the company will now focus on the roll- out of its prepaid card throughout Brazil. Visa Brazil sales and commerce solutions vice-president Fernando Pantaleao told It will be do this by catering to the under- Since launching in July 2017, Rappi has Reuters that the prepaid cards can handle banked population. expanded in more than 20 cities in Brazil. transactions beyond the internet. Pantaleao added: “Rappi has an engage- Its financial unit was launched in October, The launch of the Rappi prepaid card will ment capacity that nobody else does. This enabling fund transfers between app users. help the company to devise improved re- prepaid card will grant its users access to all It has also introduced a QR code payment ward programmes, and expand its footprint. of Visa’s benefits and anti-fraud security.” facility. < Credit Agricole launches biometric payment card trials France’s Crédit Agricole has launched and attract customers and retailers can The process provides greater security a trial of biometric payment cards with maximise throughput and reduced drop- without impacting convenience. sensors provided by Swdish biometrics outs, increasing revenues. The smartcards are equipped with operator Fingerprints. “Most importantly, consumers Fingerprints’ optimised T-shape module With the launch, Fingerprints no longer have to compromise sensor. has confirmed that 20 security in the name of The biometric payment cards do not contactless card trials across convenience.” use a battery; the module procures power the world now utilise its The Crédit Agricole trial is from the POS terminal to authenticate a fingerprint touch sensors. expected to continue for six transaction. Fingerprints’ smartcards months, following which, a In March, Zwipe selected Fingerprints’ senior vice-president, Thomas commercial roll-out is planned T-shaped sensor for the latest version of its Rex, said: “Awareness is growing as next year. biometric payment card. banks, retailers and consumers recognise The biometric sensor on the payment Zwipe said decision was based on the the value that biometrics can offer. Banks card replaces PIN and signature sensor’s performance and scalability in can reduce fraud and grow trust to retain verification with fingerprint authentication. mass volume production. <
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CI June 2019 568.indd 9 01/07/2019 15:26:19 innovation | curve cash
was the next step. We are delighted to have introduced 1% instant unlimited cashback curve cash: for our customers to spend at their favourite retailers.” According to Curve, by February 2019 it had gained 300,000 sign-ups since launch. curve launches It also has 100,000 active users, and its membership is growing by 40% month on month. This cashback service is sure to gain more customers, but to what extent? cashback product Bialick continues: “Attracting more customers is the outcome of building a great Curve, the card-consolidation smart card and app, product, and that’s our key focus: build the best money experience out there. Everyone has launched Curve Cash, which gives 1% instant who likes to get value for their money cashback to customers. Patrick Brusnahan writes should be attracted by the new Curve Cash proposition. urve Cash customers will receive ($127,000). The Curve customer protection “Following the interchange fee regulations an additional instant 1% cashback policy covers all credit and debit card which capped interchange revenue for issuers, Con top of existing reward schemes payments made via the Curve card, giving many issuers have stopped their cashback at over 60 high street brands. Participating cardholders an extra layer of protection for programmes in Europe. Curve’s unique firms include Amazon, Apple, Sainsbury’s, disputes with merchants. The Mastercard product allows retailers to target, retain and Waitrose, TfL, Uber, Gett, Spotify and chargeback scheme, which previously covered acquire customers better than ever before, Netflix. Curve card payments, continues to apply to and thanks to this, Curve can provide more Curve Cash also gives users the freedom transactions of more than £100,000. benefits to its customers.” to spend the rewards wherever Mastercard is Under the new policy, claims can be Is cashback a differentiator? Many accepted. Funds are added to a separate Curve made within 120 days; this applies when companies offer it as a reward, from banks to Cash account in the in-app Curve wallet. cardholders use their Curve card and goods or supermarkets and everything in between. Following this, purchases can be made using services are not received, defective or not as “Curve offers instant cashback – so as soon the Curve card. The rewards are offered to described. It also covers eligible purchases if as you have made your purchase, the rewards customers in three segments: goods prove to be counterfeit or if a promised appear in your Curve Cash card and you can • Curve Blue customers receive 1% instant refund is not completed. spend it everywhere Mastercard is accepted,” Curve Cash for 90 days, and a choice of Bialick notes. “This is unlike other rewards up to three retailers; WHY NOW? programmes, like Amex, which make you • Curve Black offers the same as Curve wait until the end of the month to collect Blue, but for an unlimited time, and So why did Curve decide to launch the your rewards, and are limited in the places • Curve Metal offers 1% instant Curve cashback offer? And why now? Speaking to you can spend them.” Cash for an unlimited period, but with a CI, Curve founder and CEO Shachar Bialick On the topic of Amex, it is still one of the choice of up to six retailers. believes it is all about improving the product, firms not currently working with Curve. In and that this was a natural progression. February 2019, it blocked attempts by Curve While customers cannot currently change He says: “Curve is the best rewards card to load Amex cards into its all-in-one wallet. their retailer choices “at the drop of a hat”, on the market, and we are constantly looking A big side effect of the loading would be that Curve is working on a way to allow them to at ways to give our customers a better Curve customers could use an Amex card do so over time. experience. After the launch of LoungeKey anywhere that Mastercard is accepted. Is there “Curve cash introduces a whole new in May, improving our cashback offering still bad blood between the two? experience around Curve, rewarding our Bialick concludes: “In principle, we think customers with instant 1% Curve Cash Amex is a fantastic product. Unfortunately, that they can use anywhere Mastercard is Amex’s cardmembers can’t use Amex almost accepted,” explains Diego Rivas, product lead anywhere, and that was one of the problems at Curve. Curve aimed to solve for its cardmembers. “The launch of Curve Cash is just one “Amex is currently under a lot of regulatory example of the many ways Curve simplifies pressure with the introduction of PSD2 people’s finances, constantly delighting them and the interchange fee regulation, and we by combining all their debit and credit cards don’t see how they continue to support their into one, and rewarding them with cash they rewards system. can spend instantly.” “Curve Cash is here to provide a reasonable Curve recently offered customer protection, and smart alternative for both customers and which now covers claims within one working retailers who would like to maximise their day on eligible purchases of up to £100,000 The Curve app value for money.” <
10 | June 2019 | Cards International
CI June 2019 568.indd 10 01/07/2019 15:26:24 analysis | amazon
my favourite cards to recommend to folks with crummy credit or those who are new to amazon’s new credit card: credit, because they’re a low-risk way to work to get your feet under you. Except for the deposit, they work like most any other credit card, but the typically small credit lines mean a life raft for that there’s only so much damage you can do on a spending spree. “This is the first secured retail credit card I recall seeing. Retail cards are popular those in debt? with folks with thin or imperfect credit in part because they’re easier to get than your E-commerce giant Amazon has launched a credit typical bank credit card. However, they also card for people with low credit scores. While it has typically come with sky-high interest rates and other unfavourable terms that make services that could aid such consumers, is another them a dangerous choice for credit newbies. card really the way out? Patrick Brusnahan writes Introducing a secured retail card seems like a good choice that has a chance of being ubbed Amazon Credit Builder, Speaking to CI, Brandon Spear, president popular with consumers.” Amazon’s new credit card is at global B2B payment and credit solutions “For a secured card, the rewards are pretty Davailable exclusively to members provider MSTS, says: “Amazon is creating strong,” he adds. “A $40 gift card after you of its Prime service. an inclusive payment environment for both make the deposit and ongoing 5% cash The card was developed in collaboration current and potential customers by partnering back at Amazon will be compelling for those with Synchrony Financial. Customers can with Synchrony to launch its new Amazon considering a secured card.” deposit between $100 and $1,000 into a Credit Builder credit card option. Specifically Synchrony Bank account, which will serve as designed for those with poor credit, Amazon THE FINE PRINT their credit limit. However, the no-annual-fee is now able to deliver rewards credit and Amazon credit card can only be used only on build loyalty with more customers than it had However, Schulz also advises caution with the the company’s website. previously been able to reach. card. “There are a few fine-print details that Similar to Synchrony’s existing Amazon “B2B companies should consider cues from consumers should be aware of: the card can Store card, the Amazon Credit Builder B2C and Amazon’s priority to the customer’s only be used at Amazon, and it will take up programme will offer Amazon Prime purchasing experience. It is as simple as to two weeks to activate the card once your members an appealing 5% cashback on evaluating the customers they may be missing deposit is received. purchases. It will also offer customers tips on with their payment options, especially as it “The card also comes with a special building credit. relates to e-commerce.” financing offer that, like most special Customers that have held an Amazon Spear adds: “Credit cards are often financing offers, can be great if you follow the account for six months or more will be the go-to choice for B2B e-commerce rules, but can pack a big surprise at the end if eligible to upgrade to the Amazon Store Card. transactions, but they are not always the you don’t know what you’re getting into. The application process is same as for other preferred payment method for the buyer. “With the Amazon card’s special financing, Amazon cards, with the main downside being Consider other payment options including you pay no interest for up to 24 months – the that the new credit card comes with a higher Credit as a Service’s InvoiceMe (invoicing for length depends on how much you spend – APR of 28.24%. e-commerce), extending net 30-plus terms or if you pay the purchase in full during the It could be comforting for consumers to financing purchases over time. This results in introductory period. However, Amazon says: hold a credit card with a brand they recognise. a deeper relationship with the buyer, increases ‘Interest will be charged to your account from Amazon, according to BrandZ, is the world’s sales, and engenders loyalty by breaking down the purchase date if the promotional balance biggest brand, having recently been valued at the barriers to purchase.” is not paid in full within the promotional $315bn, a 52% rise from 2018, moving above Matt Schulz, chief industry analyst at period’. That means that if you don’t pay your Apple and Google for the first time. CompareCards, adds: “Secured cards are whole purchase off during the introductory period, you can get stuck with a big bill. That can be a really unpleasant surprise.” Similar to the Apple Card, Amazon’s latest product is being heavily hyped. The difference is that Apple is aiming at a much wider demographic with its card, while Amazon’s effort is honing in on one specific segment. While that is all fine and good, stating that a product will genuinely benefit those with debt is potentially a very slippery slope. If it does not work, who is to blame? <
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CI June 2019 568.indd 11 01/07/2019 15:26:25 innovation | crypterium
Facebook subsidiary whose goal is to provide is crypterium set to financial services that will let people access and participate in the Libra network. Its plan is to let users send Libra to almost anyone with a smartphone. start a global The digital wallet will be available in its own standalone app, as well as in WhatsApp and Messenger. It hopes to launch in 2020. Not everyone is convinced that this crypto craze? is a good move for Facebook, however. GlobalData analyst Bhavika Shah says: “While Libra is targeting the unbanked, London-based Crypterium has launched what it claims it seems that Facebook is simply trying to is the world’s first global crypto card, allowing holders to become like a bank by enabling electronic payments. In addition, Libra has the potential pay with Bitcoin and other cryptocurrencies at any retailer, to capture a large proportion of users that are anywhere in the world. But does that mean everyone across currently paying by cash. the world will start using it? Patrick Brusnahan writes “Whilst Facebook has been trying to enter the payments market for years, after rypterium entered the scene in and Crypterium’s own CRPT. A further 11 its unsuccessful launch of Facebook Credits 2013 when its team built a mobile currencies are expected to be added to the in 2009, doing so by targeting a relatively Cpayment solution based on QR wallet by the final quarter of 2019. unprofitable segment could limit its potential scanning in Eastern Europe. This gained it The app also includes standard features to raise profits. $1m in a Series A funding round. such as account blocking and unblocking, “The reason for this is that the unbanked By 2015, the firm had partnered with PIN changes and expenses tracking. are unlikely to have much disposable income, more than 300 e-commerce retail services and although Facebook is likely banking on raised another $7m. It started work on crypto FACEBOOK LIBRA growth in these economies in order to raise in 2017, and this led to the Crypterium card. Libra’s profitability over time, as well as Operating similarly to a standard prepaid Something else that is bringing potentially increase its adoption in the West.” card, Crypterium can be loaded with cryptocurrency to a wider audience is Shah continues: “Despite Libra’s potential, cryptocurrencies and used at both online and Facebook’s latest stab: Libra. cash-dependent developing markets have their physical retailers. Described by Facebook as a “global own incumbent electronic payment tools, Crypto-backed cards are a convenient currency and financial infrastructure”, Libra and Facebook will need to deal with fierce way to convert digital currencies into local will be powered by a Facebook-created competition from mobile wallet providers. currencies wherever the user happens to be, version of blockchain. It will be serviced by For instance, Libra will need to compete but this has previously been restricted to a consortium called the Libra Association, with Paytm in India, WeChat and Alipay specific regions or retailers; the Coinbase based in Switzerland, which includes in Southeast Asia, as well as various mobile Card, for example, is limited to the UK. Mastercard, Visa, PayPal, eBay, Uber, Spotify, money providers in the Middle East and The Crypterium card is available now, can and Vodafone. It is backed by the Libra Africa. be used globally and can pay for a number of Reserve, a collection of low-volatility assets. “However, Facebook is trying to goods and services. Facebook has also announced the Calibra differentiate itself from these competitors “One of the major barriers to general digital wallet. Calibra is a newly formed through Libra’s global reach.” < crypto acceptance has been the fact that it is very difficult to spend cryptocurrency in the real world, and any solutions offered so far have been confined to specific countries or retailers,” says Crypterium CEO Steven Parker. He adds: “The beauty of cryptocurrencies is that they are designed to be borderless and global. The Crypterium card lives up to this borderless, global ideal: anyone can apply for one and start using their cryptocurrencies to pay for things in everyday life. This has the potential to take off as quickly as NFC.” The card is linked to the Crypterium Wallet app, which lets account holders buy, manage, and store multiple currencies. These include Bitcoin, Ethereum, Litecoin, USD Coin,
12 | June 2019 | Cards International
CI June 2019 568.indd 12 01/07/2019 15:26:28 INNOVATION | voice activation
announced that its sensory branding suite is voice activation: now being used in 25 countries. With passwords and PINs increasingly becoming things of the past, and with new technology accelerating innovation in payments, it is little surprise that consumers a new frontier are moving past older forms of authentication. Rightly, security is the primary concern with voice payments. Consumers look for quick and easy banking solutions with the for payments highest levels of security. To drive voice payments even further, banks and payments Voice-enabled support is the newest buzz for consumers companies will need to focus even more on across the financial industry. AI-focused assistants have the authentication process to ensure that only the right people are accessing accounts. been rolled out by giants such as Apple and Amazon, while Visa has developed partnerships with a payments giants Mastercard and Visa are also expanding range of companies around the world that will their voice-enabled services. Briony Richter reports deploy sensory branding, allowing the suite to take off globally. Examples include: oice commands through enabled or Google smart speaker, as well technology are being used far more as through Priceless.com. When the voice Mobile-first experiences Vregularly by consumers – both in assistant becomes available later this summer, • The Carousell marketplace app in the home and while travelling. cardholders will be able to hear about a Singapore; The likes of Alexa and Siri have surged variety of experiences available in cities • The Monyx Wallet payment app from in popularity, and it is little surprise that including New York, Miami, Los Angeles, Nayax, and the technology has also found a place in Boston and Chicago. • 11 issuer mobile wallet apps throughout the financial sector. As more customers use The process is simple: users ask their Latin America. smartphones to conduct banking, voice speaker to “open Priceless Experiences”. Users payments have become a natural substitute will know the request has been activated Sports venues for tapping on the go. when they hear the immediate chime of the • In stadiums across France at the Fifa Already, platforms such as Zelle and Mastercard sonic melody. Women’s World Cup, and Square allow users to use verbal commands So, with the ever-rising popularity of voice • In the stadium at Oracle Park, home of the to make banking transactions. It may be a assistants, is it a natural evolutionary step for San Francisco Giants. repetitive thing to say, but it all comes down the technology to find a place in the world of to personalisation, which is the main growth banking? Technology and retail partnerships driver for voice-enabled services. Raja Rajamannar, chief marketing and • Providers of POS terminal technology communications officer at Mastercard, directly to merchants, including Aurus, PRICELESS EXPERIENCES comments: “Sound – and in this case the Equinox Payments, Pax, Poynt, IBA and Priceless Experiences skill marked by the VisaNet; In June 2019, Mastercard announced Mastercard sonic brand – is a powerful way • First Data in Singapore, and in Cannes, France that it would soon for us to create a culturally relevant and • Xpress-pay, a leading, flexible e-payment be launching its Mastercard Priceless emotional connection with consumers.” solution for SMEs. Experiences. The experiences will feature Mastercard’s A GLOBAL GOAL Lynne Biggar, chief marketing and first ever voice assistant for smart speakers, communications officer at Visa, comments: tapping into a market that has already Voice banking is conquering the financial “As consumers continue to change where and embraced the presence of Siri and Alexa. industry. Banks, fintechs and payment how they pay in the world, the entirety of the By 2020, 75% of US households will most companies are all competing to offer more customer experience must also evolve in ways likely own at least one smart speaker, making personalised, innovative and advanced that have trust built in from the start. it a highly lucrative sector. An additional solutions to attract new customers to their “Giving greater dimensionality to our 74% of US citizens now prioritise personal suites. brand, and letting our customers see, hear experiences over products; therefore, by In January 2018, Visa announced that its or feel Visa when they pay, is an essential tapping into this market Mastercard is able to suite of sensory branding was available as a ingredient at a time when the physical point offer access to tailored activities in the cities pilot programme for merchants, terminal of sale is making way for greater digital where consumers live and travel to. manufacturers and developers. After a environments.” Cardholders looking for memorable series of trials, Visa finally landed on a Biggar concludes: “Sensory branding cues experiences while holidaying, or a special single “energetic” and “optimistic” sound, provide a way for us to express that our brand encounter closer to home, can now access and complementary animation and haptic promise of speed, security, reliability and trust experiences through Mastercard’s Alexa- vibration. Now, also in Cannes, Visa has is still behind every transaction.” <
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CI June 2019 568.indd 13 01/07/2019 15:26:28 feature | brand values
payment brands: the rise and rise of visa and mastercard
The brand values of Visa and Mastercard continue to soar. Visa is now valued as the world’s fifth- most-valuable brand, up a whopping 22% in the past year. Meantime, Mastercard is the world’s 12th-most-valuable brand, following a 30% rise in its brand value, reports Douglas Blakey
he BrandZ 100 Most Valuable of 2006, Citi ranked as the most valuable respectively. By 2008, the year the financial Global Brands 2019 report is one banking brand, placing ninth in the top 100. crisis reached its peak, RBS had dropped out Tof the more eagerly awaited annual The following year, Citi inched up a place of the top 100, while Mastercard debuted at a surveys – and it has pedigree, dating back to rank eighth. Since then, the decline in the lowly 99th. to its debut in 2006. relative strength of the Citi brand is quite All but one global bank loses value in dramatic: by 2009, Citi ranked only 49th; MASTERCARD, VISA DEBUTS the 2019 BrandZ survey. Regional banks fast-forward to 2012 and it ranked a lowly fare little better, with only two brands 82nd. The brand has since recovered slightly, Visa made its first appearance in the Top 100 up on the year. By contrast, in the cards ranking 77th in 2019. at number 36 in the 2009 BrandZ ranking, sector, Mastercard and Visa have enjoyed a Bank of America (12th), American Express following its successful IPO the previous year. phenomenal year. (25th), HSBC (36th) and Deutsche Bank (39th) Meantime, Mastercard inched up to rank at Visa ranks fifth overall in the 2019 100 also featured prominently in the original 2006 87th position. most valuable global brands, with a brand ranking. The 2009 survey was notable for two other value up 22% year on year. Visa rises two Deutsche Bank featured in the first three reasons: China and Canada. The relative places from last year with a brand value, surveys, before dropping out in 2009. Bank strength of the Canadian banks compared to according to BrandZ, of $177.9bn. of America has at least remained in the top their UK and US peers following the crisis is Rival Mastercard is also on the up, 100, but its fall in the rankings mirrors that apparent. and ranks among the year’s fastest risers. of Citi. From a high of 12th in 2006, Bank of Canada’s TD entered the ranking for the Mastercard’s brand value is up 30% year America ranks a lowly 83rd in 2019. first time in 2009, ranking 61st, with RBC on year to $91.9bn and now ranks 12th, up Two of the biggest casualties of the crisis, 48th. Barclays also dipped, down to 90th, from 15th last year. American Express is also Wachovia and Washington Mutual, featured while ING’s brand value collapsed by 55% in ahead, with its brand value rising by 17% to at 54th and 95th respectively in 2006. a year to rank 93rd. $35.1bn, and ranking 33rd in 2019. The 2006 ranking is also notable for one The top three most valuable financial It is all a far cry from the original BrandZ other interesting point: Amazon makes an brands by 2009 were all Chinese: ICBC, 100 Most Valuable Global Brands survey appearance, ranking 78th with a brand value China Construction Bank and Bank of published back in 2006. of a modest $5.9bn, behind Chase (59th) and China. That, however, was not to last, with ING (76th). Visa becoming the second-most-valuable PRE-CRISIS YEARS A number of banks featured in the survey financial brand by 2010. for the first time in 2007, notably Wells Fargo Overall, Visa ranked 18th in the top 100 Neither Visa nor Mastercard featured in the at 18th. The two Royal Banks, Canada and in 2010, with Mastercard 67th. Visa and first BrandZ ranking. In the pre-crisis days Scotland, also debuted at 39th and 82nd Mastercard emerged from the financial crisis
14 | June 2019 | Cards International
CI June 2019 568.indd 14 01/07/2019 15:26:36 feature | brand values
brand values: rises and falls since 2006 – top 10 and selected others
2006 2012 2019 rank Brand value ($bn) rank Brand value ($bn) rank Brand value ($bn)
1 Microsoft 62.1 1 Apple 182.9 1 Amazon 315.5
2 GE 55.8 2 IBM 115.9 2 Apple 309.5 3 Google 107.9 3 Coca Cola 41.4 3 Google 309.1 4 McDonalds 95.2 4 China Mobile 39.2 4 Microsoft 251.2 5 Microsoft 76.6 5 Marlboro 38.5 6 Coca Cola 74.3 5 Visa 177.9 6 Walmart 37.6 7 Marlboro 73.6 6 Facebook 158.9
7 Google 37.4 8 AT&T 68.9 7 Alibaba 131.2 9 Verizon 49.1 8 IBM 36.1 8 Tencent 130.8 10 China Mobile 47.1 9 Citi 31.1 9 McDonalds 130.4 13 ICBC 41.5 10 Toyota 30.2 10 AT&T 108.4 14 Wells Fargo 39.8 12 Bank of America 28.1 15 Visa 38.3 12 Mastercard 91.9 25 American Express 18.8 24 China Construction Bank 24.6 23 Wells Fargo 46.5
36 HSBC 13.9 29 Mastercard 20.8 29 ICBC 38.4 30 American Express 20.2 39 Deutsche Bank 13.1 33 American Express 35.1 31 HSBC 19.3 54 Wachovia 10.2 56 HSBC 23.2 40 Royal Bank of Canada 17.3 59 Chase 9.7 57 Royal Bank of Canada 22.9 54 Toronto Dominion 14.6 61 UBS 9.5 60 C’wealth Bank Australia 13.1 59 China Construction Bank 22.7 65 Goldman Sachs 8.8 63 ICICI 12.7 67 Chase 20.5
70 JP Morgan 7.1 72 US Bank 11.5 72 Toronto Dominion 19.9 74 Sberbank 10.6 76 ING 6.3 77 Citi 18.9 79 Standard Chartered 10.1 78 Amazon 5.9 83 Bank of America 17.9 82 Citi 9.8 88 Barclays 5.1 91 C’wealth Bank Australia 15.8 83 Scotiabank 9.6 95 Washington Mutual 4.7 92 Chase 8.6 95 US Bank 14.9 Source: BrandZ, Millward Brown Source: BrandZ, Millward Brown Source: BrandZ, Millward Brown relatively unscathed, with increases in brand 2013: HITTING NEW HIGHS brand value is down 15% to $9.8bn while values of 52% and 57% respectively in 2010. ING’s is down a whopping 23% to $9.6bn. The 2010 survey was also notable for the In 2013, the brand values for Visa At the same time, the values for BBVA and debut of ICICI (45th) and US Bank at 88th. and Mastercard rose by 46% and 34% UBS are down by 17% and 18% respectively. The following year resulted in more steady respectively. Visa hit the top 10 for the first Barclays is down by 10% to $5.7bn. growths for both Visa and Mastercard; time in 2013, ranking ninth, with Mastercard Goldman Sachs is another well-known their brand values rose by 15% and 16% up to 20th. bank that no longer features in the top 100. respectively. The 2011 survey was notable for The next year brought more of the same. Notwithstanding Goldman Sachs’s sudden the contrasting fortunes of Wells Fargo and Visa and Mastercard’s brand values both enthusiasm to target the consumer banking Bank of America: the former enjoyed a rise in rose by over 40% to rank seventh and 18th. segment in the UK and the US, and its brand value of 97%, while Bank of America’s Meantime, Amazon broke into the top 10 partnership with Apple, the bank’s brand plummeted by 43%. for the first time to rank 10th. By 2015, Visa value dips by 2% year on year to $8.6bn in By 2012, Visa was up to 15th in the top had risen again to rank fifth in the top 100, a 2019, well outside the top 100. 100, just behind ICBC and Wells Fargo at position it again holds in 2019. From its debut entry position of 78th in 13th and 14th respectively. Mastercard shot up A number of major European banks are 2006, Amazon ranks first in 2019 with a from 60th the previous year to rank 29th in notable by their absence from the 2019 brand value of $315.5bn. Apple, Google and 2012. Meantime, Russia’s Sberbank in 74th ranking: Santander, ING, BBVA, UBS and Microsoft follow in that order, ahead of Visa started to climb the rankings. Barclays all fail to make the cut. Santander’s sitting at fifth. <
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CI June 2019 568.indd 15 01/07/2019 15:26:37 country snapshot | austria
AUSTRIA
country snapshot: austria Gradual shift to debit cards for low-value payments
ash remains the preferred payment However, use of payment cards has population. Most Austrian consumers are instrument in Austria, accounting been growing in line with rising consumer now banked, and card penetration stood at Cfor 44.8% of the total payment awareness of electronic payments, and an average level of 1.5 cards per individual transaction volume in 2018. an increase in the country’s banked in 2018.
value of credit transfers value of payment cards value of cheque payments
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,
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Source: ECB, GlobalData Source: ECB, GlobalData Source: ECB, GlobalData
16 | June 2019 | Cards International
CI June 2019 568.indd 16 01/07/2019 15:26:45 Artificial Intelligence
Debit cards are the most popular card Debit card shares by issuer Debit card shares by scheme type, and are also increasingly being used for payments, as consumers are gradually i a switching to debit cards to carry out low- value transactions. The credit and charge
card market is relatively small in Austria, ther Raiffeisen Bank mostly as a result of the debt-averse nature of consumers. With the gradual adoption of contactless technology, growth in online payment Ma tercard instruments, the emergence of alternative a ag S Er te an payment solutions and the introduction of digital-only banks, the payment card market is anticipated to grow further between 2018 and 2022. DEBIT CARDS PREFERRED Source: GlobalData Source: GlobalData pay later shares by issuer pay later shares by scheme Debit cards are the most popular card type, with every Austrian, on average, holding at
least one. i a High banking penetration, the debt- averse nature of Austrian consumers ther a ag S and combined efforts by banks and government bodies to promote electronic i a payments and financial inclusion have led Ma tercard to their strong adoption. The frequency of debit card payments Er te an Raiffeisen Bank has increased, registering a healthy CAGR of 8.2% to rise from an average of 47.8 times per card in 2014 to 65.5 times per card in 2018. Meanwhile, the average transaction Source: GlobalData Source: GlobalData value for debit card payments fell from €49.10 ($56.28) in 2014 to $46.99 in 2018, suggesting that consumers are E-COMMERCE GROWTH 1.6 million in 2018, at a CAGR of -37.6%; gradually using debit cards to make lower- the decrease is primarily attributed to value payments. The Austrian e-commerce market is closure of one of the country’s e-money currently in a growth phase, increasing systems in 2017. However, the number CHARGE AND CREDIT CARDS from $7.4bn in 2014 to $11.3bn in 2018, of prepaid cards in circulation in Austria is at a CAGR of 10.9%. expected to record a CAGR of 5.3% over Credit and charge cards are not very The growing adoption of e-commerce the next five years. popular in Austria, with penetration in Austria can be attributed to increasing Prepaid cards are widely used for both averaging just 39.6 cards per 100 confidence in e-commerce among both shopping and gifting purposes in Austria. individuals in 2018. merchants and consumers. The availability Bawag PSK, for example, offers the Furthermore, Austrians are not prolific of a variety of payment options has also reloadable Mastercard-branded Shopping users of credit and charge cards; this is helped to promote e-commerce purchases Card Plus prepaid card, while Raiffeisen evident from the fact that the combined in the country. A number of banks and card Bank offers a rechargeable Visa-branded credit and charge payment transaction issuers offer customised cards specifically Preload prepaid card for gifting purposes, value accounted for 38% of the total for online shopping. which can be reloaded up to a maximum payment transaction value in 2018. The growing availability of online amount of $171.83. The debt-averse nature of consumers, as payment solutions such as PayPal, Prepaid cards developed specifically well as banks offering overdraft facilities paysafecard, Klarna and Masterpass has for online shopping are also increasingly on bank accounts, has limited the scope of also supported this growth. available in Austria. Erste Bank, for credit card adoption in the country. Charge instance, offers a Visa-branded virtual cards tend to be the preferred option, PREPAID CARDS prepaid card that allows users to load up to as Austrians like to settle outstanding a maximum of $11,455.48 and make online amounts in full at the end of the The number of prepaid cards in circulation purchases in either domestic or foreign repayment period to avoid falling into debt. in Austria fell from 10.6 million in 2014 to currencies. <
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CI June 2019 568.indd 17 01/07/2019 15:26:46 country snapshot | finland
FINLAND
country snapshot: finland Nordic state moves quickly towards a cashless society
innish consumers are prolific users 2018, behind only Denmark, Estonia and country’s central bank expecting Finland to of payment cards. The frequency of Sweden. be fully cashless by 2029. Fuse of payment cards is the fourth- Finland is moving quickly towards Consequently, the share of cash in the highest globally, standing at 188.6 in becoming a cashless society, with the total payment volume declined from 33.5%
value of credit transfers value of payment cards value of cheque payments
n n n ,
,
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Source: ECB, GlobalData Source: ECB, GlobalData Source: ECB, GlobalData
18 | June 2019 | Cards International
CI June 2019 568.indd 18 01/07/2019 15:26:52 country snapshot | finland
in 2014 to 27.7% in 2018. The country’s Debit card shares by issuer Debit card shares by scheme well-developed payments infrastructure, affordable and widely available financial products, the strong presence of alternative payment instruments, and consumer preference for electronic ther an payments have all driven Finland towards Ma tercard becoming a less cash-dependent society. i a Debit cards are the preferred card type for payments in Finland, with debit card payments accounting for 78% of overall ordea S an i debit card transaction value in 2018; the average frequency of debit card payments reached 191 yearly transactions in 2018 – significantly higher than the 36 recorded
by credit cards. Source: GlobalData Source: GlobalData However, credit card issuers are now using a number of initiatives to attract pay later shares by issuer pay later shares by scheme consumers, including offers of instalment payments, reward points, discounts and cashback. ther Meanwhile, the emergence of e-commerce and the rising adoption of ther contactless payments are expected drive ordea growth in the payment cards market over i a the next five years. Ma tercard S an i DEBIT CARDS an Debit cards dominated the overall payment landscape in 2018. Debit card penetration in Finland is adequate, at an average of 1.5 cards per individual; this was supported Source: GlobalData Source: GlobalData by the country’s strong adult banked population, which stood at 99.8% in 2018. Debit cards were also the preferred bank, the number of contactless payments increasingly invest in this underpenetrated card type for payments in Finland. doubled from 2016 to reach 376 million space, and the availability of a secure The introduction of Payment Directive in 2017, accounting for 23% of all card mobile and card-based payment 2014/92/EU – which requires all banks payments. environment grows, the market is expected in the EU to offer a basic bank account at In value terms, contactless payments to develop between 2019 and 2022. a reduced price, and account-switching totalled €3.3bn ($3.8bn), or 7% of the facilities – contributed to a rise in debit value of all card payments. PAYMENT INFRASTRUCTURE card penetration. To complement traditional banks, mobile E-COMMERCE DEVELOPING The ATM infrastructure in Finland banks such as Holvi and N26 also offer registered a 3.6% decline between 2014 current accounts and debit cards. The e-commerce market in Finland grew and 2018. from $7.6bn in 2014 to $11.6bn in 2018, The rapid decline in the number of ATM CONTACTLESS ADOPTION at a CAGR of 11.3% – a growth rate much terminals can be attributed to a decrease lower than its peers. in demand for cash withdrawals, which The Finnish contactless payments market The relatively slow growth can be drove banks to shut down ATMs to reduce is growing rapidly. largely attributed to consumers not being operating costs – a trend that is estimated All major banks, such as Nordea, accustomed to this channel, and the low to continue over the next five years. OP Bank and Danske Bank, now offer levels of investment made by retailers in Meanwhile, the number of POS terminals contactless-enabled cards, while all major this space. is estimated to record a CAGR of 1.2% mobile payment providers offer contactless According to the E-commerce in Nordics over five years. payment facilities in Finland. 2018 report, published by postal company VeriFone partnered with MobilePay in There were 8.3 million contactless cards PostNord, only half of Finnish consumers June 2017 to allow merchants to accept in circulation in 2018, up from 1.8 million aged between 18–79 shop online on a contactless payments from MobilePay in 2014. According to the Finnish central monthly basis. However, as merchants users via VeriFone POS terminals. <
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CI June 2019 568.indd 19 01/07/2019 15:26:54 Country snapshot | slovakia
SLOVAKIA
country snapshot: slovakia Card use grows as consumers embrace contactless
ash remains the dominant payment Cash is mainly used for day-to-day low- The rise in card adoption is supported instrument in Slovakia, accounting value transactions; despite its dominance, by government initiatives to increase Cfor 64.3% of the total payment however, consumers are gradually shifting financial inclusion, restrictions on cash transaction volume in 2018. towards card-based payments. use, and improvements to the payment
value of credit transfers value of payment cards value of cheque payments
n n ,
,
,
,
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Source: ECB, GlobalData Source: ECB, GlobalData Source: ECB, GlobalData
20 | June 2019 | Cards International
CI June 2019 568.indd 20 01/07/2019 15:27:05 Country snapshot | slovakia
infrastructure. The introduction of an Debit card shares by issuer Debit card shares by scheme EU-wide cap on interchange fees has also encouraged payment card acceptance among merchants. The average annual spend per card ther in Slovakia is higher than regional peers Slo en a sporiteľna including the Czech Republic, Russia, Ma tercard Hungary, Poland, Slovenia, Romania, i a Croatia and Bulgaria. Rising adoption U an a of contactless enables consumers to easily make low-value transactions, while ai ei en an the growth of mobile-only banks and e-commerce are expected to further encourage electronic payments.
DEBIT CARDS DOMINANT Source: GlobalData Source: GlobalData
Debit cards remain the preferred card type pay later shares by issuer pay later shares by scheme among Slovakians, with a penetration of 83 debit cards per 100 individuals in 2018;
this is mainly supported by government ther financial inclusion initiatives. Debit cards are also increasingly used for payments, accounting for 89.4% of the ther U an a total card payments value in 2018. Ma tercard Frequency of debit card payments grew i a significantly from 56.9 in 2014 to 92 in 2018, at a CAGR of 12.7%; this was mainly supported by a rise in preference for Slo en a sporiteľna ai ei en an contactless payments, as well as Slovakian banks encouraging customers to use debit cards beyond cash withdrawals by offering reward points, discounts and cashback. Source: GlobalData Source: GlobalData AVID CONTACTLESS USE Growing internet and smartphone For instance, UniCredit Bank offers the Contactless uptake and use are rising in penetration, a rise in online shoppers and Maestro Bratislava City prepaid card, which Slovakia, mainly supported by major banks increased purchasing power by Slovak serves as a means of payment for public such as CSOB, Slovenská Sporiteľňa, VUB consumers supported this growth. transport in the city. Cardholders are also Banka, UniCredit Bank and Raiffeisen Online events such as Black Friday and entitled to a 10% discount on transport Bank, all of which offer contactless cards. Cyber Monday are supporting growth payments. Slovak consumers have embraced in the e-commerce market, as is the contactless, and it is increasingly used for availability of alternative solutions such as CONTACTLESS ADOPTION payments. According to the central bank, Google Pay, PayPal and Masterpass. over 90% of the total payment cards were The number of POS terminals registered contactless in 2017, and 245.2 million PREPAID RECOVERY significant growth, at a CAGR of 7.5%, contactless card payments worth €4.7bn rising from 45,651 in 2014 to 61,064 ($5.4bn) were made during the year. The Slovak prepaid card market has in 2018. Adoption of contactless POS Contactless acceptance is also high, with registered a decline since 2015. This is terminals has gained momentum, with over 80% of POS terminals supporting partially due to the exit of the non-bank banks actively embracing this technology. contactless. lender Provident Financial in 2016, which In 2017, for instance, VUB Banka offered loan disbursals in the form of upgraded all its POS terminals to ROBUST E-COMMERCE prepaid cards. The market is, however, contactless. The bank also installed over expected to record positive growth 1,700 new POS terminals in the same year, The Slovak e-commerce market registered between 2018 and 2022. including 100 virtual terminals. robust growth from $441m in 2014 Prepaid cards are used for several According to Slovakia’s Bank Card to $684.3m in 2018, with electronics different purposes in Slovakia, ranging Association, over 80% of POS terminals and media, clothing and footwear, and from regular payments at merchants to were equipped with contactless cosmetics the popular purchase segments. transport fares. technology as of January 2019. <
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CI June 2019 568.indd 21 01/07/2019 15:27:12 industry insight | flywire
and, critically, payment volume away from them, they need to either compete or buy. payments consolidation: As a result, these players have adopted a dual strategy: first, acquire existing players from the traditional card-based world to increase economies of scale to counteract price is it utopia, or a compression; and second, acquire challengers to have a stake in these emerging ecosystems. Payment giants, threatened by growing competition and new regulation, are on the retrograde step? acquisition trail. They are looking to fill in the puzzle with the pieces they lack to compete in a new global, open and data- Over the past few months, we have seen some enormous centric landscape. If you can bring the pieces deals struck in the payments sector. Giants like of the puzzle together, and drive the scale and Mastercard and Visa in particular have been acquiring volume, you reach payment ‘utopia’. It was not long ago that a small number new industry challengers, but is this the road to of giants had a stranglehold over the market. payments ‘utopia’? Flywire CEO Mike Massaro writes The emergence of the fintech sector in the last decade, along with changes to interchange isa and Mastercard notably fought If technology advances are providing the fees and the arrival of PSD2, has created an a public battle over cross-border tools for disruption, regulation is ripening the increasingly competitive environment for new V payments firm Earthport. marketplace. The Second Payment Services payments companies. Governments have gone Mastercard eventually backed away Directive (PSD2) has opened up access to significant lengths to promote innovation, in favour of a similar acquisition with to consumer bank accounts, and with it, boost competition and improve consumer international money and cross-border transfer ‘account-based’ payments. This is a seismic choice. This has been to a certain extent about service Transfast, in a huge deal worth an shift that many are underestimating. It means curtailing the power of payment giants. astonishing $274m. This may sound like service providers like merchants and their As these giants go on the acquisition trail, a lot of money, but the culmination of the payment partners can offer consumers ‘pay we risk a retrograde step for the industry. acquisitions has been far greater. by bank’ as a payment method, completely If they reach payment ‘utopia’ – holding In March 2019, Florida-based Fidelity circumventing card networks that have controlling stakes in both existing and Information Services’ takeover of payment dominated the retail payment market. emerging payment networks – the steps taken processing company WorldPay caused In parallel, interchange fee regulations to curb their power will have been nullified. shockwaves across the industry and beyond. are driving down revenues for issuers and Ultimately, it is in everyone’s interest to WorldPay was bought for a record sum of card networks. In 18 months since their have a more open industry that leaves room $32bn, heralded as the biggest deal ever in introduction in 2016, fees fell by 50% with for the bigger players and the challengers payments and putting an even larger spotlight an estimated €2bn ($2.24bn) annually sucked alike. There is enough volume in payments on the multi-trillion-dollar industry, whilst out of credit card issuers’ revenues alone. for everyone to still be at the table: not only raising the question: what is driving the This price compression in an increasingly is there the volume, a more competitive march of payment M&A? commoditised market cannot be sustained. ecosystem will drive innovation and deliver To work out the answer, we must first look Companies that rely on interchange revenues to consumers the services they need, at the at the challengers – over the past few years must replace them with something else. prices they and merchants can afford. Rather we have seen huge growth in the fintech than seek to compete at every opportunity, market. The 2008 financial crash sparked IN SEARCH OF UTOPIA collaboration is a more sustainable path. a fintech revolution as new challengers – How do big payments giants and Revolut, Monzo, Fidor – emerged, riding a So why does this matter in the context of challengers proceed? The idea of a challenger wave of bank inertia, consumer demand for consolidation? Sure, people continue to might sound like they are taking aim at digital-first services, and huge technological use their Mastercard or Visa debit or credit existing business, but the reality is that advancement. cards – but payments is a scale and volume challengers need giants and vice-versa. In the payments space specifically, new business. The larger a company’s scale and Partnerships allow both sides to benefit from players like Ripple, Curve and Venmo have volume, the bigger its slice of the pie, and the the pieces they are missing – and to reap entered the market with disruptive services more it controls variables like rate fluctuation the rewards. These ‘marriages’ ensure that built on new technologies such as blockchain and exchange fees. These shifts threaten to consumers are still able to access the latest and real-time payments. For example, Ripple’s steal scale and volume away from the existing products they desire – and bigger companies blockchain-based offering for international value chain built on decades of card-based, have to do less of the innovation leg work. payments disintermediates SWIFT and other four-party-model transactions. Rather than search for ‘utopia’, both interbank payment rails, while Venmo’s P2P The incumbent payment giants have seen payments giants and challengers need to service uses real-time payment rails, shifting this threat coming. If new payment services partner and build an ecosystem that works for payment volume away from card networks. and infrastructure are taking customers the many, not the few. <
22 | June 2019 | Cards International
CI June 2019 568.indd 22 01/07/2019 15:27:13 HEAR • NETWORK • DISCOVER • CELEBRATE Leasing Life Conference & Awards 2019 Barcelona, Spain • 28 November 2019
For its 15th edition, the Leasing Life Conference and Awards 2019 moves to Barcelona, to bring together asset finance professionals and industry disruptors in an active discussion of the key issues facing the leasing industry. This year’s Leasing Life Conference explores how Europe’s leasing industry is responding to the value chain opportunity, the role of technology in this pinnacle transformation, strategy-driven innovation and much more. Thriving in a digital age has never been more important.
Event highlights • Embracing technological transformation: creating digitised business models • From new technologies to corporate cultures: making innovation a reality • The circular economy: driving change at full speed • CEOs panel discussion and Q&A: the future of asset finance – a strategic outlook • Remaining relevant in an increasingly competitive world • Panel discussion: capitalising on data to drive industry-wide innovation
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Exhibitors Panel Partner Cocktail Partner Table Host Badge and Lanyard Partner
For more details please contact Ray Giddings on [email protected] or call +44 (0)20 3096 2585