HOW WILL BREXIT AFFECT THE UK'S CARD MARKET? - Verdict
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May 2017 Issue 543 www.cardsinternational.com
HOW WILL BREXIT
AFFECT THE UK’S
CARD MARKET?
• PRODUCTS: Prepaid in Canada
• ANALYSIS: Social Finance
• GUEST COMMENT: FICO, PPRO Group and allpay
• COUNTRY SURVEYS: Thailand, the UK & Italy
CI 543 May.indd 1 13/06/2017 11:08:28
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
PRODUCTS: PREPAID IN CANADA Poll shocker: Lloyds ranks top
Two Vancouver-based fintechs, Koho
and Mogo Finance Technology, have
launched mobile-enabled prepaid
for trust
cards targeting Canadian millennial
consumers looking to avoid high
W
bank charges and expensive credit
cards. Robin Arnfield assesses the ell here is a turn up. A U K retail • Only 8% of people are happy for banks to
market’s promise and headwinds
banking consumer survey asks con- have their personal data regardless of wheth-
8 ANALYSIS: SOCIAL FINANCE sumers which bank they trust most er they have received good or bad customer
After acquiring multi-currency – and the most popular answer was service from them.
digital bank Zenbanx, US online not First Direct, Metro Bank or Nationwide.
lender Social Finance (SoFi) plans to
apply for an industrial bank charter Nor was it TSB, which the writer might have Surprisingly, the report finds that older people
so it can offer bank accounts and expected to score highly. seem to understand personalisation best. 63% of
credit cards. Robin Arnfield speaks
to industry analysts to find out more
Nope-the top answer was Lloyds. Not a mis- 55-64 year olds state that personalisation means
print: it is Lloyds. Lloyds Banking Group (LBG) companies tailoring communications to their pref-
10 RESEARCH: GLOBALDATA comes out rather well in the survey with sub- erences and actions, whereas only 38% of 25-34
Canadians are less keen than their brands Halifax/Bank of Scotland ranking second, year olds took the same view.
US peers on mobile payments,
India leads the e-wallet charge in ahead of Barclays in third place. The report concludes that trust is a much bigger
Asia-Pacific, interest rates in the US Santander, fourth and First Direct in an unac- factor than either liking or being an existing cus-
cause concern, and a discrepancy in
Singapore between card penetration
customed fifth place round off the top five. tomer, when it comes to whether people are happy
and transaction volumes is striking Cue an immediate check to see just who spon- for banks to hold their personal data.
sored the report and what was the sample size, While LBG will no doubt welcome the report,
12 GUEST COMMENT: FICO
given Lloyds and Barclays lack of obvious suc- work remains to be done across the sector. Lev-
Which works better for modelling
credit risk: traditional scorecards or cess in the quarterly account switching rankings, els of trust with banks have remained relatively
AI and machine learning? The best generally dominated by Nationwide, Santander, static in the last 12 months with only 11% of the
approach is to use them together,
writes FICO’s Scott Zoldi
Metro Bank and admittedly, Halifax. consumers surveyed saying they trusted their bank
The report ‘Personalisation in Retail Banking’ more than last year.
13 GUEST COMMENT: ALLPAY was not actually sponsored by LBG (the survey So there you have it: people can like a bank and
Outsourcing payment processing can
free up time, and allow businesses
was commissioned by Webhelp) but it was a rela- be a customer without actually trusting them,
to focus on customer service, client tively small survey of 500 UK-based adults. although in turn this is likely to limit the level of
relations and lasting growth, writes Key takeaways include: personal data that they are willing to provide.
allpay’s Ross Macmillan
As for positives: well only 30% of those Web-
14 COUNTRY SURVEY: THAILAND • Just 55% of respondents have heard of per- help surveyed said they are not influenced by
16 COUNTRY SURVEY: THE UK sonalisation and understand what it means, personalised communications with another one
with the figures dropping to only 38% for third saying that they feel it is helpful to receive
18 COUNTRY SURVEY: ITALY
people aged between 24 and 35; offers and communications that are personalised
20 GUEST COMMENT: PPRO GROUP to them.
• 49% of people are happy with a bank hav-
From Jack trading a cow for magic
beans to tapping plastic against an
ing their data if they trust that bank This shows that a significant opportunity exists
NFC reader, how we have paid for • 39% of respondents do not want banks to for banks to engage with their customers in a more
goods has taken many unexpected hold their personal data regardless of wheth- personalised way, but only on the proviso that
turns, writes Ralf Ohlhausen
er they trust them or not; they are able to tailor their approach effectively.
• 35% of people are happy to have their
personal data kept by a bank that has given Douglas Blakey
them good customer service, and douglas.blakey@cardsinternational.com
Editor: Douglas Blakey Group Publisher: Ameet Phadnis For more information on Verdict, visit our
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www.cardsinternational.com May 2017 y 1
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NEWS: DIGEST Cards International
DIGITAL
Vision Travel, CSI globalVCard directly into Concur, which will help in the “This partnership advances our capabili-
to integrate virtual payments automation and streamlining of reservations. ties and gives corporate travel clients highly
Once the integration is complete, card secure payments that are customised, con-
Canadian travel management firm numbers will become invalid as only trolled and easier to reconcile.”
Vision Travel and CSI globalVCard preauthorised purchases will be CSI globalVCard’s senior vice-president of
have integrated travel manage- processed. Users will be able to travel, Juliann Pless, said: “Our integration
ment software Concur Compleat control use and spending lim- with Concur Compleat allows Vision Travel
to their single-use virtual card its in real time with desktop or to offer next-level service by saving time and
payments partnership. mobile devices. increasing the security of payments.
The partnership will help Vision Travel’s president of “It is exciting to play such a pivotal role
Canadian companies to procure Ontario-West, Brian Robertson, in the expansion of virtual travel solutions
travel with a virtual card payment said: “Vision Travel is committed to into the Canadian market. We are looking
system. Vision Travel will incorporate a personalised and responsive approach forward to this evolving partnership with
CSI globalVCard’s virtual card numbers to the business of travel. Vision Travel.” <
PRODUCTS
American Express Open
or transfer points to the company’s partici- Referring to the card’s headline features,
launches business credit card pating airline or hotel loyalty programmes. American Express Global Commercial Pay-
American Express Open has introduced a The card will also allow small businesses ments’ senior vice-president of global prod-
new Blue Business Plus credit card, that will to better manage cash flow by offering a low ucts, Audrey Hendley, commented: “Blue
enable entrepreneurs to earn rewards on introductory APR, helping vendors to access Business Plus is the only no-annual-fee small
everyday purchases, and improve cash-flow credit needed to start and grow businesses. business credit card from a major issuer that
management. Card members can also spend above their offers double points with no category restric-
The no-annual-fee card includes double credit limit, and earn points on amounts tions, so small business owners can be con-
Membership Rewards points on the first spent above the limit, payment for which will fident they are making the smart choice for
$50,000 spent each calendar year, and a low be due in full each month. their business.
introductory APR on purchases and balance Amounts that small business owners can “With so many different ways to redeem
transfers for up to 15 months. spend beyond their credit limit vary based Membership Rewards points, purchases with
Cardholders can redeem points for travel, on a number of factors unique to each Blue Business Plus can become an investment
statement credits, gift cards, or merchandise, cardholder, the company said. toward future growth.” <
PRODUCTS DISTRIBUTION
UBS targets mass affluent Mobile solution Samsung Pay
market with new credit card made available in the UK
Swiss banking giant UBS is targeting HNW South Korean electronics giant Samsung has
and UHNW customers with a new credit card. launched its mobile payment solution, Sam-
The new UBS Visa Infinite credit card will sung Pay, in collaboration with MasterCard
offer a range of rewards, travel benefits and in the UK.
credits, such as exclusive savings when users UBS Wealth Management Americas’ head MasterCard is working with Spanish bank-
fly, stay, cruise or drive. of private wealth management and UHNW, ing group Santander and credit card compa-
Holders will have access to a US-based con- John Mathews, said: “By putting the UBS ny MBNA to enable MasterCard holders to
cierge and client services group, and financial Visa Infinite credit card in our clients’ hands, use Samsung Pay, which will allow users to
advisors. They will also receive exclusive trav- we can have a more meaningful impact on make payments at almost any location where
el benefits, credits and a rewards programme our clients’ everyday lives and experiences contactless payments are accepted.
with flexible redemption options, which may by serving more than their traditional wealth Card details will not be stored on devices
exceed $4,000 per year. management needs.” but on a digital ‘token’, which uses Master-
Users can earn three points per dollar spent UBS head of cards Fred Jubitz said: “The Card’s Digital Enablement Service to make
on commercial air travel, two points per dol- advisor’s ability to service and advocate for payments using industry-standard tokenisa-
lar spent on gas and groceries, and one point their clients is just one thing that makes the tion processes. MasterCard said it will gener-
per dollar spent on all other eligible purchas- UBS Visa Infinite credit card exceptional.” ate a unique card number that will be specific
es. Users can also earn up to 50,000 bonus “Visa has a long and successful history to the cardholder’s device and cannot be used
points by spending $3,000 within the first working with UBS to deliver world-class in conjunction with any other device.
three months of approval. rewards credit card products serving UBS’s MasterCard’s president of UK and Ireland,
UBS said that the latest metal card will high-net-worth clients. Mark Barnett, said: “Every Samsung Pay
replace the current UBS Preferred Visa Sig- Visa’s senior vice-president of global prod- transaction made with MasterCard is highly
nature credit card, with no changes to the ucts, TS Anil, said: “The UBS Visa Infinite secure – a critical part of this is our ability to
$495 annual card fee. All existing UBS Pre- credit card goes beyond rewards to deliver tokenise cardholder details.”
ferred Visa Signature credit card users will the total customer experience, including Samsung Pay will be initially available on
automatically receive the UBS Visa Infinite comprehensive protection benefits and access the Samsung Galaxy S8, S8+, S7, S7 Edge, S6,
credit card. to premium travel and lifestyle benefits.” < and S6 Edge devices. <
2 y May 2017 www.cardsinternational.com
CI 543 May.indd 2 12/06/2017 15:38:05
Cards International NEWS: DIGEST
PRODUCTS DISTRIBUTION
BrilliantTS launches new allow cardholders to track the last known Samsung Pay debuts in Taiwan,
integrated smartcard card location, as well as remotely wipe all with extensive support
card information.
BrilliantTS, a South Korean manufacturer of The smartcard is available in two options: South Korean electronics giant Samsung has
smart hardware and software solutions, has Fuze M and Fuze A. Fuze M is a non-EMV launched mobile payment solution Samsung
launched the Fuze Card, a new smartcard model aimed at those looking to use the card Pay in Taiwan, with support from seven
that incorporates all cards into a single unit. for gift, membership or loyalty cards. Fuze A financial institutions.
The new offering, which is compatible is an EMV chip model, and can be used for The solution will be supported by Cathay
with magnetic-stripe, near-field communi- all situations. United Bank, Citi Bank, E.Sun Commer-
cation, EMV and Bluetooth, works with BrilliantTS CEO Jaehun Bae said: “Our cial Bank, Standard Chartered Bank, Taipei
iPhone and Android phones. journey began in the early 2000s when I Fubon Bank, Taishin Bank and Union Bank
With the latest card, users can combine co-founded CrucialTec, which was the only of Taiwan.
credit, debit, membership and loyalty cards. company to successfully miniaturise optical Samsung’s head of Taiwan, Li Dai Hua,
Fuze can store information from up to 30 mouse tech into a small module as big as said: “We are excited to introduce Samsung
cards in a single encrypted chip. your fingernail. Pay to Taiwan, and are thrilled to lead the
It will also offer a flexible display, a 30-day “We further developed that technology to innovation of mobile commerce, in order to
rechargeable battery and advanced security develop Fuze Card, which packs so much provide consumers with safer, smarter and
features. Fuze’s in-app tracking feature will tech into a 0.03-inch-thick card.” < better mobile wallets through offering more
valuable services.”
DISTRIBUTION Mastercard’s head of Taiwan, Eva Chen,
said: “Together with Samsung, we are excited
UnionPay adds Apple Pay at around 20,000 POS terminals in Sogo, to drive greater usage of mobile payments in
support in Hong Kong 7-Eleven, Mannings and Tsui Wah Restau- Taiwan. To help encourage everyday usage,
UnionPay International has partnered with rant locations. we have also partnered Carrefour to give
Bank of China (Hong Kong) and Standard When customers add a credit or debit card Mastercard cardholders the hottest discounts
Chartered Bank (Hong Kong) to allow its to Apple Pay, the actual card number is not in Taiwan.” <
debit cardholders to make payments through be stored on the device, nor on Apple serv-
Apple Pay. ers. A unique Device Account Number is STRATEGY
The partnership will allow holders to assigned, encrypted and securely stored in JCB International partners with
make purchases with Apple Pay at more than a dedicated chip called the secure element. Sberbank in Russia
10 million POS terminals supporting mobile Each transaction is authorised with a one-
QuickPass in Mainland China, Hong Kong, time unique dynamic security code.
Taiwan, Singapore and Australia. Apple Pay currently works with the iPhone
Earlier, UnionPay added Apple Pay sup- SE, iPhone 6 and later models, and the Apple
port to credit card users of Bank of China Watch. When paying in apps, the solution
(Hong Kong) and Bank of East Asia. works with the iPhone SE, iPhone 6 and later
UnionPay believes the collaboration models, the fifth-generation iPad, the iPad
will make the QuickPass service available Pro, the iPad Air 2, and the iPad mini 3. <
PRODUCTS
CreditBank, Gemalto and Unilux
has provided the necessary insight, expertise
launch combined card
and technology to achieve another premiere
Lebanese lender CreditBank has launched a in the market.” JCB International, a wholly owned subsidi-
combined credit and debit card in collabora- Commenting on the launch, Unilux Cards ary of JCB, has signed an agreement with
tion with Dutch digital security firm Gemalto MD Ronald Nacouzi said: “We are proud Russian lender Sberbank to enhance its card
and Unilux Cards. to help Creditbank be the first to launch this acceptance in Russia.
The new EMV card will allow bank cus- innovative solution, just after being the first Sberbank will accept JCB cards on its
tomers to access their choice of account when to introduce the contactless sticker, a great countrywide POS terminal network in 2018.
making a transaction with a single card. step towards the future of mobile payment.” According to JCB, the lender has the largest
The card, which features chip-and-PIN Gemalto’s senior vice-president of bank- POS terminal network in the country, and the
security, will allow users to choose a single ing and payment for the Middle East, partnership aims to increase its brand pres-
PIN for both accounts. The card’s dual inter- Nassir Ghrous, said: “Competition in the ence in the market.
face capability will also allow users to make Middle East banking sector has never been JCBI president and COO Kimihisa Imada
contactless payments. fiercer, in particular with millennial custom- said: “We are sure this arrangement will sup-
Creditbank assistant general manager ers demanding higher standards of service port our objective as a very active player in
Hanadi Saad said: “The launch of this card and innovation. the payment industry in Russia.
reflects Creditbank’s commitment to innova- “With the support of Unilux Cards and “We believe our collaboration will con-
tive products and services to improve end- Gemalto, Creditbank has provided the mar- tribute to the growth of card payments and
user experience. ket with a unique payment card offer which provide greater convenience to JCB card
“Our partnership with Gemalto and Uni- attracts new business and reinforces brand members both in Russia and from all over the
lux Cards goes back over a decade, and it loyalty,” Ghrous added. < world, ” Imada added. <
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NEWS: DIGEST Cards International
MOBILE DISTRIBUTION
Zain and MasterCard launch tures that make it easier for them to complete UnionPay partners with HBL to
mobile wallet in Jordan their daily transactions. issue chip cards in Pakistan
“This partnership is part of our efforts to
Telecoms service provider Zain has partnered boost the electronic payments system in Jor- UnionPay International, a subsidiary of
with MasterCard to develop its digital pay- dan, and expand the Zain Cash services to China UnionPay, has partnered with Paki-
ment services in Jordan through the Zain enrich the subscriber experience and provide stan-based lender HBL to issue UnionPay
Cash mobile wallet. them with an unprecedented, easy and secure chip cards on a large scale. The partnership
The partnership aims to extend the ben- way to pay by mobile in the kingdom. will enable the bank to issue UnionPay chip
efits of the Zain Cash service to the “Our customers have always been at cards for the first time.
telco’s subscriber base, and enhance the forefront of the most advanced According to UnionPay, almost all POS
the overall user experience. technologies in the world, so terminals and nearly 80% of ATMs in Paki-
Zain has received a license our strategic partnership with stan accept UnionPay cards. Ten local banks
from the Central Bank of Jordan MasterCard will contribute to have issued more than 4.1 million UnionPay
to issue MasterCard prepaid the goal behind Zain Cash, and cards, with around 90% of transactions
cards linked to the Zain Cash to provide e-payment solutions made by the cards occurring in Pakistan.
mobile wallet, that will allow to all citizens.” UnionPay International CEO Cai Jianbo
subscribers to utilise the card both MasterCard’s general manager of said: “We are giving full play to our advan-
locally and globally. Saudi Arabia and Levant Cluster, Basel tages in chip card products, standards and
Zain customers will be able to use the card Eltell, said: “Our collaboration with Zain is global chip card acceptance networks to
through a network of over 50 million POS an important strategic step aimed at enhanc- promote the largest commercial bank in
terminals at MasterCard-accepting loca- ing the e-payment sector in the kingdom. Pakistan to issue UnionPay chip cards on a
tions. The partnership will also allow users “We are pleased to sign this agreement large scale.
to shop online. with a prominent company such as Zain, “Thus, we are able to realise the migration
Zain CEO Ahmad Al Hanandeh com- which comes as part of our relentless efforts from magnetic stripe card to chip card, joint-
mented: “We are very pleased to sign this to deliver innovative financial solutions for ly supporting the upgrade of the local pay-
strategic partnership with a leading technol- mobile payments while also reflecting our ment industry. Next, we will carry out the
ogy company such as MasterCard, as we vision of paving the way for all segments of chip migration of our acceptance network,
continue to deliver the latest and world-class the society to have access to financial servic- to lay a solid foundation for the issuance of
services to our subscribers and provide fea- es,” Eltell added. < mobile QuickPass-enabled UnionPay chip
cards, to enable local residents to conveni-
MARKETING ently tap their cards to pay.” <
Netspend, United Airlines
DIGITAL
launch Visa prepaid card in US
Monaco Technology launches
Netspend, the prepaid card company owned cryptocurrency card and app
by Total System Services, has partnered with
United Airlines to launch its first prepaid Monaco Technology has introduced a new
card, the MileagePlus Go Visa prepaid card, cryptocurrency card, Monaco Visa Card,
in the US. and app that can be funded with Bitcoin,
The new offering, which will be avail- Ethereum and other ERC20 tokens.
able from summer 2017, will allow US con- The new offering, which will allow users
sumers to directly earn miles for qualifying to spend and transfer funds globally at inter-
purchases made with a prepaid card. It will bank exchange rates, will work on the Visa
also enable cardholders to redeem award network wherever it is accepted.
miles through the airline’s MileagePlus the US offers the ability to directly earn miles Monaco App will allow users to make
loyalty programme. through a major airline.” transfers in 23 currencies to 120 countries,
The card will be issued by Republic Bank, United’s vice-president of loyalty, Praveen and free and instant transfers between
and will be FDIC-insured on a pass-through Sharma, said: “With the MileagePlus Go Monaco users. The funds will be immedi-
basis. It will also offer electronic anytime Visa Prepaid Card, we are providing another ately available to the recipient and accessible
alerts to help cardholders monitor spending. avenue for customers to earn MileagePlus with the card.
Netspend president Chuck Harris said: miles. Through MileagePlus, we offer cus- Commenting on the launch, Monaco
“Our new MileagePlus Go Visa Prepaid tomers a variety of ways to both earn and use Technology founder Kris Marszalek said:
Card will attract frequent flyers who may not their miles – from flights in United’s global “The team worked incredibly hard over the
know much about prepaid cards but have an network to once-in-a-lifetime experiences.” last year to bring the Monaco Visa card and
affinity to United’s MileagePlus programme Visa’s head of North American debit and app to the market. It is a beautifully simple
and are looking for new ways to earn miles. prepaid solutions, David Josephs, said: “By product that allows users to avoid all the
“We are also eager to offer the opportunity partnering with United and Netspend, Visa charges that banks and currency exchanges
to earn airline miles to consumers who are is helping broaden access to payments for impose on them.
looking for new financial solutions to help more customers. “It brings amazing value, transparency
them manage their money. “Together, we are continuing to innovate and peace of mind. You’ll never have to
“Several of our prepaid cards offer a loy- and develop new payment products that worry about exchange rates again, always
alty component, but no other prepaid card in meet evolving customer needs.” < getting the best deal physically possible.” <
4 y May 2017 www.cardsinternational.com
CI 543 May.indd 4 12/06/2017 15:38:08
Cards International NEWS: DIGEST
DIGITAL STRATEGY
Comdata unveils new virtual are a technology company first and fore- Android Pay, PayPal partner to
credit card tool most. And when it comes to accounts payable allow online payments
automation, we focus our development on
Tennessee-based B2B payment solution easy administration and vendor enrolment,
provider Comdata has unveiled new virtual because we believe those are the two biggest
credit card technology that will allow cus- drivers of a successful program.
tomers to automate vendor-management “A lot of firms and banks sell virtual credit
functions. cards, but our mission is to help clients build a
The new Spend Escalator technology will world-class e-payables program. Spend Esca-
allow virtual credit card – or e-payables – lator is our latest innovation in support of
clients to eliminate the manual effort associ- that mission.”
ated with enrolling and managing vendors in Comdata’s vice-president of product and
their programmes. strategy, Meitra Aycock, said: “We already
The tool will support merchants enrolment integrate our virtual credit card system to each
and convert spend volumes at nearly double client’s ERP or accounting system, to make the
the average rate of other Comdata clients. payment and reconciliation process seamless.
It will also help reduce costs by minimising Spend Escalator expands this integration to
cheque payments. not only automate payments, but also reduce
Comdata’s senior vice-president of product the effort of managing and enrolling vendors
and strategy, Vijay Ramnathan, said: “We to accept card payments.” <
MOBILE
Android Pay arrives in Russia
Pay button to enable a card in Android Pay
Search engine giant Google has launched the without re-entering card information.
Android Pay mobile payment service in Rus- Android Pay users can make payments at
sia, supported by 15 financial institutions. outlets such as Magnit, Perekrestok, Star- Android Pay has expanded its partnership
The launch makes Russia the 11th country bucks, KFC and Rosneft. The app can also with payment giant PayPal to streamline the
where Google has launched the solution. It be used to shop online through support- online payment experience at merchants that
is supported by Mastercard credit or debit ing applications including Lamoda, OneT- accept PayPal.
cards issued by AK Bars, Alfa-Bank, B&N woTrip, or Rambler-Kassa. With the extended partnership, Android
Bank, MTS Bank, Otkritie, Promsvyazbank, Google first launched Android Pay in the Pay users on Chrome mobile web will be able
Raiffeisen Bank, Rocketbank, Russian US in September 2015, followed by eight to pay at online merchants using a PayPal
Standard Bank, Russian Agricultural Bank, additional countries – the UK, Singapore, account and fingerprint. Users will not need
Sberbank, Tinkoff Bank, Tochka, VTB24 Australia, Hong Kong, Poland, New Zea- to enter a username or password when shop-
and Yandex.Money. land, Ireland and Japan – in 2016. ping with a phone running Android version
Users of the Raiffeisen Bank, Sberbank and In a blog post, Google said: “We’re thrilled 4.4 or higher, including KitKat, Lollipop,
Tinkoff Bank mobile apps can also enable to name Russia as our 11th country to adopt Marshmallow and Nougat.
Android Pay within the banks’ apps, with- Android Pay, and we hope it’ll make your In a blog post, PayPal said merchants on
out having to download Android Pay sepa- everyday purchases faster, easier, and a little the latest versions of PayPal Checkout do
rately. Users simply tap the Add to Android more fun.” < not need to carry out any integration to use
the new features.
ONLINE Google payment products vice-president
WEX Australia launches new same of type of experience at work that they Pali Bhat said: “Mobile checkout remains
online service centre get in their personal or ‘real’ life, similar to one of the biggest sources of friction in the
what they do with their major banks. commerce experience, and we’re excited to
WEX Australia, a subsidiary of corporate “We collaborated with the best and bright- collaborate with PayPal on enabling stream-
payment solutions provider WEX, has est and engaged Sapient Nitro/Razorfish to lined checkout experiences for all Android
launched a new online service centre for its help with the strategy and important design Pay and PayPal users.”
WEX Motorpass fuel card business, to meet elements. This enabled us to have an output PayPal COO Bill Ready said: “This new
rising customer demand. we could be proud of while building up the seamless way to make a purchase with
The new platform will enable custom- capability of our internal resources. Building PayPal on Chrome mobile web with an
ers to easily view all transactions made to our digital skill set has been central to the Android device is just one way we’re work-
an account, request a receipt if the original growth in our innovation capability.” ing to simplify the checkout experience.
has been lost, and set product controls on WEX Australia’s head of information “PayPal’s One Touch is another way, and
all cards on an account. Customers can also technology, Jim Madytianos, said: “While enables consumers to securely check out
change their PIN statuses, set new PINs on clearly I am thrilled with what has been across platforms and devices without hav-
all cards, and set up annual and quarterly delivered and the step change in our digital ing to type in any payment information once
activity reports. capability, at the heart of the growth is the logged in.”
WEX’s director of product and marketing relationship between the WEX and Sapi- In April 2017, PayPal collaborated with
Asia-Pacific, Susan Nicholson, said: “Busi- ent Nitro/Razorfish teams to get such a Google to allow the use of PayPal as a pay-
ness customers are increasingly expecting the terrific outcome.” < ment method on Android Pay in the US. <
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PRODUCTS: PREPAID IN CANADA Cards International
Fintechs enter Canada’s
prepaid card market
Two Vancouver-based fintechs, Koho and Mogo Finance Technology, have launched mobile-enabled prepaid
cards targeting Canadian millennial consumers looking to avoid the country’s notoriously high bank
charges and expensive credit cards. Robin Arnfield assesses the market’s promise and headwinds
K
oho’s prepaid Visa card is linked to card. The company says most transactions On its Roadmap website, Koho lists sup-
a mobile personal financial man- are free, with the exception of out-of-net- port for Apple Pay and Android Pay in the
agement (PFM) app, and is issued work ATM withdrawals. near term, plus photo cheque deposits.
by Vancouver-based Peoples Trust. Customers fund their Koho accounts
Mogo’s prepaid Visa card is issued by through salary direct deposits and transfers Customer experience
Home Trust, a subsidiary of Canadian from their bank accounts. Including transac- “Not being a deposit-taking bank and being
mortgage lender Home Capital which in tions during its beta trial, Koho had handled a pure technology play, we’re able to build
April 2017 saw an exodus of savers after the C$2m worth of transactions on its prepaid a rich, elegant customer experience tethered
Ontario Securities Commission alleged it had cards up to April 2017. to a prepaid card,” says Eberhard. “From a
misled investors in its handling of a scandal “The average Koho user is about 30 and pre- customer usage perspective, prepaid cards
involving falsified mortgage applications. dominantly male, but we’re trying to change make a lot of sense.”
On 1 May, Home Capital said Home Trust that,” says Koho CEO Daniel Eberhard. Koho’s customers can set up Interac
had drawn down C$1bn ($731m) from its “Their average income is about C$74,000. e-transfers from the account linked to their
C$2bn credit line provided by a facility led Our goal is to get 100,000 customers, and prepaid card and also perform Koho-to-
by the Healthcare of Ontario Pension Plan. we’re only interested in social media plat- Koho transfers. Interac e-transfers are P2P
forms that can scale in terms of promotions. payments using Canadian debit scheme
Cash-in We’ve done 100-120 customer-acquisition Interac’s infrastructure.
The two startups hope to cash in on young experiments through major digital channels.” “Our Smart Spending Account is a PFM
Canadians’ dislike of high bank fees and “The way we view the Canadian prepaid tool that lets customers set control categories
desire for mobile-friendly banking services. card market is that prepaid is virtually identi- for their spending,” says Eberhard.
CBC cites Statistics Canada as saying Cana- cal in terms of core feature set to any other “We look at a lot of the data sets traditional
dians paid “an average of C$216 annually in primary bank account Canadians use,” says PFMs don’t examine because they just scrape
bank service fees in 2015”. Eberhard. your bank account. For example, we look at
Whereas in the US, prepaid has been most- “What we did was map out the function- merchant categorisation codes and several
ly stuck in the sub-prime lending market, in ality people expect from a primary account other variables to give consumers real-time
Canada the key driver for prepaid adoption – such as bill payments and money transfers insight into their spending behaviour to pro-
is the concept of spending accounts to avoid – then layer this functionality around a pre- vide the context for their financial life.
excessively high banking fees and high-inter- paid card and offer a much richer feature set.” “We’re accurate 99% of the time in terms
est credit cards. Currently, Koho does not offer mobile of budget categories, and let consumers
Vancouver-based Koho has received payments or cheques. “There is a low ROI break down their supermarket spending, for
C$2.6m in backing from Canada’s Power in giving people the ability to write cheques example, into sub-categories like groceries
Financial Corp., and other investors includ- from their prepaid account, although we and lifestyle/health. It’s very easy to either
ing the founders of social media tech com- might offer that at some point,” explains permanently or temporarily change these
pany Hootsuite, and e-commerce business Eberhard. categories.”
Shopify. In April 2017, Koho launched its “We plan to offer NFC payments on smart- Eberhard says it takes three minutes to get
Smart Spending Account and linked prepaid phones in quarter three of 2017.” a Koho account on a smartphone, and the
6 y May 2017 www.cardsinternational.com
CI 543 May.indd 6 12/06/2017 15:38:13
Cards International PRODUCTS: PREPAID IN CANADA
account can be totally managed via mobile rience. Also, they want to know how much to be placed in prepaid Visa accounts,”
devices. they are spending via our PFM tool. B – they Smythe continues. “Its primary business is
Koho is regulated by the Financial Trans- don’t want a primary account that is going to instalment loans and personal line-of-credit
actions and Reports Analysis Centre of Can- charge them fees. C – they want to have their accounts.
ada (Fintrac), a Canadian government anti- account run by an institution that they trust “Mogo is also a mortgage broker, and this
money-laundering/anti-terrorist-financing and relate to and which isn’t going to sell line of business may be facing greater scru-
agency. them things they don’t need, or overly com- tiny from lenders which are becoming more
“We do full KYC and terrorist watchlist- plicate things to make greater profits. There cautious as a result of Home Capital’s prob-
screening, and part of the intellectual prop- is a mistrust of banks among younger people. lems. Mogo has been in operation for many
erty we’ve built is the decisioning on account “Our ethos is to build a great product and years and is still facing operations losses. Its
applications,” explains Eberhard. not profit from confusion or complexity. staff complement seems to be high, based on
People know exactly what they are going to the business being generated,” notes Smythe.
Roadmap get, and that message resonates with them. “Koho is a recent start-up, whose primary
“We’re feature-equal to or better than tradi- Our revenue comes from card interchange source of revenue is interchange fees and
tional bank accounts,” says Eberhard. “Over and interest on deposits,” Eberhard explains. income from funds on deposits in its prepaid
the next 18 months, we’ll accelerate in terms “We think that our clients might link their card accounts.
of technology development and continue to Koho account to a savings account with “It identifies its target clients as people tired
do unique things with our account. [Canadian digital banks] Tangerine or EQ of bank charges. In consumer surveys con-
“Ultimately, what we want is to create Bank. ducted by IDC Canada, we didn’t see bank
value throughout the entire financial life of “One of the things that causes a lot of pain fees to be a major concern. Desirable clients
the client. At the moment, we own the spend- for consumers is that they have difficulty usually have balances large enough to elimi-
ing of a lot of our users and a meaningful in getting a holistic understanding of their nate fee charges.
percentage of them use Koho as their pri- financial life. So we’re laying some of the Smythe adds: “Koho is trying to convince
mary account. We’re extending the customer functionality of [Canadian digital account- clients to have their salaries deposited into
relationship by adding account aggregation scraper PFM tool] Mint into our PFM tool.” their prepaid account. It suggests anywhere
so that, with Koho, you’ll see what’s going Mogo’s Platinum Prepaid Visa Card is from a third to 100% of income so deposits
on with all your accounts at any time. linked to the digital Mogo Spending Account, can then be used to fund on-going purchases.
“We’ll also be adding credit facilities such which consumers can transfer funds to from I doubt Koho will have much success in con-
as an overdraft – but it won’t be unsecured most Canadian bank accounts. Each time vincing people to deposit their hard-earned
lending at 21% APR.” they add money to their Spending Account, money with anyone but a stable bank. IDC
Koho plans to offer a loyalty programme they are prompted to set a spending goal. Canada surveys also show that consumers
and a referrals reward programme. “We The Mogo app provides instant transac- are very satisfied with their banks and the
think that using our app for P2P transfers tion alerts with each purchase along with services they provide.
will be important,” says Eberhard. “Some of updated real-time balances. There are no “Koho has some positives going for it, and
the UK prepaid card issuers like Monzo and monthly charges for the account, and Mogo has also been discovered by Power Financial
Loot that are further ahead of us and have prepaid customers have access to Mogo’s as well as several other investors. It seems
similar models, see 80% of their customer other products including free monthly Equi- to have a reasonable staff complement and
acquisitions come through referrals.” fax credit scores, mortgages and a range of adequate initial funding. It also has an inter-
“Koho’s management team takes a different different personal loans. esting array of services that enables payments
approach, as we aren’t bankers,” Eberhard In April 2017, Mogo said it had surpassed while providing real-time information on
continues. “We’re technology entrepreneurs, 400,000 members, up 52,000 from the how funds are spent.
and our team comes from Silicon Valley and 348,000 members reported as at 31 Decem- “The major challenge Koho faces is the
from firms such as Alibaba and PayPal. I co- ber 2016. assumption that there are many bank clients
founded a wind farm technology company, Mogo’s Level Up Program for its Mogo- wanting to switch to a solution that provides
so I’m basically an entrepreneur. Money loans rewards borrowers for making lower fees,” Smythe says. “I don’t think there
“The prepaid card model is doing very payments on time by giving them a lower are too many people in this category. It will
well in Europe. There has been a lot of noise interest rate. also be difficult to provide core bank services
in the US prepaid market, but there hasn’t based on prepaid debit cards.
really been a breakout, maybe because of Future promise – substantial headwinds “This may be why Koho’s projected growth
the fragmentation in the US market. But I “I think Koho has future promise, while targets are very low. These need to be
understand that the Green Dot/Walmart Mogo faces some substantial headwinds,” increased substantially to make the company
MoneyCard prepaid card is doing very well says IDC Canada associate Robert Smythe. viable and to make it a potential acquisition
in the US.” “Mogo could be affected by the problems target.
Koho’s target market is Canadian millen- facing Home Capital, parent of Mogo’s issu- “On the positive side, Koho provides inno-
nials, or people who want to run their finan- er Home Trust. With the problems Home vative payment reporting and management
cial life on their smartphone. Capital is facing, it may be more difficult for services that are currently only offered by TD
Asked why they would get a prepaid card Mogo to get clients to place funds in a Visa as a result of its partnership with Moven.”
account, Eberhard says: “Everyone in Cana- account managed by Home Trust. The plus Smythe concludes: “Koho needs to target
da can get bank accounts, and there’s a very factor may be that most people won’t make being the Canadian equivalent to Moven,
small percentage of underbanked people the connection between the Mogo prepaid which involves selling its software solutions
here. People using Koho fall into three cat- Visa card and Home Trust/Home Capital. to banks globally. This will involve abandon-
egories: A – they want the technology and “The other positive for Mogo is that its ing trying to be a bank and focusing on being
the simplicity and intuitiveness of the expe- main source of revenue isn’t collecting funds a fintech software vendor.” <
www.cardsinternational.com May 2017 y 7
CI 543 May.indd 7 12/06/2017 15:38:14
ANALYSIS: SOCIAL FINANCE Cards International
Social Finance to
apply for industrial
bank charter in US
After acquiring multi-currency digital bank Zenbanx, US online lender Social Finance (SoFi) plans to apply
for an industrial bank charter so it can offer bank accounts and credit cards. However, whether it will be
successful in its attempt is far from certain. Robin Arnfield speaks to industry analysts to find out more
S
oFi CEO M ike Cagney told US lished banks to fintechs being granted trial loan company. As outlined earlier, the
m aga zi ne Tec hC r u n c h i n M ay banking licences. If SoFi’s ILC application FDIC continues its efforts to provide inter-
2017 that SoFi plans to apply for is approved, it would be the first firm to be ested organising groups with a clear path to
an industrial loan company (ILC) granted an ILC charter in a decade in the US. forming a new insured depository institu-
banking charter within the next month. ILCs differ from standard banks as they tion, regardless of the type of charter pur-
A SoFi spokesperson confirmed to CI that are not owned by a bank holding company, sued by an organising group.”
the TechCrunch story is accurate, but but by a commercial venture such as a car
declined to provide details. manufacturer. Currently, seven US states Rush of new entrants
Cagney said Zenbanx’s technology pro- including Utah, California and Nevada, “If SoFi’s application for an industrial lend-
vides the infrastructure for SoFi’s move offer ILC charters. If its ILC application ing licence is successful, this could really
into banking and that, by combining bank- is unsuccessful, SoFi could conceivably start a rush of new fintech entrants applying
ing services with its lending products, SoFi partner with Wilmington, Delaware-based for similar licenses,” says Greer.
could offer discounted rates to members WSFS Bank which provides banking servic- “My feeling is that it won’t be easy for
who set up auto-pay between their accounts. es for Zenbanx in the US. SoFi to get an industrial lending licence.
Cagney admitted that FDIC approval for its According to the Utah Department of Also, there are implications about being an
ILC application cannot be taken for granted Financial Institutions: “An industrial bank industrial bank as opposed to a traditional
“SoFi’s plan to apply for an ILC charter is is a state-chartered depository institution chartered bank, namely that industrial banks’
a progression step on its part,” says Joseph that is eligible for FDIC insurance, exempt- holding companies aren’t subject to oversight
Walent, associate director, customer interac- ed from the technical definition of a bank by the Federal Reserve. It’ll be interesting to
tion advisory service, at Mercator Advisory for the purposes of the Bank Holding Com- see if fintechs go this route, or try to take
Group. “By becoming an industrial bank, pany Act of 1956, and otherwise generally advantage of the OCC’s fintech charter.
SoFi will be able to build its banking func- subject to the same banking laws and regu- However, this won’t include deposit insur-
tionality from the ground up and take total lations as other bank charter types.” ance, so it’s unclear what the value will be.”
control of the financial institution.” Industrial banks are subject to FDIC regu- Launched in 2011, SoFi initially refi-
The topic of fintech regulation is contro- lation. Following the 2008 financial crisis, nanced student loans, and then expanded
versial in the US. In December 2016, the US the Dodd-Frank Wall Street Reform and into personal loans, mortgages, wealth man-
Office of the Comptroller of the Currency Consumer Protection Act set a three-year agement and life insurance. On its website,
(OCC) proposed that fintechs such as online moratorium on FDIC approval of ILC appli- SoFi states: “We look behind just credit
lenders be offered special charters, allowing cations for deposit insurance after Novem- scores and debt-to-income ratios to consider
them to offer banking services nationwide. ber 2009. factors like estimated cashflow, career, and
New York State’s banking regulator, the In a July 2016 speech to the US House of education. While other leaders charge high-
New York Department of Financial Services, Representatives’ Committee on Oversight er rates to account for the possibility that
filed a lawsuit in May 2017, arguing that the and Government Reform, FDIC chair Mar- borrowers won’t pay back their loans, our
plan to offer national charters was “lawless, tin Gruenberg said: “The current economic unique underwriting process helps ensure
ill-conceived and destabilising of financial environment with narrow net interest mar- our members have a high likelihood of mak-
w
markets” which are best regulated by the gins and modest overall economic growth ing their payments.”
state, Reuters said. In April 2017, the Con- remains challenging for US banks and the In 2016, SoFi originated $8bn in loans, up
ference of State Banking Supervisors filed a establishment of de novo institutions. from $5bn in 2015, and expanded its mem-
similar lawsuit against the OCC. “The FDIC is committed to working with, ber base to 225,000 from 100,000 over the
Celent banking analyst Stephen Greer and providing support to, groups with an same period. At the end of 2016, the com-
says there is strong opposition from estab- interest in organising a bank or an indus- pany had 750 total staff.
8 y May 2017 www.cardsinternational.com
CI 543 May.indd 8 12/06/2017 15:38:20
Digital toCards International ANALYSIS: SOCIAL FINANCE
Last year, SoFi launched Student Loan an undisclosed sum. It also raised $500m in DUCA Financial Services Credit Union. Kuh-
Payoff Refi for home mortgages and student Series F financing in February 2017 led by lmann has taken an executive role leading
loans in partnership with Fannie Mae. In private equity firm Silver Lake Partners. The banking products at SoFi, and Zenbanx staff
addition to new lending products, SoFi intro- investment, which brings the company’s total have also joined SoFi.
duced its SoFi at Work brand for employee funding to $1.9bn, will be used to speed up “With Zenbanx joining SoFi, we’re mov-
financial wellness, SoFi Wealth for modern SoFi’s expansion into new product areas and ing one step closer to becoming the centre
investment management, and a partnership countries outside the US. of our members’ financial lives by adding
with Protective to offer term life insurance. In a SoFi blog, Cagney wrote: “We’ve SoFi deposit, money transfer, and credit
SoFi focuses primarily on student lend- never been shy about SoFi’s ambitions to card products to our offerings for members,”
ing to clients who are at top universities become the center of our member’s financial Cagney said in February 2017.
and have the potential to become HNWIs,” lives. Offering deposits, credit cards, and “The logic behind SoFI’s acquisition of
Greer says. “It wants to offer banking ser- payment solutions is key to that ambition, Zenbanx is twofold,” explains Ron Shev-
vices on top of loans to these clients. SoFi and we think we can offer something better lin, director of research at US-based Cor-
makes money from securitising its loans and than incumbent players with the same kind nerstone Advisors. “SoFi needs deposits to
from its refinancing and lending process.” of innovation we’ve brought to other areas fund its lending business, and it wants a bank
According to the Wall Street Journal, SoFi of finance, like student loan refinancing, per- offering to become the provider of choice to
estimates it will generate $600m in revenue sonal loans, and mortgages. young upwardly mobile consumers.
in 2017, after receiving $40m in adjusted Zenbanx, established in 2012 by Arkadi “It isn’t going to scale. Zenbanx has little
profit in the first quarter. Kuhlmann, founder of ING Direct Canada name recognition and won’t be much of a
In April 2017, SoFi launched an invest- and ING Direct USA, offers mobile banking draw to many SoFi customers who are per-
ment fund to give investors access to its accounts that let customers save and send fectly happy with the mobile offerings of
loan portfolio, disclosing in a Securities money in multiple currencies domestically their existing banks.”
and Exchange Commission filing that it and internationally. Following its purchase of Zenbanx, SoFi
raised $105m for its SoFi Prime Income Its mobile app was designed to eliminate plans to launch a range of mobile deposit,
Fund. Each investor contributed a minimum the complexities of international banking credit, and payment products to its US mem-
of $500,000. for people who bank cross-border. US Zen- bers in 2017, as well as offer its products in
In February 2017, SoFi bought Delaware, banx accounts are available through WSFS Australia and Canada by 2017 end, SoFi said
California- and Toronto-based Zenbanx for Bank, and in Canada through Toronto-based in a news release. <
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CI 543 May.indd 9 12/06/2017 15:38:25
Digital touch briefings ad copy - MF 18042016.indd 1 18/04/2016 11:15:29RESEARCH: GLOBALDATA Cards International
Canadians less keen than their US peers
on mobile payments
The US is unusual in that mobile proximity Canadian banks including RBC, CIBC, that key players in the payments market
payments are increasingly popular, despite ATB Financial and Canadian Tire Bank need to put significant effort into driving
the absence of a contactless cards market. have also sought to drive growth in the interest in mobile payments.
Meanwhile in Canada, consumer interest in Canadian mobile payments market by Only 12% of Canadians carry out
mobile proximity payments remains muted. partnering with Apple. m-commerce transactions, compared to
According to GlobalData’s Cards and A number of other recent initiatives – 16% of their US peers. However, m-com-
Payments Market Drivers, the US had a including the launch of a contactless mobile merce is forecast to record stronger growth
55% smartphone penetration in 2015, payment service for Android by American in Canada than in the US, with a CAGR of
compared to 49% in Canada. Express, and Scotiabank’s My Mobile Wal- 26% over 2015-2020, compared to only
While the US mobile payments market let – are looking to attract Canadian con- 12% in the US.
is highly competitive and features a wide sumers to mobile proximity payments. Mobiles will be increasingly used for
range of brands, it is less fragmented than Yet mobile wallet ownership stands at impulse buys and small purchases at home
the cards market. Most big brands are 16% in Canada, significantly below the or on the move, as consumers become
available to any consumer, regardless of global average of 29% and that of the US increasingly comfortable with the form
who they bank with, and Apple Pay in par- at 33%. The majority of Canadian con- factor and with storing their card details
ticular has partnerships with almost every sumers do not have a mobile wallet, and on merchant sites or apps to enable
retail bank in the country. have no interest in getting one, indicating quick checkouts. <
Land of mobile payment opportunities:
India leads the charge in Asia-Pacific
The role of mobile payments in e-commerce n DIGITAL WALLET USE FOR E-COMMERCE IN ASIA-PACIFIC
has become increasingly important in the past
few years, and as a growing proportion of
global trade goes online, there is a large poten-
tial opportunity for digital and mobile wallets.
In the five years to the end of 2016, Chi- China
nese payments via digital wallets grew from 524%
$514.4bn
around $98bn in 2012 to over $500bn. These India Hong Kong
2,233% 365%
staggering statistics are driven mainly by the $5.5bn $6.1bn
proliferation of Alipay and WeChat’s Tenpay.
Vietnam
However, there are several other Asia-Pacific 1,506%
markets where the prospects for mobile pay- $588m
Thailand
ments are equally bright. 584% Malaysia
According to GlobalData’s Payment Card $1.9bn 694%
Analytics, the most exciting markets for digi- $134m
tal wallets are in Asia-Pacific, where even Chi- New Zealand
Australia
na’s huge growth rate only ranks in the middle Percentages refer to
203% 260%
growth in digital wallet use in Singapore $440m
of the pack. Digital wallet payments in India e-commerce, 2016-2016 596% $5.2bn
grew by over 2,200% in the five years to the $386m Indonesia
1,027%
end of 2016, and both Vietnam and Indone- $337m
sia are exciting markets that have recorded
extraordinary growth in the past five years.
In markets such as Vietnam and India, Source: GlobalData
where there are large untapped markets with
underdeveloped payment infrastructure, the However, the outlook for India is extreme- – enough to focus the world’s attention on
environment is right for new digital payment ly positive. Consumers and merchants alike markets other than China.
providers, because while growth rates have have already embraced Paytm, which offers Most importantly for the significant
been impressive, absolute volumes and values QR code-based mobile payments, while underserved population in the developing
still have a long way to go. For example, at the India’s government is pushing for a national parts of Asia-Pacific, the proliferation of digi-
end of 2016 the value of transactions made QR standard to help bring digital payments tal wallets will reduce dependence on cash
by digital wallets in India reached $5.5bn – a to the unbanked. and bring multiple benefits to consumers in
low figure given that the country accounts for The market is forecast to record several the region, including accessible and afford-
almost 20% of the global population. years of very high mobile payments growth able payments and financial services. <
10 y May 2017 www.cardsinternational.com
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