www.cardsinternational.com Issue 567 / may 2019
SHINING BRIGHT
FRANCE LEADS ITS PEERS IN CARD TURNOVER AND AVERAGE SPEND
FEATURE ANALYSIS COUNTRY SNAPSHOTS
Sberbank enhances its The battle to onboard Key payments market data ATM network to deliver an remains a huge issue, and analysis for Ukraine, omnichannel experience despite record investment France and Nigeria
CI May 2019 567.indd 1 06/06/2019 12:45:12 contents this month
COVER STORY NEWS 18 05 / EDITOR’S LETTER 06 / DIGEST • Amex provides contactless facility for New York subway • Brim launches customer-centric credit card in Canada • Visa launches b.yond to drive fintech innovation • Raphaels Bank fined for card outsourcing failings • Sharp decline in German ELV card payments • Brex to raise fresh funds with $2bn valuation • Zwipe joins with Goldpac to launch biometric cards • JCB partners Arkea to boost French acceptance network • Fomo Pay signs acceptance deal with FRANCE Discover
Editor: Group Editorial Director: Director of Events: Douglas Blakey Ana Gyorkos Ray Giddings +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]
Junior Reporter: Publishing Assistant: Sales Executive: Briony Richter Asena Değirmenci Jamie Baker +44 (0)20 7406 6701 +44 (0)20 3096 2633 +44 203 096 2622 [email protected] [email protected] [email protected]
Customer Services: +44 (0)20 3096 2603 or +44 (0)20 3096 2636, [email protected] Financial News Publishing, 2012. Registered in the UK No 6931627. ISSN 0956-5558 06 Unauthorised photocopying is illegal. The contents of this publication, either in whole or part, may not be reproduced, stored in a data retrieval system or transmitted by any form or means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. For more information on Verdict, visit our website at www.verdict.co.uk. As a subscriber you are automatically entitled to online access to Cards International. For more information, please telephone +44 (0)20 7406 6536 or email [email protected]. London office: John Carpenter House, John Carpenter Street, London, EC4Y 0AN Asia office: 1 Finlayson Green, #09-01, Singapore 049246 Tel: +65 6383 4688, Fax: +65 6383 5433 Email: [email protected] follow CI on twitter @Payments_News
2 | May 2019 | Cards International
CI May 2019 567.indd 2 06/06/2019 12:45:33 contents may 2019
COUNTRY SNAPSHOTS 16 / UKRAINE 16 Ukraine’s economy was severely affected by the global financial crisis of 2008 and the political crisis of 2013–14, which significantly impacted the country. Over 90 banks were declared insolvent between 2014 and 2017 18 / FRANCE The French payments market is mature and highly competitive. It registered the highest turnover per card in 2018 among peers including the UK, US and Germany. It also had the highest average annual spend per card 20 / NIGERIA Use of cash for consumer payments remains highly prevalent among Nigerians, especially in rural areas. This is primarily a result of limited public awareness of other instruments and limited access to banking infrastructure FEATURES ANALYSIS 10 / SBERBANK 11 / MASTERCARD 12 Sberbank, Russia’s largest bank and operator of Digital innovation is usually described as on its largest ATM network, has begun enhancing the rise or incoming, but that is no longer the its ATM network to deliver an omnichannel case: according to a recent European study experience. But with such a large undertaking, carried out by Mastercard, it is already here. is the task too great? Patrick Brusnahan writes Patrick Brusnahan reports 14 / PAYMENTS RACE 13 / JCB Ahead of Money20/20 Europe, four teams using JCB cardholders’ spend in Europe was up a different means of payment raced round the whopping 63% between 2017 and 2018 – and world, with various checkpoints along the way. Asian JCB cardholders are also ramping up Briony Richter spoke to UK social media star expenditure in other international markets. Max Fosh on Team Mobile Douglas Blakey looks at the figures 15 / ONBOARDING 10 The battle to onboard new customers remains a huge issue for European financial institutions. Despite record levels of investment in digital technology, abandonment rates are no better than they were in 2016. Douglas Blakey writes TECHNOLOGY INDUSTRY INSIGHT 12 / VERIFI 22 / DCC FORUM Every year merchants lose money through Following a recent article in the Financial chargebacks, with scams and fraudulent Times stating that the UK cash system may be activity often falling into the ‘family and “on the verge of collapse”, some consumers friendly’ category. Verifi’s Gabe McGloin have started to wonder what the future holds. speaks to Briony Richter about the problem DCC Forum chair Gino Ravaioli writes
www.cardsinternational.com | 3
CI May 2019 567.indd 3 06/06/2019 12:45:43 HEAR l NETWORK l DISCOVER l CELEBRATE Digital Accountancy Forum & Awards London 2019 3rd October 2019 l London Shape the Future of Digital Accountancy The Digital Accountancy Forum & Awards has grown from strength to strength in recent years. Starting as an awards reception in 2012, we will be returning to London in 2019 with our industry forum followed by a gala awards ceremony aimed at UK, European and global accounting firm leaders. On the 3rd October at the iconic Waldorf Hilton we will once again bring together c-level professionals from accounting firms, regulators and industry bodies, consultancies and advisors, law firms and tech vendors to discuss some of the most pressing issues the industry faces today.
Event highlights l Deploying and using artificial intelligence for better services in accounting and auditing l Getting on Blockchain – hype or reality for auditing and reporting l Automation of services in accounting and the effect on the businesses l Uncovering the potential of machine learning for your business l Developing future leaders with new technology l Implication of digital transformation on accountancy and their firms’ business model l Cloud adoption by accounting firms: Latest trends and developments l Post GDPR review and key takeaways from small, medium and large firms l Creating real business value through your data strategy
Badge and Knowledge Partner Silver Partner Lanyard Partner Lunch Partner
For more details please contact Hannah Leigh on [email protected] or call +44 (0) 20 7936 6689
1019Timetric_DAF_Ad.indd 1 12/12/2018 10:23 editor’s letter
Tally: a perfect example of AI in personal finance
Douglas Blakey, Editor
s CI goes to press comes some pretty sobering full financial automation. Customers sign up by connecting news from the Federal Reserve: four in 10 US their current account and then selecting how much they want A adults cannot afford a $400 expense with cash, to save. Tally then automatically transfers the amount to an savings or a credit card that could be quickly paid off. FDIC-insured savings account. Overall, eight in 10 US adults have at least one credit card; the percentage is higher among those with higher incomes and Tally Save, Keep the Change more education. This concept is not remotely novel. In particular, Bank of Among those with a credit card, 47% pay their bill in full America blazed a trail with its Keep the Change programme every month. One-quarter carry a balance once or some of the back in 2005. It was a phenomenal success for BofA, attracting time, while the remaining 27% carry over a balance most or all two million members in its launch year. Since then, more of the time. And it is that 27% of cardholders than 12 million customers signed up for the that a fintech named Tally believes it can help. programme. In total, members have saved Tally is on a mission to help credit cardholders more than $2bn in total. Moreover, 60% of tackle long-standing debt. It is also a perfect new customers enrol for Keep the Change, and practical example of using AI to assist with 99% of customers who sign up stick with the personal finance. programme. Tally debuted in 2017, offering an automated Tally’s ambitions are more modest, but debt manager. In particular, it analyses the best it does offer one advantage: its savings way for customers to pay down their credit programme is compatible with any bank card debt. The Tally business model involves or credit union in the US. In addition, Tally loaning funds to credit card debtors based on Tally uses AI to help users in debt rewards points are earned that can then their credit scores – customers require a FICO be redeemed for gift cards from retailers score of at least 660. Tally then bundles the loans into asset- including Amazon, Target, Walmart and Starbucks. They can backed securities that are then sold on to investors. also exchange points for travel with Uber, Airbnb, Delta and The company makes money by charging customers interest Southwest Airlines. on the loans, though at a lower rate than banks charge on Tally says a cardholder with debt of $15,000 at 20% APR can credit card debt. It operates in around 30 US states, and says pay off that debt twice as fast by saving $10 each week with it can save customers on average $5,000 in total interest on Tally Save. their debt repayments. Card charge-off rates: not all bad news Tally capital raised tops $40m The figures for April are not, by any means, all bad. For Last year, the average credit card interest rate in the US hit an example, delinquencies at Capital One are down by 30 basis 18-year high. Given the level of US credit cardholder debt, it points to 3.42% from the prior month. is no surprise that Tally has been growing user numbers – and Synchrony reports a 30-basis-point drop in delinquencies to raising capital from its backers. 4.1%. Delinquencies are also down at Discover, by seven basis Last July, Tally raised $25m in Series B funding led by Kleiner points to 2.38%. At American Express, there is a 10-basis- Perkins. Previous investors Shasta Ventures, Cowboy Ventures point drop in delinquencies to 1.4% from 1.5% in March. The and Sway Ventures also participated. The Series A round in position is even stronger at Chase, with delinquencies down by 2016 raised $15m. five basis points to 1.18%. Tally is now launching a free automated savings service, Tally Charge-offs are also down, by 10 basis points to 2.4% at Save. It awards virtual points for “good financial behaviours” Amex and by four basis points to 2.51% at Chase. Despite such as consistently setting money aside or paying toward some positive metrics, there is a huge pool of potential clients revolving balances. It is, says Tally, one more step towards for Tally to target. <
Get in touch with the editor at: [email protected]
www.cardsinternational.com | 5
CI May 2019 567.indd 5 06/06/2019 12:45:51 News | Digest
news digest Amex provides contactless facility for New York subway commuters can use contactless-enabled smart devices or cards on a full-fare or pay-per-ride-basis. The new facility can be used on Lines 4, 5, and 6 between Grand Central-42nd Street and Atlantic Avenue- Barclays Centre, and on all MTA buses on Staten Island. Amex has collaborated with transit fare solutions company Cubic Transportation Systems in order to integrate contactless payments with the MTA. The collaboration also works with other transit authorities to accelerate similar programs. The payment company also announced that from July this year, all new and replacement cards will be contactless. Amex executive vice-president Jaromir Divilek said: “We’re committed to making contactless accessible for our card members in the US, and are working with merchants across the country to make this a reality. “Around the world, once consumers have experienced the speed, convenience and security of contactless payments in their transit system, they are more likely to tap and pay at restaurants, retailers and more. We are excited about the benefits contactless can bring to both our US American Express has collaborated with Effective immediately, Amex cardholders merchants and card members.” New York’s Metropolitan Transportation can use contactless-enabled cards, or Visa recently enabled commuters in New Authority (MTA) to provide a contactless cards in digital wallets through the MTA’s York and New Jersey to pay travel fares payment facility for the city’s subway new contactless fare system. The system using Visa payWave-enabled cards and commuters. is currently in a pilot phase, during which mobile phones. < Brim launches customer-centric credit card in Canada Canadian financial platform Brim has Brim Financial CEO and founder Rasha Brim Mastercard and Brim World Elite launched a new credit card that provides Katabi said: “In the past, people were born Mastercard. customers with reward points specific to into their banks, either because it was the Brim Financial’s senior director of prod- their lifestyle and spending habits. bank their parents used or because they uct, Thomas Patterson, said: “We already see The new offering merges rewards, travel were tied down through a mortgage invest- that the new features we’ve introduced to the and cashback cards into a single card. ment. But today, consumers are no longer market have pushed incumbents to deliver Holders can earn unlimited rewards and limited by those banking relationships. more to their customers, and that’s a great uncapped points, which can be redeemed at “Brim has elevated this idea by creating an thing for Canadians.” any time. experience unlike any other. We are not your He added: “It comes down to a technology Unlike traditional travel or cashback parents’ bank, which is what will continue infrastructure that will support continuous programmes in categories such as gas and to differentiate us as we look at building out growth and innovation. We’re proud to be at grocery, Brim’s new offering provides points our suite of product offerings.” the forefront of that evolution.” on purchases that are unique to the holder’s Three credit cards are currently offered by Brim cards are available to Canadian spending habits. Brim Financial: the Brim World Mastercard, residents in all provinces. <
6 | May 2019 | Cards International
CI May 2019 567.indd 6 06/06/2019 12:45:58 News | digest
Visa launches b.yond to drive fintech innovation Visa has launched a new financial innova- tion platform, b.yond, to accelerate fintech processes for businesses, banks and other brands. b.yond aims to allow consumer-facing banks and businesses to rapidly deploy a range of innovative payment services. Visa has joined the project with companies in- cluding Global Processing Services, Panno- vate, Cornercard, Modulr, AllPay, Meawallet and W2 Global. b.yond is looking to address the challeng- es that business and banks face when trying to deliver desired services. Businesses can use the platform to focus their drive on cus- tomer loyalty and engagement, or develop their own payments programme using Visa’s rails. This can then deployed for customers in less than eight weeks. By joining the platform, Visa said businesses will have everything required to launch a payments solution. The contract will include onboarding, KYC, P2P trans- fers, card control, agency banking, visualis- ation of statements, and spending and alert “The launch of b.yond is another big step to drive fintech innovation to a new level of notification. Tokenisation and other services towards enabling our clients to gain rapid simplicity and speed. are scheduled to be added at a later date. access to the capabilities that lie within Visa’s “The project has been all about collabora- Smriti Vicari, head of fintech at Visa, global network to power their own ideas.” tion-led innovation. With an established list stated: “At Visa we believe in the power of b.yond co-founder and consortium leader of other leading companies wanting to join partnership to bring the best possible solu- Neil Harris added: “b.yond is breaking the the consortium, we expect the initial propo- tions to both emerging payment players and mould with its consortium of industry-lead- sitions to grow exponentially as we onboard our existing clients and partners. ing companies, which are coming together new organisations and regions.” < Raphaels Bank fined for card outsourcing failings The UK’s Financial Conduct Authority operation of its card programmes during It also noted an absence of processes to (FCA) and Prudential Regulation Authority a disruptive event. This posed a risk to identify critical outsourced services, and (PRA) have fined Raphaels Bank £1.89m Raphaels’ operational resilience and flaws in initial and ongoing due diligence of ($2.4m), in relation to failures to properly exposed its customers to a serious risk of outsourced service providers. manage outsourcing arrangements harm. Raphaels’ outsourcing arrangements between April 2014 and December 2016. The risks were highlighted on 24 continued to be inadequate until the end Raphaels’ Payment Services Division December 2015, when a technology of 2016, by which time it had designed operates prepaid card and charge card incident lasting over eight hours occurred new outsourcing policies and procedures programmes in the UK and Europe, and at a card processor, causing a complete to remedy the failings. relies on outsourced service providers to failure of the authorisation and processing Mark Steward, executive director of perform functions critical to the operation services provided to Raphaels. During this enforcement and market oversight at the of its card programmes. These functions period, 3,367 customers were unable to FCA, said: “Raphaels’ systems and controls include the authorisation and processing of use their prepaid cards and charge cards. supporting the oversight and governance card transactions, a service performed by The joint FCA and PRA investigation of its outsourcing arrangements were third-party processors. identified weaknesses throughout the inadequate. This exposed customers to Raphaels failed to have adequate business’s outsourcing systems and unnecessary and avoidable harm and processes to enable it to understand and controls, of which Raphaels should have inconvenience. assess business-continuity and disaster- been aware since April 2014. These “There is no lower standard for recovery arrangements. In particular, it included a lack of adequate consideration outsourced systems and controls, and firms failed to assess how its outsourced service of outsourcing within its board, and are accountable for failures by outsourcing providers would support the continued departmental risk appetites. providers.” <
www.cardsinternational.com | 7
CI May 2019 567.indd 7 06/06/2019 12:46:04 News | Digest
Sharp decline in German ELV card payments At the same time, the German bank- prices. Oil companies had deliberately opted owned girocard debit card scheme recorded for ELV for reasons of price competition, strong growth of 15.1%. but have given up their resistance. In this In 2018, merchants extensively replaced price-sensitive segment too, the girocard ELV transactions with the girocard proce- system replaced ELV to a considerable dure, putting an abruptly halt to decades of extent in 2018. continuous growth in the ELV system. Only Excluding the substantial shift of German every fourth payment with a girocard is now ELV card payments in favour of girocard, signed, as compared to every third payment total sales generated with girocard in 2018 during 2005-17. continued to show moderate growth of 4.1% As a result of regulatory changes, fees for compared to the previous year, as compared POS girocard acceptance have fallen contin- to growths of 3.9% in 2016 and 6.2% in uously since November 2014. The average 2017. fee is now well below 0.2%. Compared to The average receipt for payments made ELV, the girocard system has become more with girocard has fallen continuously for competitive, as costs for ELV are largely years, indicating that cash payments are in- determined by relatively stable default costs. creasingly being replaced by debit cards. The Signature-based German ELV card pay- Since then, card market statistics show slow- rising popularity of contactless payments for ments fell dramatically by 18.8% to €63.6bn er growth of ELV compared to the girocard small amounts reinforced this trend in 2018. ($71.4bn) in 2018, according to figures re- scheme. However, the 2018 figures clearly show leased by payments consultancy Paysys in its Card-issuing banks have succeeded in that the ELV substitution, rather than the preliminary report of the 2018 card market considerably weakening the competing ELV rising preference for contactless, has led to for Germany. procedure through substitution-dependent record values in the girocard system. < Brex to raise fresh funds with $2bn valuation Brex, which delivers corporate cards to Global and IVP could also join the Brex announced a $100m debt capital raise startups, is reportedly close to raising new funding round, the report says, adding that to finance the platform’s next phase of funds at a valuation more than $2bn. negotiations are being held and the deal growth. According to reports citing sources may or may not materialise. The start-up recently made strategic familiar with the development, the latest Last year, the San Francisco-based enhancements to its capital and financial round is expected to be led by US venture startup raised $125m in a Series C round markets infrastructure, including software capital firm Kleiner Perkins. Existing at a $1.1bn valuation. In April, Brex and upgrades and financial appointments from investors such as Greenoaks Capital, DST financial backer Barclay Investment Bank SoFi, Kraft Heinz and PwC. < Zwipe joins with Goldpac to launch biometric cards Norwegian biometric technology company convenient to use, such as for payments or its efforts in commercialising biometric Zwipe has teamed up with Chinese secure for identification. We are excited to work payment solutions globally.” payment solution provider Goldpac to with Zwipe to qualify and then introduce In May, Zwipe collaborated up with launch biometric payment cards, as well as its biometric technology to our customer Lebanese digital security solution provider enrolment offerings and related services to base, in the process providing a winning Inkript to produce biometric payment Goldpac’s customer network. solution to our customers.” cards. In April, it unveiled the JavaCard Goldpac’s customers include some of The partnership includes the licensing operating system, which is compatible the world’s largest financial companies. of Zwipe intellectual property, and with numerous payment network applets The network is fully certified by Visa, technical integration of its components worldwide for biometric payments. Mastercard, China UnionPay, American and hardware. It also involves the adoption Other Zwipe collaborations include Express, JCB and Diners. Goldpac supplies of the Norwegian business’s portfolio of projects with Brazilian card manufacturer payment smartcard chips, instant-issuance enrolment platforms and advisory services, Thomas Greg & Sons do Brasil to launch card kiosks, and card personalisation and targeting biometric payment card pilots biometric payment cards, and with UK issuance platforms. with numerous issuers before the end of card manufacturer TAG Systems Group to Commenting on the partnership, this year. launch a commercial biometric payment Goldpac Group senior vice-president Oliver Zwipe CEO André Løvestam said: card offering. Hui said: “Biometric cards enable our card “Goldpac is one of the largest, and fastest- In March, Swipe selected Fingerprint’s issuance customers to in turn provide their growing innovators in the global payment T-shaped sensor for the latest version of its end users with cards that are secure and card market, and we are excited to support biometric payment card. <
8 | May 2019 | Cards International
CI May 2019 567.indd 8 06/06/2019 12:46:07 News | Digest
JCB links with Arkea to boost french acceptance network operations cluster at Arkea, said: “JCB is a leader in its market, and offers high-quality services to more than 130 million JCB cardmembers. “Arkea’s ambition is to support its clients, regardless of their typology, in the development of their projects. Enabling merchants to expand their customer base to JCB cardmembers is a truly international opportunity.” JCB International (Europe) MD Tsuyoshi Notani added: “This partnership with Arkea comes at a key juncture in JCB’s European strategy, which aims to strengthen its acceptance as close to consumers as possible. “JCB cardmembers coming to France will JCB International, a unit of Japanese card The French banking group intends to benefit from convenient access to luxury, issuer JCB, has entered into a strategic gradually launch access to JCB cards on all retail, hospitality, catering, gastronomy partnership with French banking group its payment terminals portfolio. and cash withdrawals from ATMs. Arkea is Arkea relating to merchant acceptance and Arkea also plans to introduce access to present at major tourist destinations such ATM access. its online payment pages from its wider as Brittany and New Aquitaine.” The agreement will allow merchants network of partners, including Crédit JCB has over 130 million card members, using Arkea’s payment terminals and Mutuel de Bretagne, Crédit Mutuel and nearly 30 million merchants accept gateway to accept JCB card payments. du Sud Ouest, Crédit Mutuel Massif JCB card worldwide. Both Arkea’s physical and online Central and Arkea Banque Entreprises et In May, JCB International teamed up merchant network will support JCB card Institutionnels. Business customers will with Viva Wallet to boost coverage in payments. Cardholders will also be able to be able to accept JCB cards by the end of Europe. In February, it signed a joint withdraw cash from all Arkea group ATMs, June, with no additional costs. licensing agreement with Cyprus-based including those located in shopping malls Frédéric Laurent, deputy general face-to-face acquirer JCC to extend its and railway stations. manager and leader of the innovation and European presence. < Fomo Pay signs acceptance deal with Discover Discover Global Network has teamed up with Fomo Pay, a Singapore-based provider of QR code payment solutions, to increase acceptance for cardholders globally. The partnership will allow Discover cardholders to use their cards at Fomo Pay merchants worldwide. In its press statement, Fomo Pay said the agreement is part of a strategy to position it- self as a leader in “integrating new payment solutions for major financial institutions and merchants”. ing an agreement with Fomo Pay is part of Discover Global Network includes card Fomo Pay CEO and co-founder Louis Liu our strategy to partner with organisations companies and fund-transfer networks such said: “We are excited to work with Discover that will help our cardholders by expanding as Discover, Pulse, Diners Club Internation- and offer this option to their customer base. our acceptance worldwide.” al and affiliated networks. It has more than “Offering more payment solutions has Parsons continued: “Fomo Pay works with 44 million merchant-acceptance locations always been our goal, and this is also con- key merchants, many of which have a global and two million ATM and cash-access loca- venient for both merchants and consumers, e-commerce presence and are important to tions across the world. especially those who like to travel without our cardholders.” In May, Discover joined with UK software cash and wish to pay for these transactions Following the agreement, Discover card- business Sage to boost acceptance of its e a s i l y.” holders will be able to use their preferred cards in the UK and Ireland. In April, it Amy Parsons, senior vice-president of payment method at many larger merchants partnered with Global Payments to increase global acceptance at Discover, added: “Sign- that are part of Fomo Pay’s network. acceptance in Hong Kong and Taiwan. <
www.cardsinternational.com | 9
CI May 2019 567.indd 9 06/06/2019 12:46:11 feature | sberbank
field working with NFC – cards, phones, watches, whatever devices that work with Visa Sberbank: atms and the or Mastercard that I’ve seen, not only for our cards, but also the cards of any bank. “The share of transactions currently happening through NFC grows 5% every omnichannel month. Currently we have something like 15% of all ATM transactions happening with NFC. Until the end of the year, I’m sure this will be not less than 40-45% in total.” experience Biometrics will also be installed in the form of facial recognition. Sberbank has already developed the technology, which it is in the Sberbank, Russia’s largest bank and operator of its largest process of implementing. ATM network, has begun enhancing its ATM network to He continued: “We started in the beginning of this year, upgrading the network deliver an omnichannel experience. But with such a large with the cameras. Currently we have more undertaking, is the task too great? Patrick Brusnahan writes than 7,000 ATMs already equipped with the cameras. In the next four months, we start he omnichannel experience is a put it next.” The bank will also find out launching the transactions without card or huge talking point in the industry. which transactions are the most popular so phone, just your face. We have developed this THowever, most of the conversation the right hardware is installed. technology and it will be live in September.” revolves around new and exciting solutions, • Technology: This seems obvious, but Impressively, this is all being done in-house, but what about the ATM? What part does Sberbank wants to use ATMs to generate as Sberbank decided that vendors could not that have to play? Sberbank considers it to sales leads. When a customer uses an provide what it needed. be crucial and a “competitive advantage in ATM, tellers receive a push notification Zharsky concluded: “We understood the market”. on an iPad saying what they can offer that there will be no service providers in the Andrey Zharsky, MD of the Bank By Your the customer. This has already converted market that can make the top-end service Side division at Sberbank, believes you can 6% more sales in the field, according to we want. That’s why we started making our have a great mobile application and a terrific Zharsky. own technical monitoring system. We don’t omnichannel experience, but if the customer use any monitoring system provided by the then goes to an old, malfunctioning ATM, all WHO NEEDS A CARD? vendors. Older monitoring system providers that effort goes out of the window. cannot handle our quality. We made our own Speaking at RBR’s Self-Service Banking With new hardware comes new features, and system that is currently in place. Europe 2019, Zharsky explained that Sberbank is more than happy to utilise them. “We have our own financial monitoring, Sberbank has spent the last two years The first is a trend that is taking many nations our own care, we have our own service completely renovating its ATM network. by storm: contactless. company that works under our service “Russia is absolutely a contactless country,” standards, and also works for the market, RENOVATING, REINVENTING stated Zharsky. “So 99.5% of our POS providing the same service standards for us terminals are contactless in Russia. and for our colleagues. This is no easy task. Sberbank has the world’s “If you come to Russia, you can forget your “We have a customer call management seventh-largest ATM network with over card and wallet, use your phone and it’s okay. system. This is the system in place that will 77,000 in the field. According to the bank, We have 80% of our ATMs currently in the always improve on a daily basis.” < the network has a monthly average user base of 76 million, carrying out an average of 13,000 operations a minute. So what are the bank’s priorities? Zharsky named the strategic pillars: • Basic service: Focusing on the basic service of cash withdrawal. Russia is an “energetic country with some very digital companies”, but cash as a basic service will remain the number one preference. Sberbank wants to make it the “most perfect basic service ever”. • Location: Using AI to decide where an ATM is most needed. Zharsky said: “If we have a machine that has a poor workload, we take it out and decide where we should Sberbank has overhauled its entire ATM network
10 | May 2019 | Cards International
CI May 2019 567.indd 10 06/06/2019 12:46:15 analysis | mastercard
with digitised banks over the last two years. It partners with more than 60 players, and digital finance is 75% of respondents think the firm is the right partner for them; this was due to safe and secure technology (28%), reliability (23%) and its innovative products (22%). not on its way, Mastercard currently works with players such as Monzo, Revolut and Holvi, as well as incumbents such as ING. An increasing number of Europeans have it has arrived said they are willing to switch to a digital bank at some point, with the figure reaching 54% in 2019, compared to 49% in 2017. Digital innovation is usually described as on the rise The largest share for switching in the next or incoming, but that is no longer the case: according 12 months was in Hungary (28%), followed by Italy (20%) and the UK (18%). The to a recent European study carried out by Mastercard, European average was 13%. it is already here. Patrick Brusnahan reports On the other hand, many people are staying put, with 39% saying they would igital banking services, if it was mobile solutions will increase in the future, stay with their banks, compared to 32% in not already apparent, have fully due to their simplicity and convenience. 2017. The Dutch and the Swiss were the most Dintegrated with consumer life. Jason Lane, executive vice-president, loyal, at 58% each. Perhaps unsurprisingly, Mastercard looked at 11 markets across market development Europe at Mastercard, people aged between 18 and 29 were the most Europe, and found that six out of seven says: “The study underlines that digital disloyal age group, with 63% of this segment people use digital banking solutions at least banking through traditional and digital-only considering a switch. once a month. Furthermore, 38% use the banks is the new normal for most Europeans. Three benefits that customers are most services on a weekly or daily basis. They want digital products that are easy to use looking for most should be covered by Mobile banking apps from traditional and secure at the same time. incumbents, but seem to be more readily banks are used by 63%, and by 20% from “We believe strongly in collaboration to available from fintechs. They are: available digital-only banks. bring out the best in digital innovation, everywhere as well as easy to use (32%), real- Security was the most important factor for and are proud to be the leading partner of time cost control and transparency (25%) and 67% of respondents. In comparison, only choice for a continuously growing number of more flexibility (22%). 39% thought the same when asked the same digitised banks, helping them to deliver safe One area where bigger banks have the question two years previously. and convenient digital payment solutions.” advantage is trust, especially when it comes to Convenience was considered less important managing money. Overall, 70% of Europeans than two years ago, down from 43% in 2017 COLLABORATION see banks as their preferred go-to source, to 33% in 2019; however, it is still considered with Bulgarians (80%), Swiss (78%) and to be the biggest advantage of digital banking More than 90% of Europeans believed that Russians (77%) being the most trustful in solutions, due to them being time-saving collaboration and partnerships were the the information provided by them, and the (66%) and easy to use (65%). In addition, way forward for innovation. Mastercard has British (59%) having the least confidence. 63% of those asked believed demand for doubled the amount of partnerships it has A third of Europeans (33%) ask friends or family members, and 44% of the younger key digital factors generation aged 18-29 years seek trusted financial information from their friends. Importance of convenience Importance of security Some 21% get their information from the media, 15% from financial advice companies 50% 80% and just over one in 10 (11%) from apps and 70% social media. 40% 60% Lane concludes: “We see that Europeans are very much interested in connected and 30% 50% personalised financial services which make 40% their banking easier and more transparent. 20% 30% The Open Banking initiative will help drive 20% these innovations. 10% 10% “As trust is a key success factor, banks are in pole position for providing such solutions 0 0 to their customers, as people trust them more 2017 2019 2019 2017 than any other peer groups or institutions Source: Mastercard when it comes to managing their money.” <
www.cardsinternational.com | 11
CI May 2019 567.indd 11 06/06/2019 12:46:17 technology | verifi
the amount of chargebacks; however, many chargeback solutions: that have used chargeback representment were leaving a lot of money on the floor and not contesting any chargebacks. verifi looks to get VERIFI SOLUTIONS Verifi provides clients with a range of products that support merchants in resolving ahead of the game chargebacks far more seamlessly. According to Verifi, in 2018 alone, chargebacks cost merchants more than $19bn Every year merchants lose money through chargebacks, with in lost profits, employee time, company scams and fraudulent activity often falling into the category resources, and associated fees and penalties. In addition, around 24% of merchants lose of ‘family and friendly’. Gabe McGloin, head of international out in the dispute-response process, primarily merchant sales and business development at Verifi, speaks to as a result of being unable to collect the right Briony Richter about the underlying problem documentation in time. Outlining Verifi’s solutions, McGloin says: hargeback management for card- revealed that in 76% of cases, the consumer “Firstly, we provide a product called Order not-present payments has always will call the financial institution rather Insight, which allows the issuer to ask the Cbeen essential for merchants. than the merchant. Why is this a problem? merchant for more information in real time However, in an era where chargebacks McGloin believes the issue is caused by the to help the cardholder understand what and fraud continue to increase, it is even somewhat antiquated nature of the they bought. That typically exposes more vital for merchants to find frictionless chargeback process. first-party fraud, which is familial solutions that support their business. “When the cardholder calls fraud. Order Insight brings more Verifi offers solutions and support to enable their bank to say they are not information into the issuers’ clients to tackle fraud more efficiently, and happy with a transaction, they ecosystem.” resolve costly chargebacks with the least often get the money straight If this does not resolve amount of hassle possible. The company has away, and that is taken from the issue and the cardholder a global reach, continuing to evolve its suite the merchant without the Gabe McGloin, continues to dispute the of solutions to match the changing payments merchant being able to respond,” Verifi purchase, the merchant has more landscape around the world. he explains. “Now, the merchant options. If they are signed up to Gabe McGloin is responsible for all can respond after with what is called a Verifi’s Cardholder Dispute Resolution merchant and partner relationships outside chargeback representment, but the money is Network programme, the issuer will offer a North America. At Verifi, he expands the gone by this point and they have to try and refund and Verifi will write that request for company’s reach while cultivating new win the money back again.” the refund from the issuer to the merchant. revenue opportunities across Europe. Chargeback representment allows In this way, the merchant can make a refund Chargebacks are very much a global merchants to dispute a chargeback. The without a chargeback being raised. concept, and work the same way everywhere merchant must be able to provide strong “If neither of these work, the issuer will thanks to Visa, Mastercard and Amex. Across evidence that the purchase was completed raise the chargeback through the Visa and Europe, however, the regulatory landscape properly; if successful, the issuer reverses the Mastercard networks. The merchant then has is changing significantly, with PSD2 and chargeback and the merchant is refunded. the opportunity to represent that chargeback. SCA driving everything to do with fraud and McGloin notes that many of Verifi’s larger We support merchants with that service as chargebacks. clients typically seek support on managing well,” McGloin concludes. < Speaking about the issues facing merchants, McGloin states: “The problem is not so much with the chargeback process, it’s a Self-Service Chargeback Representment problem with human nature. A lot of the In March, Verifi launched Self-Service Chargeback Representment, to help merchants reclaim money lost to disputes. It has a number of key features: problems come from family or friendly fraud, and when this happens the consumer • A single portal allows quick and in- • The case management feature reviews depth management of disputes from and updates all aspects of each case; is more likely to call the financial institution multiple dispute sources and acquirers; – that’s the biggest challenge, that they don’t • The platformprioritises each case, contact the merchants. Our solutions have • The solution identifies and enabling quick responses to effectively recommends maximise win rates, and been developed to help both the financial key compelling evidence for each dispute. This ensures that institution and the merchants to solve it • Robust analytics and user-friendly merchants have correctly gathered amicably and efficiently.” dashboards help merchants track a dispute responses and complied with dispute’s progress. It reports in real Verifi recently conducted a study with each card brand’s rules on disputes; time without neglecting cases. research and advisory specialist Javelin, which
12 | May 2019 | Cards International
CI May 2019 567.indd 12 06/06/2019 12:46:19 analysis | jcb
jcb: carholder spend soars in europe
JCB cardholders’ spend in Europe was up a whopping 63% between 2017 and 2018 – and Asian JCB cardholders are also ramping up expenditure in other international markets. Douglas Blakey reports
n particular, JCB reports 45% global • 13% of aggregated spend for Thai JCB growth in total annual sales volumes in cardmembers went to one German airline; Ithe past four years. • In Spain, the average transaction value per JCB cardholder numbers are also on the year is €159.40, and rise, and now exceed 130 million worldwide. • 27% of Thai JCB visitor spend in Spain According to JCB, Asian spending power was with one luxury watch store. is projected to hit $32.6trn by 2026. JCB says European retailers that accept the In the UK, the average transaction value JCB card report that, on average, one-half spend in 2018 is more modest at €125.26. of their customers are international. And One UK luxury retail store took more one merchant tells JCB that 100% of its in 2017 used their card for payment than 10% of Chinese JCB visitor spend. customers came from outside the EU. abroad 2-3 times. Meantime, Thai cardmembers made 18% The figures are released in a whitepaper, of their purchases at one specific luxury Building Foundations For Growth. This HIGH NET WORTH SECTOR department store. includes a survey of JCB cardmembers’ Tsuyoshi Notani, MD at JCB International spend from customers resident in China, The report also examines how high net-worth (Europe), says: “It will be fascinating to see Taiwan, Thailand and South Korea. It also individuals among JCB Asian cardmembers the changes in Asian purchase behaviour over contains exclusive proprietary spend data are spending their money in Europe. the next few years. Customers’ expectations based on offline and online spend by JCB • In France, the 2018 average transaction of their shopping experience is changing in cardmembers. value per year is €275.80 ($310.90); the light of new payment technology and • Of all JCB Chinese spend in France in expanding e-commerce opportunities. HUGE POTENTIAL 2018, 42% went to one merchant; “At JCB, we have experienced a growth of • The same merchant took home 31.5% of 45% in the last four years. Now we have a The findings highlight the wider growth total South Korean JCB spend and 26% of current user base of 130 million cardmembers potential for European merchants offered by Thai spend; worldwide. In response to this increase, we’re Asian holders of international debit and credit • In Italy, the 2018 average transaction value looking at technology and behavioural trends. cards; however, according to JCB, many per year is €271.40; We will enhance the merchant and customer retailers are still unsure of how to utilise this • One-third of Thai JCB visitor spend in experience both right now and in the not- new revenue stream. 2018 was allocated to luxury designer too-distant future. Providing a seamless Highlights from the report include: retail outlets, high-end department stores omnichannel customer experience, including • JCB says 44% of its cardholders resident and luxury watch stores; special offers, is a key factor for growth. This in China took their card abroad to buy • In Austria, the average transaction value generates loyalty with mobile-first customers high-priced purchases; per year is €188.60; who are used to very high standard of service. • Japanese cardmembers’ outbound travel • 12% of Chinese JCB visitor spend, 15% Notani concludes: “As the payments increased 2% worldwide in January 2019 of Taiwanese and 24.5% of Thai spend ecosystem evolves and innovative payment year on year; went to one luxury retailer; providers and fintech businesses further • 34.6% of South Korean cardholders who • One watch retailer took 5% of Thai visitor integrate with established corporates, the travelled in 2017 used an international spend; opportunity for a comprehensive and brand card 2-3 times, and • In Germany, the average transaction value frictionless payments experience will only • 38.5% of Thai cardmembers who travelled per year is €188.60; strengthen for European merchants.” <
www.cardsinternational.com | 13
CI May 2019 567.indd 13 06/06/2019 12:46:22 feature | payments race
“Flights and accommodation, for example, are no problem. I have just been going on the world payments race: various booking apps and doing it through there. My most used have been Alternative Airlines, where I can buy flights with ApplePay, and PriceLine, which allows me to what would you do a similar thing with hotels.” However, as Fosh found out, there are many countries outside the UK where paying by mobile is less accessible. “The big struggle bank on to win? has been day-to-day items, especially food,” he said. “Most restaurants outside the UK have not yet taken to contactless, and the only ones that have are the big conglomerates. More people bank and make payments digitally. Cash There was a period of three or four days where remains important, but choices are widening. Ahead of I could eat either Subway or McDonalds, so it Money20/20 Europe, four teams using different means of was a lot of beige food.” Of all the countries he travelled through, payment raced round the world, with various checkpoints Fosh noted that for mobile payments, the along the way. Briony Richter spoke to UK social media US was by far the worst. “For a country that star Max Fosh on Team Mobile, sponsored by Temenos is the hub of so many tech companies, their payment methods are so archaic. There was even a big presence for swipe and sign! veryone has heard of Around the “When I was there I couldn’t do much World in 80 Days, but now it would in the way of entertainment, so I just stuck Ebe far too easy and quick to do a to areas that I knew would work for mobile round-the-world race using the transport payments: getting around in Uber and eating currently available. at either Subway, McDonalds or Starbucks.” To make things a little more challenging Debit card adoption is high in the US. and interesting, four contestants raced around According to GlobalData, every US consumer the world using four different payment types. holds more than two debit cards. In 2018, The teams competed against each other cards had the highest share in terms of to reach Amsterdam for the Money20/20 transaction volume. Max Fosh, Team Mobile conference on 3-5 June. Max Fosh used The growing number of digital-only only mobile payments to travel and pay for initiative is one of the most innovative races! banks is likely to increase competition in the everything, including hotel stays, clothes, We are delighted to be sponsoring. banking and debit card market, but as Fosh tickets and food. The other contestants were “This idea of race of payment methods is a experienced, contactless and mobile payments Sophie Theen for Team Card, Valentina stroke of genius. It gives a reality check on the still have a way to go. Kristensen for Team Cash, and Alex Hobern actual adoption and penetration of various While on their journey, each contestant had for Team Crypto. payments methods around the world.” a support team. Fosh’s mentor, Liz Lumley, Each competitor had to visit as many Asked which team Temenos would be on, director of fintech at VC Innovation, spoke to countries as possible to gain points. They also Rastogi exclaimed: “Without doubt, it has to CI about backing Team Mobile. had to reach checkpoints around the world be mobile, as it offers the most personalised “Payments come in many forms, depending – the first in Belfast, the last in Amsterdam and frictionless payment experience – barring on which region you are in. In some parts – but beyond that, the route was relatively a few hiccups along the way. Go Team of the US, people live on their credit cards, flexible. To earn even more points, contestants Mobile!” cash is still king in Germany, China does checked off as many different modes of everything on the phone, crypto people transport as possible along the journey. MOBILE ROUND THE WORLD love their crypto, but when it comes to All competitors started at Trafalgar Square global ubiquity, only one item is in use in on 23 May at midday, with a target to reach Mobile banking has become more popular in almost every country in the world: a mobile the finish line on 3 June in Amsterdam. Fosh recent years as more countries and banks open telephone. That is why I backed Team Mobile. passed through London, Belfast, Dublin, up their ecosystems to new ways to pay. “I know the point of the race is to only use Seattle, Vancouver, Hong Kong, Abu Dhabi CI caught up with Fosh while on his one form of payment, but – outside the fun of and Paris. His final stretch included Riga, journey, and asked whether using only mobile the Payments Race – if I could only take one Vilnius, Warsaw and then Amsterdam. payments was proving difficult. “I would say thing with me when I travel, it would be my Talking to CI during the race, Shrey both yes and no,” Fosh replied. “For some phone. I could use it as a card, as contactless, Rastogi, senior payments strategist at Team things, it’s incredibly easy to get out your as a way to wire cash,” Lumley added. Mobile sponsor Temenos, said: “Payments is phone and pay for something, but other areas, “As long as there are cellphone towers and one of Temenos’s main growth areas, and this not so much. Wi-Fi, mobile will rule.” <
14 | May 2019 | Cards International
CI May 2019 567.indd 14 06/06/2019 12:46:24 analysis | onboarding
Finland. Similarly, twice as many applications take longer than 30 minutes to complete in The battle to onboard: the UK than in the Nordics. GOOD NEWS FOR BANKS abandonment rate The good news for banks is that they retain consumers trust to create and maintain identity solutions. The report shows that almost half (44%) highlights pain of consumers trust banks to manage their digital identity, while government schemes come in at a distant second at 25%. Retailers The battle to onboard new customers remains a huge issue and social media platforms are barely trusted at all, chosen by only 3% and 2% of for European financial institutions. Despite record levels of respondents respectively. investment in digital technology, abandonment rates are no “Institutions have clearly improved better than they were in 2016. Douglas Blakey writes their onboarding processes, but customer expectations have shifted. This is partly due to challenger banks and fintechs that are laser- he battle to onboard new customers and painful; this number increases to 32% focused on perfecting customer experience. remains a huge issue for European two years later. But it is also because consumers are used Tfinancial institutions. In 2019, consumers feel that while the to better, slicker interfaces elsewhere,” says Despite record levels of investment in application process has improved, it has not Signicat CEO Gunnar Nordseth. digital technology, abandonment rates are no quite made it back to 2016 levels. Around “Onboarding has become a ‘Red Queen better than they were in 2016. 24% say that onboarding is difficult to Race’. Everyone is innovating, and consumer The investment means that consumers are complete or worse. expectations are continually increasing. finding applications easier to complete than Financial services providers need to run fast last year; on the other hand, consumers report NETFLIX AND DELIVEROO just to maintain the position they have,” more onboarding ‘pain’ than in 2016. Nordseth adds. Around 38% of all financial services “New providers of financial services such as applications in Europe are abandoned. neobanks and digital-only payments firms UK INCREASINGLY UNHAPPY Although 38% improves on 2018’s high of have changed customer expectations. They 52%, abandonment rates are back at nearly deliver services in a manner akin to Netflix In 2016, some 40% of consumers abandoned the same level as 2016 (40%). and Deliveroo,” says Sarah Kocianski, Head bank applications before they were complete. The figures are released in the third edition of Research at 11:FS. “Many larger, older More than one in three of these of digital identity solutions provider Signicat’s financial services firms however are failing to abandonments were a result of the length report, The Battle to Onboard, which is based adapt to this new reality. of time required to complete the necessary on a survey of 3,500 adults across Finland, This is partly because those expectations details. Another third objected to the amount Germany, the Netherlands, Norway, the UK change faster than some of these industrial of personal information they were asked to and Sweden. It covers consumers’ digital giants can comprehend moving, but it is provide. on-boarding experience with retail bank also partly because they don’t approach the Two years later, the survey questions accounts, credit cards and insurance. problem in the same way. remained the same; surprisingly, however, Financial institutions are required to “Most of them have invested heavily in the findings are worse. The number of UK comply with KYC and AML requirements the technology that underpins these new consumers abandoning applications leapt when onboarding customers. onboarding processes. But they have failed from 40% to 56%. to rethink the processes themselves. That The report suggests that banks, credit cards USER EXPERIENCE is why they are falling behind, and that is and insurance providers each have just 14 why customers are still failing to complete minutes to get customers from the start of an This requires personal information to be applications.” application to the end – any longer and the shared and identity to be proven – but Digital identity can reduce the pain when likelihood of losing the customer altogether that is only the beginning. Usability and onboarding a customer by dramatically rises significantly. The report argues that user experience are becoming increasingly speeding up the process. In countries with achieving this target is near to impossible important in retaining customers’ attention high digital identity adoption rates, such as without digital identity. Other ways of during the process. Sweden (91%) and Norway (81%), it takes proving identity simply take too long. The ease with which consumers can less time to onboard customers. For example, The data suggests that financial services complete an application mirrors the rate of just 9% of applications take less than five providers may be turning a corner when it abandonment. In 2016, 13% of applications minutes in the UK, as compared to 23% comes to onboarding, but much remains to were said to be somewhere between difficult in Sweden, 22% in Norway and 27% in be done in creating a good user experience. <
www.cardsinternational.com | 15
CI May 2019 567.indd 15 06/06/2019 12:46:24 country snapshot | ukraine
UKRAINE
country snapshot: ukraine Encouraging rise in the banked population
kraine’s economy was severely As a result, over 90 banks were declared inclusion. It has enhanced and modernised affected by the global financial insolvent between 2014 and 2017. banking access through digital channels, Ucrisis of 2008 and the political The Ukrainian government has and introduced the deposit insurance crisis of 2013–14, which had significant undertaken several initiatives to improve programme to improve consumer impacts on the country’s banking industry. the situation and increase overall financial confidence in the banking sector.
16 | May 2019 | Cards International
CI May 2019 567.indd 16 06/06/2019 12:46:32 country snapshot | ukraine
These efforts led to a rise in the overall Debit card shares by issuer Debit card shares by scheme banked population, with the Ukrainian population aged 15 or above with a bank account standing at 65.6% in 2018 – up Others 0% from 52.7% in 2014. Others 1% The government also introduced restrictions on the use of cash for both
individuals and businesses, in order to Raiffeisen Bank Privatbank astercard 5% 54 % 4% isa reduce the dependence on cash and to 5 % promote electronic payments. Banks are Oschad Bank also encouraging cards through rewards, 17 1% discounts and cashback offers. Meanwhile, the rising adoption of contactless payments and emergence of the e-commerce market, coupled with
the emergence of alternative payments, Source: GlobalData Source: GlobalData are expected to further drive the overall payment market’s growth over the next pay later shares by issuer pay later shares by scheme five years. FINANCIAL INCLUSION
The Ukrainian payment cards market is Others astercard almost entirely driven by debit cards, 1% 0% which accounted for 96.6% of the total Privatbank card transaction value in 2018. 5 1% isa The government’s financial inclusion Raiffeisen Bank % 74 0% initiatives, coupled with increased Oschad consumer awareness of the banking Bank system, have supported the popularity of 1 5% debit cards. In Ukraine, payroll and social programmes are an important means of Source: GlobalData Source: GlobalData issuing cards, and have also led to the widespread issuance of debit cards. Debit cards were also the most preferred E-COMMERCE GROWTH Major banks such as Oschad Bank and card type for payments, with frequency PrivatBank are also offering payment of debit card use averaging 96 payments E-commerce transactions registered cards exclusively for online shopping to per card per year in 2018 – more than six growth of 30.9% in the four-year period drive consumer confidence in e-commerce times that of credit cards. to 2018, supported by rising consumer transactions. confidence, coupled with the increased CONTACTLESS ADOPTION availability of affordable internet access PREPAID CARDS and smartphones. Rising preference for contactless payments Meanwhile, several government The Ukrainian prepaid card market for low-value transactions is also driving initiatives are also providing a boost to the registered robust growth in terms of both the overall payments. overall e-commerce market. Most recently, the number of cards in circulation and Major banks in Ukraine such as in April 2017, the IT Association of transaction value in the last four years, PrivatBank and Oschad Bank now offer Ukraine joined the European e-Commerce registering CAGRs of 22.0% and 27.1% cards with contactless features. According and Omni-Channel Trade Association respectively between 2014 and 2018. to a central bank report, there were 3.6 to promote both local and cross-border Banks are increasingly promoting million contactless cards in circulation e-commerce. prepaid cards designed for specific events. as of September 2018, up by 31.4% According to the central bank, online For instance, First Ukrainian International from January 2018, while 78.8% of POS transactions accounted for 38.8% and Bank (FUIB) offers the Mastercard- terminals are enabled with contactless. 41.0% of the overall cashless transaction branded Festival card, with benefits such According to a study published by value and volume respectively in 2017. as discounts on tickets for FUIB-partnered Mastercard, the number of contactless The growing e-commerce market activities, food and drink at festivals and payments with Mastercard via mobile also attracted Ukraine’s largest bank, priority passage at events. wallets in Ukraine rose by 68% between PrivatBank, to launch its own marketplace, In 2018, FUIB issued a total of almost August 2017 and August 2018. PrivatMarket, in April 2016. 9,000 prepaid Festival cards. <
www.cardsinternational.com | 17
CI May 2019 567.indd 17 06/06/2019 12:46:34 country snapshot | france
FRANCE
country snapshot: france France leads peers for card transactions
he French payments market is the UK, the US, Germany, Italy, Spain and Debit and charge are the most popular mature and highly competitive, Canada. types of card, while credit card use is low Tregistering the highest turnover France also registered the highest due to the debt-averse nature of French per card in 2018 among peers including average annual spend per card in 2018. consumers. Many are still frequent users
value of credit transfers value of payment cards value of cheque payments
$trn $bn $trn 5 0 1,000 1 5
0 0 00 1 5 0
0 0 0 00
15 0 400 0
10 0 00 0 5 0
0 0 0
014 017 014 014 017 01 e 0 f 017 01 e 0 f 01 e 0 f
Source: ECB, GlobalData Source: ECB, GlobalData Source: ECB, GlobalData
18 | May 2019 | Cards International
CI May 2019 567.indd 18 06/06/2019 12:46:39 country snapshot | france
of cash, but those who do possess cards – Debit card shares by issuer Debit card shares by scheme particularly debit and deferred debit cards – use them frequently at the POS. France has a well-developed POS infrastructure, Others with a high number of terminals overall and 1 7% r dit Agricole a large proportion of contactless terminals, Others 5 4% driven in part by government efforts. 4 1%
A typical feature of the French payment card market is the availability of multi- 100% functional cards, whereby a single card is astercard r dit utuel 7 % integrated with more than one function, 1 % roupe providing access to several accounts via 1 % one card. The most popular combination is debit and credit facilities.
CB MAINTAINS ITS HOLD Source: GlobalData Source: GlobalData
The French card market is dominated by pay later shares by issuer pay later shares by scheme Cartes Bancaires (CB), a national interbank network that only operates in France. CB cards are also co-badged with international card schemes; while domestic transactions
are processed through the CB network, aribas international transactions are carried out Others 5 % 4 7% via international networks. Others 45 4% Overall, CB cards are accepted at 54 % over 1.5 million merchants and more than 57,000 ATMs in France. As of roupe r dit % November 2017, 70% of all CB cards Agricole were contactless. CB also supports digital 1 5% wallets such as Apple Pay, allowing holders to pay using a mobile phone. CHARGE CARDS PREFERRED Source: GlobalData Source: GlobalData
Charge cards accounted for 64.7% of the e-commerce’s growth. According to French offers a Mastercard virtual prepaid card total pay-later card transaction value in e-commerce federation Fevad, the number that can be generated within the Skrill 2018. Credit card use is low in France due of online purchases with mobile devices wallet app. The card can be used for online to the debt-averse nature of consumers, rose by 50% in 2017 compared to 2016. purchases up to the balance available in stringent credit card issuance guidelines, the Skrill account. and the availability of private-label cards PREPAID GROWTH which, unlike bank-issued, cards carry less CONTACTLESS ON THE RISE stringent qualification requirements. The prepaid card market has registered a Private-label issuers often collaborate sudden decline in terms of the number of Contactless card holding is high in with supermarkets, car repair workshops cards in circulation since 2015, primarily as France, with all major banks now offering and digital content retailers to issue co- a result of the discontinuation the Moneo contactless cards. As of November 2017, branded cards. card in 2015. 70% (4.7 million) of the total number of CB Growth was also partly affected by new cards were contactless. ROBUST E-COMMERCE government regulations on prepaid cards To increase contactless card use in 2016. From January 2017 the maximum further, the French central bank raised the The French e-commerce market grew at a limit on prepaid cards was set at €10,000 contactless card payment limit: effective strong CAGR of 13.4% during 2014-2018. ($11,998.61). Reloading prepaid cards from October 2017, holders can now make The market is highly developed, and is the through cash or e-money methods and contactless payments up to $36 without fifth-largest globally in terms of transaction cash withdrawals made by prepaid cards entering a PIN; the previous limit was $24. value, behind only China, the US, the UK were limited to $1,199.86 per month. The increase will encourage use of and Japan. Strict KYC norms were also introduced for payment cards for day-to-day low-value High online and smartphone penetration prepaid card issuance and use. transactions. According to the French and increased consumer confidence Virtual prepaid cards are also offered, to central bank, over 1.2 billion contactless in online transactions have driven serve online shoppers. For instance, Skrill payments were made in 2017. <
www.cardsinternational.com | 19
CI May 2019 567.indd 19 06/06/2019 12:46:41 Country snapshot | nigeria
NIGERIA
country snapshot: nigeria Central Bank takes lead to drive inclusion
se of cash for consumer payments awareness of other instruments and limited improve the situation. The latest of these remains highly prevalent among access to banking infrastructure. is the introduction of rules for establishing UNigerians, especially in rural areas. However, the Central Bank of Nigeria Payment Service Banks. As part of its This is primarily a result of limited public (CBN) has taken a number of steps to Financial System Strategy 2020, the CBN is
value of credit transfers value of payment cards value of cheque payments
$trn $bn $bn 00 0 0
500 15 15 400
00 10 10
00 5 5 100
0 0 0
014 017 014 014 017 01 e 0 f 017 01 e 0 f 01 e 0 f
Source: World Bank, NIBS, CBN, GlobalData Source: World Bank, NIBS, CBN, GlobalData Source: World Bank, NIBS, CBN, GlobalData
20 | May 2019 | Cards International
CI May 2019 567.indd 20 06/06/2019 12:46:46 Country snapshot | nigeria
focusing on bringing unbanked consumers Debit card shares by issuer Debit card shares by scheme into the banking system, and promoting electronic payments in the country. Banks are also attempting to address this issue by launching basic low-cost irst ank astercard of igeria 1 % banking accounts, expanding the payment 17 0% infrastructure, and making efforts to change consumer payment habits. U A 14 1% isa A rise in the economically active Others 1 % 5 % erve population, the advent of digital- 5 5% uaranty only banks, the growing popularity of rust ank online shopping, the gradual merchant 1 % acceptance of cards, and the proliferation of new payment solutions will help drive electronic payments in Nigeria. BANKED POPULATION Source: GlobalData Source: GlobalData pay later shares by issuer pay later shares by scheme To augment the CBN’s financial inclusion programme, commercial banks in Nigeria are striving to provide unbanked individuals with access to formal financial services by expanding the banking agent Access ank % network in new regions, and launching Others 7 4% astercard self-service terminals. 40 % Mobile money operators and telecoms isa 5 % companies are also actively participating cobank 0 4% in the financial inclusion programme. Airtel Nigeria is considering launching a payment U A service bank, and in 2016, United Bank for 1 % Africa (UBA), in collaboration with Visa, launched the SmartMoney banking service, comprising a prepaid card and mobile app, Source: GlobalData Source: GlobalData enabling users to make in-store purchases and withdraw cash from ATMs. $1.27bn in 2018. Banks and investment Similarly, banks are gradually moving PAY-LATER MARKET companies are launching their own towards digital channels to serve e-commerce platforms to benefit from this. customers. In 2017, FNB customers Pay-later cards are not popular in Nigeria, While traditional instruments – including conducted nearly 97 million transactions with a penetration of 0.7 cards per 100 cash, cheques, bank transfers and payment worth $11.28bn using the FirstOnline individuals – the lowest among peers such cards – remain the preferred method of and FirstMobile digital channels; these as South Africa and Egypt. Adoption and payment for online shoppers, alternatives developments will help accelerate the shift use of credit cards have been partially such as KongaPay, Paga and PocketMoni towards electronic payments. hindered by economic uncertainty in the are also used. country, and banks have become wary of NEW REGULATIONS unsecured consumer lending. DIGITAL BANKS The pay-later card market is, however, To further enhance financial inclusion in expected to register robust growth in While bricks-and-mortar branches remain Nigeria, on 26 October 2018 the CBN terms of transaction value and volume over important in Nigeria, digital banks have released a new set of guidelines for the the period to 2022, supported by growing begun to enter the market. licensing and regulation of payment service demand for consumer credit – especially In May 2017, Nigeria-based Wema Bank banks in Nigeria. among the rising middle-class population launched digital-only bank ALAT, through According to the regulation, banking and high-income consumers. which consumers can open an account, agents, telecommunication companies, receive a debit card, apply for loans, pay postal and courier service providers, E-COMMERCE GROWTH utility bills and receive discounts at partner mobile money operators, financial merchants. technology companies, financial holding The Nigerian e-commerce market Online financial services platform Lidya companies and any other entity approved recorded a robust CAGR of 29.8%, from was launched in November 2016, which by the CBN are eligible to establish a NGN163.1bn ($448.56m) in 2014 to also offers a Mastercard credit card. payment service bank. <
www.cardsinternational.com | 21
CI May 2019 567.indd 21 06/06/2019 12:46:48 industry insight | dcc forum
customer has the opportunity to make a currency, i.e. POS, online and ATM. cashless payments: On a contactless transaction within the cardholder verification method (CVM) limit, DCC is not applicable. The exception is in countries where contactless purchases how do they work over the CVM limit are allowed, provided the mandatory information is provided to the cardholder – i.e. local currency, DCC currency, exchange rate. when travelling? Then comes the question of which currency to pay in? This will ultimately determine how much you pay for the transaction as a Following a recent article in the Financial Times whole. As previously highlighted, tourists are often not up to date on the latest exchange stating that the UK cash system may be ‘on the verge rates, and could therefore find calculating of collapse’, some consumers have started to wonder the transaction in an unfamiliar currency a what the future holds in this respect. As card payments challenge. Being provided with a choice in the become increasingly popular, how will merchants abroad way they complete the payment, can help cater to evolving consumer expectations and technology? overcome this. Cardholders abroad can pay in Gino Ravaioli, chair of the DCC Forum, writes their home currency or the local currency. Choosing to make the payment in their home currency, via DCC, locks in the espite there being small businesses outgoings and remaining balance. Keeping exchange rate, and factors in all additional and individuals in the UK that track of your balance is not always as clear cut conversion charges. What is seen at the point Dstill rely on cash payments, the when spending with card – mostly because of transaction is what will appear on their move towards card does not look to be account information does not tend to update bank statement. Conversely, when opting to slowing. immediately, and can therefore be misleading. pay in local currency, the conversion charge According to the Financial Times, the Paying by card – and using contactless in administered by the card issuer remains number of transactions made using cash particular – has made purchasing so quick unknown until after the transaction has has fallen from six in 10 a decade ago, and easy that it hardly feels like spending completed. In most cases, consumers are only to three in 10 today. Electronic Payments at all. This has prompted a ‘tap and go’ aware of the value of this additional charge International also reported that “banking mentality, in which we buy items throughout when they later view their bank statement. industry association UK Finance predicts that the day without really knowing whether we Through DCC, visitors can enjoy a service cash will fall to 16% of payments by 2027,” are exceeding our limits or not. that replicates the benefits of cash – spend dropping from around 34% as it stands Difficulties with tracking spend increase trackability and transparency – along with the today. Meanwhile, figures shared in Retail significantly when abroad. The rise of the added element of convenience. Times show that annual contactless payment cashless system in the UK has inevitably spending went up by 321% in the UK’s retail built certain expectations from consumers DUTY OF MERCHANTS sector last year. when they venture overseas. Many travellers As card payments become more prevalent, find themselves overwhelmed or confused It is likely that more visitors will enter into the ways in which we use cards are also when faced with an unfamiliar currency or foreign countries wishing to pay using their evolving. The introduction of mobile wallets, a spending culture that differs from their own. iPhones, contactless cards and smart devices. for instance, has added an entirely new Our recent study highlighted this, with With DCC, retailers have an opportunity element to transactions being made at home 41% of UK holidaymakers unable to identify to give cashless consumers a choice in how and abroad the correct exchange rate for converting £1 they complete their transactions. Businesses ($1.27) into the equivalent in euros, and 70% that understand visitor requirements and NEED FOR CLARITY unable to do the same for US dollars. respond to them will ultimately ensure better There are also differences in the contactless and more seamless customer experiences – With the switch from paper to plastic in full transaction limit from country to country, of potentially leading to repeat customers. swing, now more than ever there is a need for which many travellers will be unaware. For As demand for card-enabled transactions complete clarity within the payments sector. instance, the limit in the UK recently rose to continues to increase in the UK and abroad, Card and digital tend to be regarded as £30, but in France it is €25 ($28). Further upholding this level of clarity will become more convenient ways to pay; however, they afield, in destinations such as Canada, the even more important. In order to provide do also present some challenges. Tracking limit is much higher: (C$100 or $74.60) and consumers with the comfort that is often one’s spending with cash is straightforward; similar in Australia (A$100 or $69.80). found with cash, businesses must adopt having something physical to count and take Dynamic currency conversion (DCC) an approach that offers them security, note of provides instant confirmation on is permitted in all environments where the transparency and convenience. <
22 | May 2019 | Cards International
CI May 2019 567.indd 22 06/06/2019 12:46:48