Lafferty Cards & Payments Insights VOL III ISSUE 4 - April 2014 Fixed-fee future How PayStand is disrupting MSCs Forward thinking Is there a future for a European card payments scheme? The definitive research programme delivering market and competitor analysis in mobile money worldwide Now available to order: • Nigeria • Indonesia • Brazil • India • Peru • Argentina • Mexico • Philippines • Colombia • Chile • Morocco • Jordan To place your order please contact: James Johnson Phone: +44 (0) 20 3008 8420 Email: [email protected] LAFFERTY www.lafferty.com Each report is custom researched and written according to a template, resulting in a market- specific publication that identifies the most profitable opportunities in the fascinating and dynamic world of mobile money. Customers are invited to add further value to the information through optional purchases of a database add- on and bespoke research briefing. FOREWORD Chairman’s NoteBy MICHAEL LAFFERTY, London lready we have reached the end in Europe should be processed in Europe, from new figures of the first quarter of 2014 and cleared in Europe and settled in Europe. released from the the cards and payments industry’s This could be done by the scheme itself, British Bankers’ Areputation as one of the most constantly a subsidiary of the scheme or by any pro- Association (BBA) disrupted industries in the world is fully cessor approved by the scheme. Ewald that reveal that intact. In this month’s issue alone there are Judt is Honorary Professor at the Vienna smartphone bank- revolutionary ideas that look set to shake University of Economics and Business; ing has doubled, the payments ecosystem. One of these is Malte Krueger is Professor at the Univer- with 5.7 million inspired by the entertainment industry: sity of Applied Sciences Aschaffenburg. transactions being PayStand CEO Jeremy Almond explains Both the extract and their full paper (“A completed through to Insights how replacing merchant ser- European card payments scheme – For- mobiles each day. The definitive research programme delivering market vice charges with a monthly subscription ever a phantom?”, published in the Jour- Digital natives are increasingly using fee could become the business model of nal of Payments Strategy & Systems) are mobiles and mobile apps for a number and competitor analysis in mobile money worldwide the future for the industry. This way of highly recommended. of banking needs. Speaking of mobile collecting revenue from merchants is sim- Turning from Europe to Latin America, banking apps, reports in the financial ilar to the way that everyday consumers Insights takes a look at merchant acquir- press this month have shone a light on the Now available to order: pay for music and film subscription ser- ing activities in the region, in an extract possibility of NFC technology being ef- vices such as Spotify and Netflix. Almond from a new Lafferty report. It is a pleasure ficiently integrated into the Transport for • Nigeria • Indonesia • Brazil • India • Peru • Argentina has also ensured that PayStand is laying to be able to offer such in-depth knowl- London (TfL) network. Reports suggest infrastructure now so that merchants can edge of countries like Colombia to our that two mobile phone network operators • Mexico • Philippines • Colombia • Chile • Morocco • Jordan continue to accept a blend of cash, card readership. In Colombia, there remains are working hard to have their respective and virtual currency in the future. In an an underdeveloped credit cards market, digital wallets ready to interface with ter- To place your order please contact: exclusive interview, Almond explains to even by regional standards. More than 90 minals on both the London Underground James Johnson Insights about the influence of investors percent of transactions and billed volume and at regular train ticket barriers. Phone: +44 (0) 20 3008 8420 in payments start-ups and what it takes to take place in three cities: Bogota, Cali, Facilitating customers on one of the Email: [email protected] succeed. and Medellin. Bogota alone represents world’s busiest commuter hubs may bring Also this month, from an academic per- nearly two-thirds of credit card billed vol- relevance to NFC, a technology that has spective, Professors Ewald Judt and Malte ume in the country – a reflection of the been criticised as struggling to find its au- Krueger investigate whether or not there limited bank penetration in smaller cities dience by certain industry stakeholders. is a place in the industry for a European and rural areas. card payments scheme (ECPS), in an ex- A guest piece from Steve Edkins, CEO tract from their recent research paper. The of FusionExperience, looks at how digital authors make a number of valuable obser- payment providers are fast becoming the vations and urge the essential point for an major challenge to traditional financial ECPS that all transactions of cards issued services providers. Edkins’ piece draws TABLE OF CONTENTS • News Briefs – A round-up of this month’s top news • Lafferty Spotlight – Guest writer Steve Edkins stories Page 4 looks at how digital payment providers are fast becoming the major challengers to traditional financial services providers Page 17 • Mobile Money – Lafferty presents a review of mobile money activities in Latin America Page 8 • Lafferty Talks – PayStand CEO Jeremy Almond talks to Insights about how a fixed cost model could replace today’s MSC practices in the cards industry Page 19 LAFFERTY • Lafferty Analysis – Ewald Judt and Malte Krueger investigate whether or not there is a future for a European Each report is custom researched and written www.lafferty.com card payment scheme Page 10 • Region in Focus – An extract from Lafferty Global according to a template, resulting in a market- specific publication that identifies the most Research Databases, focusing on Merchant Acquiring trends in Latin America Page 22 profitable opportunities in the fascinating and • Lafferty Review – Fin Keegan discusses how dynamic world of mobile money. Customers are stakeholders involved in cards and payments are being invited to add further value to the information called upon to develop a dual perspective, both alive to new • Lafferty Opinion – Owen Sweeney ponders if recent through optional purchases of a database add- possibilities and mindful of simple vulnerabilities Page 13 events in the cards and payments industry could further on and bespoke research briefing. drive the adoption of NFC technology Page 26 3 LAFFERTY NEWS BRIEFS One Lyric Square, London, W6 0NB United Kingdom WALMART CHANNELS Also this month, American Express T: +44 (0)203 008 8415 F:+44 (0)203 008 8426 MONEY TRANSFER said that it will launch its new prepaid www.lafferty.com payments card, aimed at financially un- AND PREPAID derserved customers, through a num- Michael Lafferty SERVICES THROUGH ber of retailers including Walmart. The Publisher and Editor-in-Chief ITS PHYSICAL STORES card, known as Amex Serve, can be E: [email protected] used to pay bills, buy groceries, shop online, withdraw cash for free at over Owen Sweeney US retailer Walmart has announced a 24,000 ATMs, send and receive mon- Assistant Editor store-to-store money transfer service ey between family and friends with E: [email protected] and its participation in a new Amex pre- Serve Accounts, and be used virtually T: +353 (0) 98 39126 paid card scheme. anywhere American Express Cards are The Walmart money transfer service, accepted. Fin Keegan Managing Editor known as Walmart-2-Walmart, will op- Walmart claims that 28 percent of E: [email protected] erate along the lines of Western Union’s Americans are classified as either un- agent-based model and will enable cus- derbanked or unbanked, with millions Kerry Manning tomers to send money at one Walmart using money transfers as a critical part Assistant Publisher/Advertising Sales store while a different party collects at of maintaining household budgets E: [email protected] another. or helping friends and family in times T: +353 (0) 98 39128 The retailer has said that it has ob- of crisis. The two new services will be served its customers struggle with the added to the retailer’s current suite of Laura Wilkinson fees associated with traditional money financial service offerings that include: Graphic Designer E: [email protected] transfer services and now, with the help cheque cashing, bill pay, money or- of money transfer business Ria, prom- ders and tax preparation services, the ises to undercut current prices by up Walmart MoneyCard (a reloadable pre- International Academy to 50 percent. Walmart will bring the paid card) and Bluebird (a checking and of Retail Banking money transfer service to 4,000 physi- debit alternative). cal stores across the US. Daniel Eckert, senior vice president Evelyn Hunter-Jordan of services for Walmart US, said: “Af- Executive Director MASTERCARD ACQUIRES ter listening to our customers complain E: [email protected] AUSTRALIA-BASED T: +44 (0)20 3008 5283 about the high fees and confusion asso- ciated with transferring money, we knew LOYALTY AND REWARDS Dick Harryvan there had to be a solution. Walmart-2- SERVICE PROVIDER Co-chairman Walmart brings new competition and E: [email protected] transparent, everyday low prices to a market that has become complicated MasterCard has announced the acqui- Professor Abdul Rahman and costly for our customers. We’re do- sition of the loyalty and rewards com- Academic Director ing what we do best – launching a new pany, Pinpoint, to expand services to E: [email protected] service that challenges the status quo issuers in the Asia-Pacific region. Steven Cowan and drives down prices for our custom- Pinpoint, which was founded in 1984 Head of Group Marketing ers.” and headquartered in Sydney, has a E: [email protected] Walmart-2-Walmart’s fee structure will growing footprint across the region in T: +44 (0) 20 3008 8425 have two pricing tiers: customers can key markets such as China, Hong Kong, transfer up to $50 for $4.50 and up to India, Taiwan and Japan.