AUSTRALIA'S SHINING CARDS MARKET - Verdict
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October 2016 Issue 536 www.cardsinternational.com
AUSTRALIA’S SHINING
CARDS MARKET
• STRATEGY: Digital Wallets
• ACQUIRING: Latin America
• GUEST COMMENTS: Verizon and The PPRO Group
• COUNTRY SURVEYS: Oman & Pakistan
CI 536.indd 1 12/10/2016 16:54:58
Multichannel
digital
solutions
for financial
services
providers
To find out more about us please visit:
www.intelligentenvironments.com
Intelligent Environments is an international provider of innovative mobile and online solutions for financial
services providers. Our mission is to enable our clients to always stay close to their own customers.
We do this through Interact®, our single software platform, which enables secure customer acquisition,
engagement, transactions and servicing across any mobile and online channel and device. Today these are
predominantly focused on smartphones, PCs and tablets. However Interact® will support other devices, if
and when they become mainstream.
We provide a more viable option to internally developed technology, enabling our clients with a fast route to
market whilst providing the expertise to manage the complexity of multiple channels, devices and operating
systems. Interact® is a continuously evolving technology that ensures our clients keep pace with the fast
moving digital landscape.
We are immensely proud of our achievements, in relation to our innovation, our thought leadership, our
industrywide recognition, our demonstrable product differentiation, the diversity of our client base, and the
calibre of our partners.
For many years we have been the digital heart of a diverse range of financial services providers including
Atom Bank, Generali Wealth Management, HRG, Ikano Retail Finance, Lloyds Banking Group and Think
Money Group.
IE RBI final design.indd 1 05/05/2016 10:36:41
Cards International EDITOR’S LETTER
CONTENTS EDITOR’S LETTER
2
6
NEWS: DIGEST
GUEST COMMENT: VERIZON Mobile payments soar but UK not
Jeffrey Granvold of Verizon
writes on the need for proper
infrastructures in the age of the
even in European top 10: Visa
T
Internet of Things
7 STRATEGY: DIGITAL WALLETS
he nu mb er of Eu rop ea n consu mers card user vs 32% non-contactless card user),
Aite Group has published an regularly using a mobile device – smart- shopping via a retailer app (49% vs 31%) or using
in-depth report on the strategies phone, tablet or wearable – to make pay- a mobile device to pay for a meal (50% vs 30%).
that digital wallet providers need to ments has tripled in the past year.
adopt in Europe and the pitfalls that
they need to avoid. Robin Arnfield But according to research from Visa - the survey Prepaid’s future has never looked so bright
speaks to Ron van Wezel about its covered more than 36,000 online consumers in 19 There is no better venue – Italy – for the annual
key points
European countries – the UK is punching below its Prepaid Summit Europe and awards.
10 EVENT: ANNUAL PREPAID EUROPE weight and is not even in the top 10 markets for Timetric research finds that the number of pre-
SUMMIT AND AWARDS mobile payments use. paid cards in circulation in Italy increased at a
October means the Principe di In the UK, nearly three-quarters (74%) of the CAGR of 18.13% from 12.4 million in 2010 to
Savoia, Milan and the annual Prepaid
Summit Europe – again sponsored by people surveyed are mobile payments users, com- 24.1 million in 2014, and is expected to grow fur-
Visa. CI previews the Prepaid Europe pared with the leading markets: Turkey (91%), ther to reach 32.4m by 2019.
Award nominees
Denmark (89%) Norway and Israel both at 87% Growth in the prepaid card market can be
11 ACQUIRING: LATIN AMERICA and Sweden (86%). attributed to improved infrastructure of POS ter-
There are still opportunities for US Poland and Romania (both 79%), Ireland minals, security features and promotional offers
acquirers active in Latin America, (78%), Finland (77%) and Belgium (75%) round by card issuers.
despite economic turmoil in the
region. Which countries have a great off the top 10. Consumer payment needs are changing and pre-
number of opportunities? Robin The study highlights how consumer adoption paid is the payment platform that best serves this
Arnfield writes
of digital payments across Europe has shifted evolution.
14 COUNTRY SURVEY: AUSTRALIA dramatically in the last 12 months. One year ago, Prepaid is evolving from a simple, secure and
16 COUNTRY SURVEY: OMAN 38% of people surveyed said they had never used reliable payment tool to a new way to connect
18 COUNTRY SURVEY: PAKISTAN a mobile device to make payments and had no banks with new customers and segments. It is a
20 GUEST COMMENT: PPRO GROUP plans to do so. Today, that number has dropped delivery platform to enable any type of transac-
Ralf Ohlhausen of the PPRO Group to 12%. tional behaviour.
discusses the value of chatbots when There is a clear correlation with contactless as Prepaid is building new payment ecosystems
applied to the payments sector
the increase in engagement with digital payments and core solutions to open new markets leveraging
coincides with greater adoption of contactless new channels to communicate with clients and
technology. According to Visa, the research indi- offer content. The future of prepaid in Europe in
cates that, across all age groups, contactless pay- general, and Italy in particular, has never been so
ments are now the norm. In the UK, more than bright.
half the people surveyed (58%) used contactless Short term, the strength of prepaid is reflected
cards this year, up from 20% in 2015. in Awards shortlists.
Europe-wide, contactless users are also consist- Full details of who won what and why will be
ently more open to embracing newer payment online at www.cardsinternational.com from 28
methods than those who don’t use contactless October, and will appear in the November issue
cards. The study highlights that contactless card of CI.
users are more interested in using a mobile device Douglas Blakey
as a payment method in a shop (52% contactless Douglas.Blakey@cardsinternational.com
Editor: Douglas Blakey Sub-editor: Nick Midgley For more information on Timetric, visit our
Tel: +44 (0)20 7406 6523 website at www.timetric.com.
Email: douglas.blakey@uk.timetric.com Director of Events: Ray Giddings
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www.cardsinternational.com October 2016 y 1
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NEWS: DIGEST Cards International
M&A
Worldline acquires majority stake in KB’s processing business
Worldline, a provider of payments and trans- for the sale of Cataps on 23 February 2016. banka, a renowned market leader in the
actional services, has acquired an 80% stake Under the terms of the agreement, World- Czech Republic, which will bring the best
in Cataps, a subsidiary of the Czech lender line and KB have signed an additional assets of the two partners to the retailer com-
Komercni banka (KB). 10-year commercial alliance for the develop- munity, adding our rich payment and digital
According to Worldline, the takeover will ment and the growth of these activities in the retail product portfolio and scalable process-
enable the company to further develop prod- Czech Republic. ing systems to the wide distribution network
uct and services for Czech merchants. Worldline general manager Marc-Hen- of Komercni banka, in order to satisfy the
KB operates as a subsidiary of the Société ri Desportes said: “Komercni banka and fast-growing demand of Czech merchants for
Générale group. After formation in 2014, Worldline have both been providing payment electronic payments equipment and associ-
Cataps assumed KB’s activities in credit services and innovative solutions to the Euro- ated services.”
and debit card payment processing services, pean market over several decades. From 1 October 2016, Cataps will be inte-
including merchant acquiring. “At Worldline, we are now delighted to grated with the merchant services and termi-
KB signed an agreement with Worldline welcome this new alliance with Komercni nals division of Worldline. <
SECURITY
Card industry delays slow US chip card transition
Delays by card companies in installing equip- it. Around 60% of retailers said they had blessing. We wish they cared as much about
ment for retailers to accept new chip-based been waiting for six months or longer. security as we do.
cards have slowed chip card transition in the NRF senior vice-president and general “This is frustrating for retailers and con-
US, according to the National Retail Federa- counsel Mallory Duncan said: “Most major fusing for consumers. Worst of all, the new
tion (NRF). retailers have done their part, but the card cards provide just a fraction of the security
A recent NRF survey revealed that 86% industry continues to drop the ball. they could because they are only chip-and-
of US retailers plan to have new EMV chip “Retailers have spent billions of dollars to signature rather than the chip-and-PIN used
card technology completely implemented by install the new equipment, but card compa- throughout the rest of the industrialised
the end of 2016. nies have failed to sign off on the installations world.
Of those who do not yet have EMV in in a timely manner. “Without a secret PIN, virtually any illeg-
use, 57% said they had already installed the “Many retailers have had new chip card ible scrawl of a signature is good enough for
equipment but were waiting for certification readers sitting next to their cash registers a criminal to use an innocent person’s credit
by the card industry so they could start using for a year waiting for the card companies’ card with or without a chip.” <
PRODUCTS
Green Dot launches Visa-branded credit card
Green Dot has introduced a Visa-branded tomer security deposit held at Green Dot Credit Card is just another way Green Dot
credit card in the US, specifically designed Bank, enabling anyone to apply and be Bank is helping to open the door to financial
to help people with no prior credit history approved for the card. inclusion for millions of low- and moderate-
or poor credit scores build a positive credit Clients’ payment performance will be income Americans.”
history. reported to the three major credit bureaus, Using cash, Green Dot Platinum Visa
The Green Dot Platinum Visa secured helping cardholders to build a favourable Secured credit cardholders can fund collat-
credit card is available to all, and does not credit history over time. eral security deposits and make monthly pay-
require a bank account. Green Dot Bank president Lew Goodwin ments at any of Green Dot’s nearly 100,000
The card’s credit line is backed by a cus- said: “The Green Dot Platinum Visa Secured retail locations. <
PRODUCTS
First Commonwealth Bank introduces three credit cards
First Commonwealth Bank, a subsidiary of chips, which will encrypt information for friends and neighbours – build financial
First Commonwealth Financial, has intro- increased data security for transactions at confidence, and we’re excited to launch our
duced three MasterCard-branded credit terminals or ATMs that are chip-enabled. credit card products because we’re doing it in
cards: Rewards, Student and Secured. Additionally, customers can sign up for a way that will benefit our customers.
Rewards and Student cardholders will MasterCard’s SecureCode that will provide “Our Rewards and Student cards will
receive 1% back as a statement credit at the an additional layer of online shopping secu- allow cardholders the opportunity to receive
end of each quarter, while the Secured card is rity. credit for future purchases, while our Secured
designed for individuals who have not estab- First Commonwealth Bank executive vice- card can help build or improve credit.
lished credit or have a credit score that pro- president and business integration group “An added convenience is that our cards
hibits them from obtaining credit. manager Norm Montgomery said: “We launched with Apple Pay, Samsung Pay and
The new cards are equipped with EMV strive to help our customers – our families, Android Pay capability.” <
2 y October 2016 www. cardsinternational.com
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Cards International NEWS: DIGEST
SECURITY
Entrust Datacard launches payment card solution
Entrust Datacard has launched its Datacard The issuance core solution enables users to Entrust Datacard vice-president for bureau
Adaptive Issuance Suite that allows users to optimise their printer’s efficiency and drive solutions Dan Good commented on the
safely issue credentials and payment cards issuance operations based on the individual launch: “Our new Adaptive Issuance Suite
across any existing platform or printer in any personalisation device. allows us to provide customers with a solu-
industry or market. The smart card application enables the tion that not only gives them the secure issu-
The Adaptive Issuance Suite includes issu- preparation of data for the personalisation ance they have come to expect from Entrust
ance solutions in four categories, including of integrated smart cards. The applications Datacard, but also the ability to easily deploy
issuance management, issuance core, smart include formats for EMV, and a number of the solutions across their production fleet
card application and key management. additional smart card formats. with ease and flexibility.
Issuance management offers advanced and Key management enables users to improve “This modular solution will allow our
flexible capabilities to central manage issu- overall security and securely manage keys at customers to create an issuance environment
ance devices from an intelligent command each step of the issuance process, and pro- that best meets their needs today, knowing
centre. It is provided by using Datacard vides users with the flexibility to effectively that should those needs change in the future,
Adaptive Issuance Remote Monitoring and manage multiple keys by using the Datacard their issuance products will adapt with
Management Software. Adaptive Issuance Key Manager Software. them.” <
STRATEGY
Caltex renews fleet fuel card processing agreement
WEX, a corporate payment solution pro- programme operator. function of getting fuel to their customers.
vider, has renewed a multi-year fuel WEX Australia will continue to pro- “We are delighted to continue our rela-
card system processing agreement vide payment processing services to tionship with Caltex and help Caltex run its
with Caltex. Caltex fleet card customers and fuel card business efficiently, effectively and
WEX Australia will process all Caltex retailers representing over securely.”
Caltex fuel card payments for three 1,900 branded retail locations. WEX serves customers and partners
years. WEX Australia MD Greg Drumm through operations around the world, with
Caltex operates as Australia’s only said: “We provide an industry-leading offices in the US, Australia, New Zealand,
Australian Securities Exchange-listed trans- fuel card processing solution to our partners Brazil, the UK, Italy, France, Germany, Nor-
port fuel supplier and commercial fuel card to allow them to concentrate on their core way and Singapore.<
M&A
Chase extends agreement with Walmart
Chase, the consumer and commercial ChaseNet offers fixed-rate pricing for “Walmart is always looking for innovative
banking business of JPMorgan Chase, and Chase Visa credit and debit payments for ways to improve the payment experience for
Walmart have extended their agreement to the term of the contract. Chase already pro- our customers while also creating competi-
process payments on the bank’s closed-loop cesses payments for Walmart’s e-commerce tion in the payments industry. We are excited
network ChaseNet. channel. to work with Chase to help our customers
Under the agreement, Chase will process Walmart senior vice-president and assis- save time and money.”
payments at more than 5,000 Walmart and tant treasurer Mike Cook said: “Engaging Chase Commerce Solutions CEO Matt
Sam’s Club locations in the US and at Sam’s Chase with a direct processing relationship Kane said: “We are pleased to expand our
Club e-commerce. Sam’s Club is a subsidiary has been a priority for Walmart for some relationship to offer consumers a convenient,
of Walmart. time. secure payment experience.”<
MOBILE
First National Bank upgrades mobile banking app
First National Bank of Pennsylvania, a sub- debit card ‘on’ or ‘off’. When the card is ‘off’, First National Bank director of digital
sidiary of FNB Corporation, has launched no transactions will be approved. channels and payments Sam Kirsch said:
the latest upgrade to the FNB Direct mobile Clients can also set transaction controls “With CardGuard, we are excited to offer
banking app that will offer customers mobile according to location, and establish limits for consumers additional security and conveni-
debit card controls. debit card purchases based on the amount of ence with yet another distinct feature of the
The upgrade, known as CardGuard, will the transaction. FNB Direct Mobile Banking app.
enable FNB customers to control debit card FNB said that its Direct Mobile Banking “This is just the latest example of FNB’s
expenses. It will also offer improved protec- with CardGuard can be used by consumers overall corporate vision of investing in tech-
tion against fraud and budgeting support. and small businesses with the FNB Direct nology to improve the banking experience
With CardGuard, customers can turn their mobile banking app, available online. for our customers.”<
www.cardsinternational.com October 2016 y 3
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NEWS: DIGEST Cards International
MOBILE
MasterCard launches new platform for building next-
generation payment apps
MasterCard has launched a new application virtual reality and the Internet of Things. a format they can more easily connect to and
programming interface (API) developer plat- MasterCard senior vice-president for APIs integrate with.
form, MasterCard Developers, which allows Oran Cummins said: “We see MasterCard Additionally, a new API has been devel-
developers to create next-generation com- Developers as empowering our customers, oped to maximise financial inclusion efforts.
merce solutions. partners and their developers in their efforts Even in the absence of telecommunications
The platform will feature a New and to innovate and grow their own businesses. infrastructure, the MasterCard Aid Network
Experimental API category, allowing part- “The new platform will serve as a key way enables to streamline aid distribution while
ners to test new technologies and applica- to integrate MasterCard technology and ser- offering more transparency to humanitarian
tions. vices into their digital solutions in an easy organisations and non-profits.
Developed at the company’s eight R&D and cost-effective way. And, consumers will MasterCard explained that the new
labs around the world, the experimental APIs benefit from the simpler, faster and safer MasterCard Developers platform offers a
will help partners build, scale and enable experiences driven by these efforts.” smooth experience and clear, developer-
payments on new platforms. MasterCard said partners now have friendly documentation with APIs supported
Simultaneously, they will provide a foun- access to more than 25 MasterCard APIs – by software development kits, developer
dation to enable payment integration into including key services like Masterpass and tools and sample code for the top six pro-
new categories such as augmented reality, MasterCard Digital Enablement Services – in gramming languages.<
STRATEGY
UnionPay partners with Socredo Bank in French Polynesia
UnionPay International has reached an ments for Socredo-issued bank cards. accept UnionPay cards.
agreement with French Polynesia-based In collaboration with UnionPay Interna- The bank’s cards will become interna-
Socredo Bank to issue the first local Union- tional, Socredo Bank will replace existing tional payment cards which can be used in
Pay card from 2017. Socredo bankcards with UnionPay cards. It the UnionPay network in 160 countries and
UnionPay will also assist the bank in will also issue new UnionPay cards. The bank regions. The cards can also be used for online
upgrading cross-border use and online pay- has enabled all its ATMs and merchants to payments. <
RESEARCH
Nearly 68% of Saudi users prefer mobile phones for online payment
Around 68% Saudi consumers prefer to Surveying 23,000 consumers in 23 differ- Elgibali said: “The MasterCard Impact of
make payments with mobile phones, accord- ent countries in the Middle East, Africa and Innovation Study provides a clear indication
ing to MasterCard’s Impact of Innovation Europe, the MasterCard Impact of Innova- that consumers in Saudi Arabia are ready to
Study. tion Study was released on the sidelines of embrace digital innovations and are increas-
The study highlights that tablets and ID the MasterCard Innovation Forum 2016 in ingly seeking better ways to pay.
cards follow at 35% and 26% respectively, Budapest, Hungary. “Mobile phones are becoming the go-to
indicating a growing consumer shift toward The survey revealed that 51% of consum- device for consumers for online activities,
new payment methods in Saudi Arabia. ers using online banking via a web browser, and this trend will gather further momen-
Codes received through SMS are the most while 44% rely on their smartphone app for tum as smartphone penetration and internet
common form of authentication for Saudi their banking needs. usage rates in the kingdom keep climbing and
consumers, ahead of PIN codes and finger- MasterCard division president for the new technologies and innovations emerge at
print scans. Middle East and North Africa Khalid a rapid pace.” <
PRODUCTS
Air Canada, CIBC roll out multicurrency prepaid card in Canada
Air Canada and Canadian Imperial Bank Canadian and Hong Kong dollars, euros, between currencies.
of Commerce (CIBC) have launched a new sterling, Japanese yen, Mexican pesos, Swiss Air Canada vice-president of global sales
multicurrency prepaid card for travellers in francs and Turkish lira. Duncan Bureau said: “Air Canada carries
Canada. Cardholders can also make POS tap-and- 41 million customers each year to more than
The card will allow customers to purchase pay transactions, ATM withdrawals and 200 destinations on six continents.
and store multiple currencies for use at retail- online purchases anywhere Visa is accepted, “To make their travels even more conveni-
ers worldwide, wherever Visa is accepted. automatically in the local currency. ent, we have partnered with CIBC to create
With the new card, consumers can man- The card, which does not charge any a prepaid global currency card. This innova-
age up to 10 currencies online or through the additional fees when used at retailers, will tive card gives travellers flexibility and secu-
card’s mobile app. allow users to view latest activities and pur- rity when dealing with foreign currencies so
The currencies include US, Australian, chases, check card balances, and move funds they can focus on exploring new places.” <
4 y October 2016 www. cardsinternational.com
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Cards International NEWS: DIGEST
RESEARCH
Barclaycard launches new credit card for overseas travellers
Barclaycard, part of Barclays Retail and If the users do not pay off their balance in
Business Banking, has introduced a new full each month, they will be charged 11.9%
credit card for use abroad. representative APR on purchases, and a hefty
The new Platinum travel credit card does 27.9% on cash withdrawals.
not charge fees until the end of August 2018, Barclaycard said that the people with 21
after which a 2.99% fee will be charged from years of age or with an income of more than
cardholders on every transaction. £20,000 per year can apply for the card. <
PRODUCTS
QIB launches credit card with flexible payment option
Qatar Islamic Bank (QIB) has launched its Cardholders will have the flexibility to pay efits, including purchase protection, extend-
latest Visa-branded credit card, which offers anywhere between 5% and 100% of their ed warranties of up to 12 months for items
flexible payment options to users. monthly balance with the new card. purchased through the card, and discounts at
The new credit card, which is available in Customers with monthly settlements will various retail outlets.
three variants – Infinite, Platinum and Gold have amounts deducted automatically from QIB personal banking group general man-
– will allow QIB customers to manage cash their accounts. Early payments can also be ager D Anand said: “We are pleased to intro-
flows by paying as little as 5% per month on made if required. duce this new credit card with flexible pay-
outstanding card balances. The new card also offers attractive reward ment option as part of our overall product
The bank is running a launch offer to cus- points based on customers’ spend. Custom- suite.
tomers applying for the card before the end ers will also benefit from higher credit limits “Our clients have been asking for a
of 2016, in which QIB will not charge card of up to two times their monthly salary. product that offers them the flexibility to
issuance fees, cash withdrawal fees or sup- Customers who hold the QIB Visa Plati- carry their balances forward, and we have
plementary card fees. num credit card can access additional ben- listened.” <
PAYMENTS
Bank of Bhutan to accept JCB cards
Japanese credit card issuer JCB International of business cooperation of Bank of Bhutan Bank of Bhutan CEO Pema Nadik said:
(JCBI) has signed an agreement with Bank of and JCB in such a historic year. “The introduction of JCB card acceptance
Bhutan, following which the bank has start- “South Asia is an emerging market and has been long awaited, given the popular-
ed accepting JCB cards in the country. Bhutan is located in the middle of East ity of Bhutan as a destination for Japanese
With the latest agreement, JCB Asia, Southeast Asia, and South travellers.
cards are accepted at over 480 Asia. “With JCB cards now being accepted
locations, covering around 90% “Through the bank’s nationwide in Bhutan through the network of Bank of
of POS terminals and ATMs in the merchant network, we can meet Bhutan’s ATM and POS terminals, visitors
market. JCB card member demand while holding JCB cards have the option of mak-
JCBI deputy president Kimihisa travelling and sightseeing in Bhutan, ing payments securely through this payment
Imada said: “This year is the 30th especially card members from neigh- channel.”
anniversary of the establishment of diplo- bour countries such as China, Bangladesh, Bank of Bhutan currently manages 82
matic relations between Bhutan and Japan, and Thailand, which have about 13m card ATMs and over 400 POS terminals across
and it is my pleasure to announce the launch members.” the country. <
DIGITAL
Payza introduces direct card processing to online merchants
Payza, a UK-based payment platform, has Payza will also provide business account Payza global executive vice-president
launched direct credit card processing to holders with easy-to-use tools and UX-opti- Firoz Patel said: “Our new low-rate direct
online businesses and merchants in Europe. mised payment flows to ensure that their cli- merchant processing account is first being
E-commerce merchants will be eligible for ents benefit from a seamless shopping expe- launched to European merchants because
the no-monthly-fee Payza business account rience. they face some of the most complex everyday
to process Visa and MasterCard payments The Payza business account will provide barriers to running their businesses, like the
for rates starting at 2.9%. vendors with a simple checkout process, easy costs of cross-border disputes, restrictions to
Approved Payza business account holders payment button and shopping cart integra- selling cross-border within and outside of the
can also accept direct Payza e-wallet, Bitcoin tion, and multiple payment options. EU, delivery costs, and taxation rules.
and Canadian debit card network Interac It will also offer advanced security and “Our direct merchant business account
Online payments at low cost, without no intelligent fraud prevention to protect mer- will provide Europeans a simpler, faster and
monthly account or setup fees. chants’ transactions. more affordable way to do business.”<
www.cardsinternational.com October 2016 y 5
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GUEST COMMENT: VERIZON Cards International
How changes in network architecture
are ushering in the IoT era
The continued proliferation of workloads will have a dramatic effect on networks; the need for a software-
defined wide area network is therefore increasingly apparent, writes Jeffrey Granvold, vertical lead and
manager of executive consulting partners in the financial services at Verizon
O
ver the last several years, IT depart- We’ll call this hypothetical app BankFit. ligence in the SD-WAN manages the entire
ments have experienced a dramatic The app lets the user create fitness and per- process seamlessly – including aspects like
change in how they support the sonal finance goals and tracks activity, nutri- security and encryption, which are core to
increasing demands placed on their tion, spending, saving, etc. The user can also IoT adoption.
wide-area network (WAN). make purchases and conduct banking While standards on the cross section of IoT
This change came not as a pass- transactions from this app. and SDN/NFV are currently being defined, it
ing trend in network manage- Users set up and complete is clear that banks should be concerned about
ment; but rather, it was driven milestones on a weekly/ the privacy and security considerations.
by the rise of the Internet of monthly basis and receive Banks will need to work with standards
Things (IoT). banking rewards (checking bodies to establish a trust framework for
Today, workloads associ- to savings account transfers), IoT that ensures the user is in control of their
ated with smart cards, ATMs special offers geared towards privacy and complies with international IoT
and branch kiosks, along with both health and fitness, etc. security standards for global interoperability.
potential workload from weara- This is a pretty standard IoT And actually IoT – specifically wearable
bles, retail loyalty programs and example. devices – can provide security and encryption
data mining, are ushering in the era of Now here’s where the SD-WAN picks in a new way for financial services companies
IoT in the financial services industry. up. The BankFit interface sends sensory data and others.
In fact, IDC estimates that between 2014 from the users’ body, their movements, GPS Consider the benefit of human uniqueness.
and 2017, IoT workloads will grow 750%. data, etc. to the Gateway – the point of data By establishing the user as the security device
This continued proliferation of workloads collection for all BankFit interfaces. with credentials embedded, they themselves
will have a dramatic effect on network The Gateway seamlessly collects and per- become their own IP address.
architecture – creating the perfect fit for the forms data analytic functions. This workload This allows for access to banking systems
software-defined WAN (SD-WAN). traffic will then be assigned a specific net- with less system intervention, and in turn
SD-WAN moves both control and moni- work via the SD-WAN centralised network provides a much higher security posture than
toring from physical devices (routers and policy. exists today.
firewalls) to an intelligent software overlay SD-WAN impacts the application layer as IoT in financial services is growing at an
that routes workloads across both public and well as the network. The application layer exponential rate, as more companies figure
private networks. has one of the most complex tasks in the IoT out how to best leverage IoT technology to
This overlay allows for increased flexibil- journey. It involves ingesting and processing better serve customers.
ity, and greater intelligence to automate and all of the information collected from a con- Moreover, the flood of IoT transactions
prioritise traffic based on various network nected device in real time. is placing such significant demands on data
types (4G, LTE, DSL, MPLS). Not all information that comes from a centres and remote sites now that the costs of
The intelligence found within the SD- connected device is going to cross over the meeting the demands with traditional WAN
WAN solution chooses the best network same network path (internet, 4G, MPLS) or topologies are impossible to sustain.
path for the particular workload. It provides end up in the same data centre. Keep in mind SD-WAN, as part of the evolution in auto-
greater efficiency in workload management that the world of IoT is a hierarchical system mated network intelligence and dynamic
and creates a new way of thinking about how of data and information. control, provides the flexibility that is essen-
to deliver products and services to financial In the example of BankFit, specific data tial for achieving market leadership, espe-
customers. such as the calorie goals, tasks, healthy activ- cially as the market itself is changing.
It also provides the proper foundation for ities, heart rate data, etc. will be processed It is recognised that retail banks will need
IoT solutions. For example, the bank net- via one application while banking informa- to work with trust frameworks to ensure
work team can create an IoT policy based tion, requests, transfers, will function within privacy policies are established and main-
network path using SD-WAN that can deliv- the banking systems process. tained. These frameworks also establish IoT
er encrypted workloads to network paths In order to make this one seamless transac- as a benefit for more banking automation
where the IoT applications reside. tion, the applications will be sending/receiv- through wearable devices based on security
Here’s a hypothetical example of how SD- ing information asynchronously via different control established by human uniqueness.
WAN and IoT collide in a financial services network paths. These paths can be based on If your financial institution is not thinking
setting: latency or the security needs of the transac- of these things – IoT for banking supported
Picture a personal health and financial tion. by SD-WAN – you will have to play catch-up
assistant app found on the latest wearable This is precisely where the investment in to your competitors. Where will your net-
device that combines fitness with banking. SD-WAN will pay off. The built-in intel- work be in 2017? <
6 y October 2016 www. cardsinternational.com
CI 536.indd 6 12/10/2016 16:55:08
Cards International STRATEGY: DIGITAL WALLETS
Strategies for success in the European
digital wallet market
Aite Group has published a report on the strategies that digital wallet providers need to adopt in the
increasingly competitive European market. Robin Arnfield investigates and speaks to the report’s author,
senior analyst Ron van Wezel, on its key points and takeaways for the industry
T
he Digital Wallets: Provider Strate- Market trends become ubiquitous in the near future,” the
gies to Meet Customer Requirements The report predicts that European B2C report says.
report says that, in recent years, e-commerce sales will reach €510bn “The European market is ready for digital
Europe has seen a multitude of digital ($574bn) in 2016, growing at around 12% wallet initiatives that leverage the NFC infra-
wallet initiatives by banks, tech companies, per annum. Online sales on mobile devices structure, although the business case (for mobile
card networks (Visa Checkout and Master- are the driving factor for the fast growth in proximity payments) is still unclear.”
Card’s MasterPass), mobile network opera- B2C e-commerce. In 2015, 23% of European The report says that the real driver for
tors (MNOs), and merchants. online retail sales took place on mobile devic- consumers to use proximity digital wallets is
In addition, global providers such as es, the report says. integrated loyalty programs allowing them to
PayPal and Paysafe’s Skrill and Neteller offer Online sales could have been even higher. redeem rewards points, offers and coupons at
cross-border digital wallets in Europe. “E-merchants currently see a checkout aban- checkout. However, seamless integration of loy-
With the arrival of the ‘Pays’ – Apple Pay, donment rate of up to 70% on PCs, partly alty with payments is challenging, particularly
Android Pay and Samsung Pay – in Europe, driven by the friction customers experience in for more complex digital wallet applications.
incumbent digital wallet providers, especially having to type in sensitive credit card data, sign
banks, face a further challenge. up for an account they will use only once, or Alternative payments
“As these wallets come to Europe as part of provide shipping-address details,” the study For proximity POS payments, cards are
their global rollout, they will redefine the com- says. virtually the only non-cash payment instru-
petitive landscape,” the report says. “For mobile, the situation is even worse ment currently available in Europe. But
(86% on smartphones and 77% on tablets), for e-commerce, alternative payments are
Definition driven by the challenge of filling out form fields becoming a significant factor in Europe, the
The study, by Aite Group senior analyst Ron on smaller screens.” report notes.
van Wezel, is based on interviews with 27 There’s a strong customer requirement for Compared to card payments, alterna-
executives from European banks, tech com- a convenient and secure checkout experience tive payments offer merchants lower costs,
panies, merchants, and industry organisa- (‘click and pay’), van Wezel says. reduced chargeback risk, and faster availabil-
tions. It defines ‘digital wallet’ as an applica- “Customer requirement for uniform, inte- ity of funds.
tion with the following basic functionality: grated payment experience across all channels “When alternative payment methods are
• Secure user enrolment (application down- will drive demand for digital wallets that sup- integrated into digital wallets, existing card
load, identity check) and secure provisioning port such experiences, in particular on mobile models may be challenged,” the report says.
of credentials (user ID/password) for wallet device, he writes. “Global (digital wallet) providers already
access; One example is the Pay with Amazon wallet, support over 100 different payment methods
• The ability to securely provision and store which enables payment with just one click for to fund their digital wallet accounts, providing
customers’ identity information (email customer acceptance, since all data is provided customers with the option to pay with the local
address, personal data), payment informa- from the wallet. payment methods they are used to.
tion (card data), and shipping address. The “For alternative payments, there is a clear
user can (pre-)select a payment method NFC value proposition for the merchant, but not
within the wallet (i.e. pay merchants online, According to the study, NFC-based much for the consumer. This could inhibit
in app, or in store), and contactless payment acceptance is reaching growth of alternative payments, unless the
• Payment funding from a debit, credit or pre- critical mass in Europe, with digital wallets value proposition for consumers is enhanced.”
paid card, bank or e-money account, virtual on smartphones or wearables being enabled Alternative payment examples include online
currency, or any other stored value which the to offer proximity payments via NFC. banking-based e-payment schemes such as the
wallet accepts. Visa reported in May 2016 that one in five Netherlands’ iDeal, which has a 60% domes-
Digital wallets may offer other features such in-person Visa-processed card payments is now tic market share; mobile payment schemes
as P2P payments, ATM cash-out, multicurrency contactless in Europe. MasterCard and Visa such as Poland’s Blik that work directly from
support, non-card-based alternative payments have set compliance dates for all POS terminals the customer’s bank account; Italy’s Jiffy real-
from bank accounts or other sources, balance- to accept contactless payments by January 2020 time mobile P2P transfer service; and Zapp/
inquiry and reporting functions, and loyalty at the latest. Pay by Bank, a UK-based mobile payments
programs such as rewards or coupons. In the UK, over 400,000 POS terminals (25% service owned by payments network operator
Mobile wallets and e-wallets are specific digi- of the installed base) are already NFC-enabled. VocaLink. In July 2016, MasterCard agreed to
tal wallet implementations for the mobile device “As two in three (European) (smart)phones buy a 92.4% stake in VocaLink.
and the desktop/browser environments respec- will be NFC-enabled by 2018, this means that In September 2016, Italian payment service
tively, the report says. acceptance of mobile proximity payments will provider SIA said Jiffy is currently offered by
www.cardsinternational.com October 2016 y 7
CI 536.indd 7 12/10/2016 16:55:08
STRATEGY: DIGITAL WALLETS Cards International
n FUNCTIONAL COMPARISON OF SELECTED DIGITAL WALLETS IN EUROPE
Product Payment Method Platform Merchant Payment Channel Other Payment Use Cases Value-Added Services
Buyer protection, seller
Pay with Amazon Card Browser Web, in app Recurring payments
protection
Android Pay In store (NFC), in app, mobile Loyalty points, online offers
Card Android N/A
(Google) web and gift cards
IOS; browser (Safari); watchOS, In store (NFC), in app; web
Apple Pay Card macOS with iPhone or Apple (Safari only) planned for fall N/A Reward cards
Watch as approving device 2016
BKM Express
Card Browser; Android, iOS In app, web, in store (QR) P2P N/A
(BKM Turkey)
Masterpass Browser; Android, iOS (second
Card Web, in app, in store (NFC) N/A Loyalty cards
(MasterCard) half 2016)
In store (NFC, Bluetooth low
MobilePay Loyalty program, reward cards,
Card, bank account Android, iOS, Windows Phone energy, QR via proprietary box), P2P, e-invoicing
(Danske Bank) receipts management
in app, web
P2P, recurring payments, Buyer and seller protection,
Card, bank account, Web, in app
PayPal Browser; Android, iOS remittance, bill payments, rewards, consumer and
e-money Starting with in-store initiatives
mobile POS merchant credit
Loyalty, payment guarantee,
Paysafe (Skrill, Card, bank account, P2P, recurring payments,
Browser; Android, iOS Web, in app chargeback protection, and
Neteller wallets) e-money, bitcoin remittance
more
Android on Samsung mobile In store (NFC, magnetic secure
Samsung Pay Card N/A Loyalty cards
devices transmission)
Bank account (via Loyalty programs, offers and
Seqr (Seamless) Android, iOS, Windows Phone In store (QR, NFC), in app, web P2P, remittance
SEPA Direct Debit) coupons, cashback
Web, in app; in store via
Vipps Card Android, iOS, Windows Phone Bluetooth low energy on P2P N/A
roadmap 2016
Visa Checkout Card Browser Web, in app N/A N/A
Source: Aite Group, Digital Wallets: Provider Strategies to Meet Customer Requirements
23 Italian bank groups and has over 400,000 30% of all individuals in the EU purchased significant factors to reduce CNP fraud. In
registered users. goods or services via the internet from sellers the POS space, digital wallets provide EMV
SIA has launched a pilot of in-store payments in other EU countries, while 18% bought from security. But any security relies on consumer
using Jiffy in Milan and Bergamo at merchants countries outside the EU. diligence, which is an issue. People root their
which are customers of UBI Banca, one of the For cross-border e-merchants dealing with phones, install apps not vetted by their phone
banks supporting Jiffy. multiple country-specific requirements, the abil- provider’s app store, accept phishing emails,
ity to accept digital wallets that support multi- and share their IDs. Banks and payment ser-
Strategies ple payment methods and currencies will add vice providers will have to implement addi-
“Successful digital wallet providers will be significant value, the report says. tional security measures, for example moni-
those that offer consumers ease of use, peace The report argues that, for the majority of toring fraudulent activity in their back-end
of mind (regarding security), and the abil- merchants, the best strategy is to focus on the systems, to mitigate those risks.”
ity to transact anytime and anywhere,” the shopping experience instead of developing a ‘Rooting’ refers to removing limitations set
report says. proprietary wallet, and select the right third- by a smartphone manufacturer in its operat-
The borders between online and in-store party wallets. ing system and running third-party apps that
(offline) commerce are becoming increasingly Van Wezel advises new entrants to the digital have not been approved by the manufacturer,
blurred as merchants seek to offer integrated wallet market to choose the right killer app for thereby breaking the phone’s default security.
shopping experiences. their wallet, and look beyond proximity pay-
“Customers will expect their digital wallet to ments. MNO wallets
work cross-channel, providing an omnichannel “Many digital wallet providers (including European MNOs have found it difficult to
digital experience,” the report says. new entrants) have launched with mobile prox- meet consumer digital wallet requirements
“They can check out and pay in store with imity payments, but the added value of this ser- such as a good customer experience, trust
the digital wallet but have the goods delivered vice for consumers isn’t clear,” the report says. and ubiquity.
at home; they can order goods online and pick “Other use cases such as P2P payments have “Signing up for an MNO wallet requires
them up at a store by showing a QR code stored proven to fulfil a need in many markets and can an NFC-enabled universal integrated circuit
in the digital wallet, or they can use their loyalty be easily built out into a merchant proposition.” card (UICC) chip to be issued to the custom-
programs in the digital wallet to work across all er,” the report says.
channels. Security “But the use case for proximity m-pay-
“This convergence will become a main driver “Digital wallets enhance security compared ments is not good enough to convince cus-
for digital wallet innovation and acceptance.” to traditional ‘card on file’ merchant applica- tomers to sign up, even when the new UICC
The report says that cross-border e-commerce tions,” van Wezel tells CI. chip is free of charge.
is growing rapidly. “Tokenisation, biometric authentication, “Although many MNOs possess a well-
It cites Eurostat data showing that, in 2015, and secure storage of user credentials are known brand, customer loyalty in their highly
8 y October 2016 www. cardsinternational.com
CI 536.indd 8 12/10/2016 16:55:09Cards International STRATEGY: DIGITAL WALLETS
n OVERVIEW OF WALLET STRATEGIES TO CREATE CUSTOMER VALUE
Value to Customer Physical Commerce Domestic E-commerce Cross-Border E-commerce
Optimise payment experience: fast, easy, tap
and go Epitomise payment experience to reduce friction Optimise payment experience and reduce
Consumer
to a minimum, one-click payment as part of the complexity due to different languages, currencies,
experience Provide extras integrated with payment: overall shopping experience payment conditions, etc.
e-receipts, rewards
Marketing via trusted brand
Marketing via trusted brand
Trust Marketing via merchant brand with loyal customer Marketing via trusted brand
(by Consumer) Marketing via merchant brand with loyal customer base
Provide buyer-protection services
base
Provide buyer-protection services
Use NFC to leverage contactless card
Ubiquity of Service infrastructure Sign up largest merchants to reach critical mass Sign up global merchants
(to Consumer)
Offer connected wallet (online/cloud)
Use NFC to leverage contactless card
Market Coverage infrastructure Distribute via consumer market leader(s) with
Manage digital wallet as a core business
(for Merchant) Distribute via consumer market leader(s) with high domestic market share
high domestic market share
Offer support of local and international payment
Product Capability Offer loyalty services integrated with payment methods, multicountry and multicurrency
Offer loyalty services integrated with payment capability, etc.
(for Merchant) Offer payment guarantee
Offer payment guarantee
Source: Aite Group, Digital Wallets: Provider Strategies to Meet Customer Requirements
competitive markets is low,” the report says. a white-labelled solution from a third-party payments with the ‘Pays,’ and bank branding
“Adding mobile payments to the proposition provider, or offer a combination of the two, will almost disappear as just another ‘Visa or
will not change this competitive dynamic in any the report says. MasterCard’ in the customer’s digital wallet.
significant way. Also, ubiquity is limited, as only “Major banks should develop their own wal- “The ‘Pays’ are claiming the online and in-
customers of the MNO can use the wallet.” lets to keep the relationship with their custom- app channels as well, building on the brand
“Most MNO wallets in the US and European ers,” Van Wezel tells CI. awareness they created in the physical world
markets don’t offer a value proposition,” van “They can do this on their own, or partner of POS payments.”
Wezel tells CI. with the card schemes.”
“Why would a consumer go through the has- For example, in the US Visa recently launched Pay by Bank
sle of requesting an NFC-enabled UICC chip for its Visa Digital Commerce App as a white- Zapp, will launch its Pay by Bank app before
their smartphone just to be able to make NFC labelled solution. the end of 2016. The service will integrate
mobile payments with that specific MNO? It said in a statement: “With the app, issu- with UK banks’ mobile banking apps to ena-
“In contrast, MNO wallets have been suc- ers provide their branding and select the spe- ble users to pay merchants from their bank
cessful in emerging markets, for example cific features to deploy, including tokenised accounts online, via an app or in-store.
M-Pesa in Kenya, offering a payment service to contactless payments, fingerprint authentica- Pay by Bank, which will be offered at launch
unbanked people where none existed before.” tion, card controls, alerts, account balance, by Bank of Scotland, Barclays, Halifax and
The report says MNO wallets will struggle transaction history and more.” Lloyds Bank, will use VocaLink’s Faster Pay-
to provide sufficient value for customers if they ments real-time settlement system.
continue to focus on proximity payments. The “Pays” Transactions will be based on secure digital
“The ‘Pays’ success will aggravate the situ- “The initial response by banks/issuers in any tokens, ensuring customers never reveal their
ation, and MNOs should find new ways to market to Apple Pay would be something bank account details to merchants.
create value in the payments space or pull out like ‘why would we relinquish our brand “Pay by Bank offers value to merchants, as
altogether,” it says. visibility and control over customer relation- they will receive the money instantly into their
ships, and pay for the privilege?’” van Wezel account with finality and no chargebacks,” van
PayPal tells CI. Wezel tells CI.
PayPal’s importance in the European and UK “When Apple Pay launched in the UK, “I have no insight into pricing yet, but that
digital wallet markets depends on the specific some of the major banks, Barclays for should be attractive compared to card pay-
market, says van Wezel. instance, didn’t participate. ments.
“In the UK and Germany, PayPal has a mar- However, the competitive pressure eventu- “The key lies, as usual, with consumer adop-
ket share of about 10%,” he tells CI. ally drove all the UK banks into Apple’s lap.” tion. If the Pay by Bank app works easily and is
“In Italy, PayPal’s market share is above “Some banks argue that the ‘Pays’ are a frictionless, and banks/merchants promote this
20%. In markets where bank-led digital pay- good thing, as they pave the way for mobile way of payment, take-up could be fast.
ment alternatives are available, PayPal’s market proximity payments and will drive credit “In the Netherlands for instance, iDeal
share is much lower. For example, its share in card payments for issuers,” says van Wezel. acquired an online payments market share of
Poland is 2%, and in the Netherlands 4%.” “In Spain, Samsung Pay convinced banks, 60% in just a few years.”
as the user experience (with Samsung Pay) “In my view, alternative payments are
The banks was better than the banks’ own (mobile pay- becoming really important in Europe, and the
Banks can choose to develop their own ment) applications. success or failure of Pay by Bank will be a valid
digital wallets using Host Card Emulation, “But the threat of disintermediation is a test of that opinion in a card-dominated market
which is restricted to Android devices, deploy valid one. Consumers will associate mobile like the UK,” says van Wezel. <
www.cardsinternational.com October 2016 y 9
CI 536.indd 9 12/10/2016 16:55:09EVENT: ANNUAL PREPAID EUROPE SUMMIT AND AWARDS Cards International
Preview: the Annual Prepaid Awards
It’s that time of the year again: October means the Principe di Savoia, Milan and the annual Prepaid Summit
Europe – again sponsored by Visa, not to mention the annual Prepaid Europe Awards. With grateful thanks
to the sponsors, judges and all entrants, CI presents a sneak preview of the 2016 award nominees
The 2016 Prepaid Europe Awards nominees
Prepaid Innovation of the Year Best Corporate/Payroll Prepaid Card and Gov- Prepaid Service Provider of the Year
Barclaycard ● MoneytoPay in collaboration with ernment Digital Prepaid Initiative of the Year Amilon ● IDT Financial Services ● Wirecard Card
BPI ● Tuxedo Money Solutions ● VFX Financial Contis Group and Suits Me ● PFS Solutions ● PFS ● Saxo
Wirecard for the Curve product Prepaid Mobile App of the Year Best Prepaid Travel Card
Prepaid Marketing Campaign of the Year Amilon ● SIA EasyPay in conjunction with Euronet Worldwide (Wizz Prepaid Travel Card)
Amilon ● Epipoli ● Realex FinAppsParty Saxo Raphael’s Bank ● VFX Financial ● Tuxedo Money Solutions
Payments Banking Circle ● UBI Banca Mobile Wallet of the Year Best Basic Bank Account with Prepaid Card
Best New Loyalty/Reward Prepaid Card Barclaycard ● Poste Italiane ● Tuxedo Money So- Ffrees ● Monese abnd Contis - Branchless,
CaixaBank Electronic Money ● EDE Euronet lutions for Liveload ● Vodafone Wallet – Loyalty Mobile Banking ● TEB24
Worldwide (Wizz Prepaid Travel Card) ● Epipoli & Offers ● Wirecard – Orange Cash Best Contactless/Proximity Payment Solution
● Vodafone Wallet Prepaid Security/Anti-Fraud Programme of Barclaycard ● BZW Santander Poland
Financial Inclusion Programme of the Year the Year ● Vodafone and Orange Wallet Solutions
CaixaBank Electronic Money ● EDE ● Contis Cybertonica ●Paysafe’s company Skrill’s Rapid Best New Payments Startup
Group Ltd & Monese ● Go Henry ● Prepaid Transfer ● Safran Identity & Security ● W2 Cybertonica ● Monzo Issued by Wirecard Card
Financial Services (PFS) ● Suits Me Global Data Solutions Solutions
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CI 536.indd 10 12/10/2016 16:55:11
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