THE NEW CONTENDERS - Alternative payment networks step up to the challenge - Cards International
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
April 2017 Issue 542 www.cardsinternational.com
THE NEW
CONTENDERS
Alternative payment networks
step up to the challenge
• EVENT: Biometric Security
• STRATEGY: Latin America
• GUEST COMMENT: Wincor Nixdorf
• COUNTRY SURVEYS: Denmark, Finland & Sweden
CI 542.indd 1 02/05/2017 15:59:02
Simple, secure and effortless digital
solutions for financial services organisations
To find out more please visit:
www.intelligentenvironments.com
@IntelEnviro
Intelligent Environments is an international provider of innovative mobile and online solutions for financial services
providers. Our mission is to enable our clients to deliver a simple, secure and effortless digital experience 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, MotoNovo Finance, Think Money
Group and Toyota Financial Services.
IE Adverts - 2017.indd 1 21/12/2016 11:53:12
Cards International EDITOR’S LETTER
CONTENTS EDITOR’S LETTER
6 DIGITAL: ALTERNATIVE PAYMENTS
The US has long been dominated
by a small group of networks
Innovation and recognition
and service providers controlling
transfers of funds through banks.
However, alternative providers are
beginning to offer competitive
networks that banks can use to offer
P2P transactions, and bill and POS
payments. Robin Arnfield reports European Power 50 Awards – making changes in the way their
nominations now sought financial services organisations
9 EVENT: BIOMETRIC SECURITY
The Digital Banking Club are operating.
As banking and payments become
increasingly advanced, the security (DBC) has launched its fourth This year we have introduced
protecting them needs to be more annual Power 50 awards of two new awards as a result of
advanced as well. An often-touted
solution is biometric security,
the most influential people in the DBC expanding into new
but can this ever truly replace the mobile and online financial verticals: the collections and
tried-and-tested password? Patrick services, the only independent the vehicle finance industries.
P
Brusnahan reports from the Digital
Banking Club’s latest debate oland’s innovative Idea ranking in digital financial ser- Therefore, of the Power 50 win-
Bank has hit on a real vices in Europe. ners, there will be one winner
12 STRATEGY: LATIN AMERICA
winner. The award categories in 2017 recognised for digital innovation
Mexico’s payments sector is
shrugging off concerns that
Idea Bank’s mobile are as follows: in collections and one for digital
President Trump’s protectionist ATM deposits in March hit innovation in vehicle finance.
threats could hit its fortunes, a record high of PLN51.5m • Personality of the Year One Power 50 winner will be
forecasting strong revenues despite
monitoring portfolios more closely, ($13.2m), up 418% year- • Digital Financial Services awarded Personality of the Year
writes Ivan Castano on-year and 38% more than Power 50 to recognise their outstanding
14 COUNTRY SURVEY: DENMARK
in February. Mobile ATMs • Digital Financial Services service to digital financial ser-
account for more than 20% Rising Stars vices. Previous winners have
16 COUNTRY SURVEY: FINLAND
of cash in transactions at the • Digital Innovation in Collec- included Teppo Paavola, BBVA
18 COUNTRY SURVEY: SWEDEN bank. tions in 2016 and Michal Panowicz,
20 GUEST COMMENT: WINCOR NIXDORF Two years after its initial • Digital Innovation in Vehicle mBank in 2015.
This year marks 50 years since launch, the service now com- Finance The winners will be invited
the first ATM was put into use. prises 19 vehicles, to increase to receive their awards at the
Technology has come a long way,
but the need for robust security by a further 18 by the end of The European Digital Finan- DBC’s October Live Debate,
solutions remains critical for ATMs June. The cash pickup service is cial Services Power 50 winners which has been confirmed for
around the world, writes Wincor now available in 14 cities. will be made up of influential Thursday 19 October at the
Nixdorf’s Richard Broadbent
There are around 6,300 thought leaders working in Law Society, London.
ATMs in Poland. Figures from digital within financial services Nominations are sought
the Polish central bank disclose companies, regulators and ana- initially from DBC members
that the average fixed ATMs lyst houses. The judging panel plus readers of Retail Banker
attract average monthly depos- will also consider nominations International. Nominations
its per device of PLN792,000; for recognised innovators and should be sent directly to me at
by contrast, one Idea Bank industry influencers. douglas.blakey@verdict.co.uk
Mobile ATM collects an aver- The European Digital Finan- before 12 May 2017.
age of PLN2.7m per month, cial Services Five Rising Stars
making it 242% more effective are compiled of digital innova- Douglas Blakey
than a usual stationary device. tors aged 35 and under who are douglas.blakey@cardsinternational.com
Editor: Douglas Blakey Group Publisher: Ameet Phadnis For more information on Verdict, visit our
Tel: +44 (0)20 7406 6523 Tel: +44 (0)20 7406 6561 website at www.verdict.couk.
Email: douglas.blakey@verdict.co.uk Email: ameet.phadnis@verdict.co.uk As a subscriber, you are automatically
Financial News Publishing, 2012 entitled to online access to Cards
Deputy Editor: Anna Milne Sub-editor: Nick Midgley International. For more information, please
Registered in the UK No 6931627 Tel: +44 (0)20 7406 6701 telephone +44 (0)20 7406 6536 or email
ISSN 0956-5558 Email: anna.milne@verdict.co.uk Subscription Enquiries &
customer.services@verdict.co.uk.
Customer Service
Unauthorised photocopying is illegal. The
Senior Reporter: Patrick Brusnahan Tel: +44 (0)20 3096 2603 London Office
contents of this publication, either in whole or
Tel: +44 (0)20 7406 6526 Or +44 (0)20 3096 2636 71-73 Carter Lane
part, may not be reproduced, stored in a data
Email: patrick.brusnahan@verdict.co.uk Email: briefings@verdict.co.uk London
retrieval system or transmitted by any form or
EC4V 5EQ
means, electronic, mechanical, photocopying,
recording or otherwise, without the prior Asia Office
permission of the publishers 1 Finlayson Green, #09-01
Singapore 049246
Tel: +65 6383 4688
Fax: +65 6383 5433
Email: asiapacific@verdict.co.uk
www.cardsinternational.com April 2017 y 1
CI 542.indd 1 02/05/2017 13:08:20
NEWS: DIGEST Cards International
PRODUCTS
Lebanon’s Byblos Bank targets on business office rentals at more than 1,600 Byblos Bank’s head of group cards,
corporate clients world locations. Additional benefits include accounts and bancassurance products,
extended original manufacturer warranties Georges Fares, said: “Companies are facing
Lebanon-based Byblos Bank has launched for up to two years, and discounts on vari- growing challenges today and need to have
its latest credit card exclusively for corporate ous products from nearly 52,000 merchants real-time control over their business.
clients, in collaboration with MasterCard, globally. “The features and benefits of the Byblos
The MasterCard World Business Credit Cardholders are automatically enrolled in Bank MasterCard World Business Credit
Card aims to give companies more control the Akram Program, a loyalty programme Card are designed to help companies make
over their finances. that allows cardholders to earn loyalty points faster transactions anytime and from any-
Holders can access a range of functionali- or miles and redeem them for gifts or travel where around the world, while keeping track
ties and benefits, including free entrance to tickets. Holders also receive travel accident of their finances and benefiting from exciting
over 550 airport VIP lounges, and incentives cover up to $500,000. rewards.”<
STRATEGY
National Bank of Greece merchants through smartphone push noti- are proud to implement our technology in
partners with Wirecard to offer fications while travelling by air to holiday NBG’s payment processes. With this, we are
Alipay in Greece destinations. enabling thousands of merchants to simul-
National Bank of Greece’s general man- taneously offer Alipay as a new payment
National Bank of Greece (NBG) has teamed ager of retail banking, Nelly Tzakou-Lam- method for a financially strong target group.
up with German payment services provider bropoulou, said: “Tourists are one of the “We believe that this, combined with the
Wirecard to integrate Alipay into the Greek most important target groups for Greek increasing number of Chinese tourists in
lender’s technical infrastructure as a new merchants. Greece, will translate into a considerable
payment option. “With this in mind, we are particularly sales potential for Greek merchants.
Wirecard has enabled NBG to combine proud that we are in a position to allow mer- “Our aim is to work with financial insti-
Alipay across the country to help Greek chants to offer a payment method trusted by tutions across Europe to integrate Alipay as
merchants to offer Alipay as a new payment Chinese customers. This has all been made an alternative mobile payment solution in as
solution at the point of sale for their Chinese possible by Wirecard’s exclusive technical many till systems as possible.”
customers. support and professionalism.” Alipay is a mobile payment channel owned
The collaboration will also enable Chi- Wirecard executive vice-president for and operated by Ant Financial, an affiliate of
nese tourists to receive offers from local mobile services Jorn Leogrande said: “We the Alibaba Group in China. <
PRODUCTS STRATEGY
Manappuram Finance and Yes Manappuram Finance will issue the pre- First Data to offer processing
Bank to launch co-branded card paid cards to customers and link existing and acquiring services to TSB
gold loan accounts to the card, enabling
India-based Manappuram Finance has them to withdraw cash from ATMs First Data, a provider of commerce-enabling
teamed up with private sector lend- across India. technology and solutions, has been appoint-
er Yes Bank to introduce its own Holders can also withdraw ed by Sabis, the IT arm of Spain-based bank-
co-branded card. money from any of Manappuram ing group Banco Sabadell, to offer processing
The Manappuram Yes Bank Finance’s 3,300 branches, which it and acquiring services for several TSB bank-
Prepaid Money Card will allow claims is a unique feature. Users can ing portfolios.
cardholders to preload up to INR50,000 also visit any Manappuram branch to First Data will transfer TSB’s credit and
($772.7), and withdraw cash from all ATMs. reload the card. debit card portfolio onto its FirstVision plat-
The prepaid card can be used on the Non-customers are also eligible to pur- form, which comprises an extensive range of
MasterCard and RuPay networks, as well chase the card by supplying their mobile products and services to support the manage-
as for online transactions and at merchants number and KYC document as required by ment and processing of credit cards, including
equipped with POS terminals. the Reserve Bank of India. < bank, co-branded, private label and Sharia-
compliant cards, as well as debit, commercial,
MOBILE
prepaid, loyalty management, loan and card
Google integrates Android Pay In a blog post, Google global head of pay- acquiring.
with mobile banking apps ments products Pali Bhat said: “Don’t have First Data will also power the bank’s digital
the Android Pay app? No problem. Through payments, and provide merchant acquiring
Tech giant Google has partnered with a num- select mobile banking apps, you can access services for money and balance transfers.
ber of banks, including Bank of America, and enjoy the capabilities of Android Pay. Commenting on the agreement, Sabis UK
Bank of New Zealand, Discover, mBank and “This latest collaboration with banks MD Angel Alonso said: “We selected First
USAA, to enable customers to add cards to expands Android Pay’s capabilities as an Data for the company’s enterprise capabili-
Android Pay from their apps. open platform, and moves us closer toward ties, global footprint, and proven international
The latest facility, which does not require our goal of empowering mobile payments migration experience.
Android Pay to be downloaded, allows users everywhere. “This strategic partnership will allow us to
to add, change and deactivate cards from “We’re continuing to integrate with addi- focus on configuring and launching new prod-
mobile banking apps, as well as make mobile tional mobile banking apps, so look for updates ucts and services for TSB as we grow our pres-
payments. from your bank about this new feature.” < ence in the UK market.” <
2 y April 2017 www.cardsinternational.com
CI 542.indd 2 02/05/2017 13:08:30
Cards International NEWS: DIGEST
M&A REGULATION
Zift buys payment technology leverage the expertise and relationships Pay- NetSpend agrees to $53m
firm PayVisors Visors has established to become a leading settlement for FTC charges
payments technology company that provides
Zift, a provider of merchant processing ser- a wide range of integrated payment manage-
vices and payment facilitation, has purchased ment solutions for software platforms, pay-
payment technology consultancy PayVisors. ment facilitators, e-commerce marketplaces
Chad Roll, president of PayVisors, has and enterprise corporate merchants.”
been named CEO at Zift, and Zift co-found- Roll said: “This opportunity provides the
ers Nate Hughes and Marc Roberts will optimum delivery model moving forward.
assume the roles of chief revenue officer and With the added ability to offer hosted solu-
chief operating officer respectively. tions for payment facilitators, marketplaces,
Commenting on the deal, Roberts said: and software platforms, as well as continue
“Technology is disrupting the payments to provide on-premise licenses for enterprise
industry, and payment facilitation is one of merchants, we are now positioned to manage
the fastest-growing segments of the market. a client’s payment management needs for the
The acquisition of PayVisors will allow us to life of their company.” <
PRODUCTS Netspend, the prepaid card company owned
Emirates Islamic launches new by Total System Services (TSYS), has agreed
Emirates Islamic deputy CEO of consumer to pay $53m to resolve the Federal Trade
Visa-branded credit card banking and wealth management Wasim Saifi Commission (FTC)’s allegations that it mis-
UAE-based lender Emirates Islamic has said: “We are delighted to launch this new led users about access to funds deposited
launched its latest credit card on the Visa premium credit card in line with the evolving onto their cards.
platform, offering a range of exclusive ben- preferences of our affluent customer segment. In its advertising, Netspend made claims
efits to cardholders. “Travel has become an integral part of life in that led customers to believe that they could
The Emirates Islamic Skywards Visa Signa- the UAE, and Emirates Islamic’s Visa Signature purchase cards, load funds and be able to use
ture credit card, allows cardholders to earn 1.5 card specifically caters to premium frequent cards immediately. However, most users had to
Skywards Miles for every dollar spent. Sky- travellers, who can benefit from the Emirates wait several weeks to use the cards, and some
wards Miles can then be exchanged for com- Airline Skywards programme. were never able to access their funds at all.
plimentary flights, upgrades or excess baggage “At Emirates Islamic, we develop products To fully activate cards, users were required
payments on Emirates flights, and Dubai duty- that are in line with customer expectations and to contact NetSpend to provide personal iden-
free vouchers. delivering high value. We are confident that the tification information including their Social
Additionally, cardholders can access mul- card will be favourably received by the target Security numbers and date of birth, as well as
tilingual concierge services with a 24-hour market following its launch.” utility bills.
personal assistant who can arrange dinner Additional benefits available to cardholders The federal regulator investigated a number
reservations, chauffeurs, taxis, tickets, gifts or include complimentary multi-trip travel insur- of Netspend user accounts between January
various other services needed to enhance their ance up to $500,000, automatic purchase pro- 2010 and August 2016, and found that the
lifestyle. Card members also have unlimited tection for all purchases made using the card, company had failed to undertake the neces-
complimentary access to more than 750 air- and an almost doubling of manufacturers’ or sary steps to verify customers’ identities before
port lounges worldwide. retailers’ warranties. < activating accounts. As a result, the company
violated the provisions of the US Patriot Act,
DISTRIBUTION which requires businesses to verify consumers’
identities before activating accounts.
Remitly lands in UK
Remitly announced that it will launch two The regulator also accused NetSpend of
US digital remittance company Remitly has primary variants of its service in the UK: being slow to resolve account errors, and fail-
expanded its global footprint by entering the Express and Economy. ing to provide or causing significant delays
UK market, its third send country after the The Express service will deliver money in providing provisional credits for account
US and Canada. directly to recipients abroad within minutes errors.
Initially, the company will enable UK resi- through direct integrations with banking and Under the terms of the settlement, Net-
dents to transfer money to India and the Phil- cash pickup partners around the world. Users Spent will provide $53m to customers who
ippines, and plans to add more recipient coun- are able to send money using a credit or debit purchased NetSpend prepaid cards between
tries soon. card for a maximum fee of £3. 1 January 2010 and 31 August 2016. Of the
Remitly CEO Matt Oppenheimer said: The Economy service, which will leverage $53m total, $13m will be used to repay fees
“Europe is the second-largest remittance mar- the UK’s Faster Payments Scheme, will enable charged to cardholders prior to 31 August
ket in the world. Launching in the UK, where customers to send money abroad at a reduced 2016. NetSpend will inform customers cov-
over £19bn ($24bn) in remittances are sent to cost depending on the recipient country. ered by the settlement.
other countries, is an important next step as “Through this option, customers get their Commenting on the settlement, TSYS said:
we transform the global remittance business. transfers to recipients quickly, safely, and “Netspend is pleased to have resolved this
“We’re thrilled to offer Remitly’s industry- with competitive foreign exchange rates as matter. We agreed to settle in order to avoid
leading service to the UK, a service that already the scheme enables nearly-instant payments the significant costs associated with protract-
enables customers in the US and Canada to between participating banks,” the company ed litigation and to get back to the business of
send over $2bn a year.” said in a statement. < serving our customers.” <
www.cardsinternational.com April 2017 y 3
CI 542.indd 3 02/05/2017 13:08:42
NEWS: DIGEST Cards International
DISTRIBUTION DISTRIBUTION
Westpac to support Samsung Gear S3 smartwatch and the newly launched UnionPay expands card
Pay in Australia Galaxy S8 and S8+ smartphones. acceptance in France
Customers need to add a Westpac card to
the Samsung Pay app to make a payment. UnionPay International and AccorHotels
Westpac Group consumer bank CEO Group have signed an agreement under
George Frazis said: “On many devices, which 85 pilot hotels in France will accept
our customers can now use either Westpac UnionPay cards.
Tap and Pay, Android Pay or Samsung Pay Pursuant to the contract, 200 hotels of the
to make contactless payments, and we’re AccorHotels Group will accept UnionPay
delighted to be the first Australian-owned cards by the end of June 2017.
bank to offer this choice. The agreement enables UnionPay
“Our mobile customers want access to the cardholders to pay for hotel rooms and ser-
best technology, and in addition to the recent vices such as restaurants, bars, meeting rooms
launch of the Westpac Keyboard, Samsung and spa treatments, at hotel POS terminals.
Pay is another example of a digital solution According to the most recent data, nearly
Australian banking group Westpac has col- that offers our customers more flexibility, 70% of ATMs in France accept UnionPay
laborated with Samsung Electronics Austral- convenience and choice.” cards for cash withdrawals, and some are
ia to offer the Samsung Pay mobile payment Richard Fink, vice-president of Samsung equipped with Chinese-language interfaces.
solution to MasterCard and Visa debit and Australia’s mobile division, said: “We know Nearly 130,000 French merchants accept
credit cardholders. Australians use their smartphones every day UnionPay cards for payment, including popu-
The solution is available at retail outlets to enjoy content, stay connected and organ- lar visitor locations such as merchants at the
across the country wherever near-field com- ise their lives. Partnering with Westpac will Avenue des Champs-Elysées, Place Vendôme
munication payments are accepted. It is com- bring the security and convenience of Sam- and Paris Charles de Gaulle Airport, as well
patible with Samsung devices including the sung Pay to millions of Australians.” < as bookstores and museum souvenir shops. <
M&A M&A
Next Group to snap up Italian MasterCard receives regulatory
card company Azugroup ties are anticipated to lower Next Cala, Cuen- approval to buy VocaLink
tas and MIO product costs significantly, pro-
US-based technology company Next Group viding for additional profits and the ability to
has signed a letter of intent (LoI) to acquire distribute our financial products at lower cost
Italy-based Azugroup, a manufacturer and to consumers.
supplier of plastic and paper debit, credit, “These significantly lower costs will enable
gift card and financial cards. us to reach millions of consumers with our MasterCard has received approval from the
According to the LoI, Next Group will products,” Maimon added. UK’s Competition & Markets Authority
acquire 100% of the unencumbered rights and Faranda said: “Azugroup has developed a (CMA) for the planned acquisition of UK
assets of Azugroup in exchange for its own strong position in the European market, and payment technology company Vocalink.
shares. On completion of the proposed trans- the proposed transaction with Next Group VocaLink technology powers immedi-
action, Antonio Faranda, president and major- Holdings will allow our companies to acceler- ate payments, also known as fast ACH, in
ity shareholder in Azugroup, will become pres- ate expansion across the US market.” financial markets including the UK, Singa-
ident of Next Group. Azugroup generated €13.2m ($14m) in pore and Thailand, with a US launch sched-
Commenting on the deal, Next Group chair revenue through its wholly owned Italian sub- uled for later in 2017. The deal is expected
and CEO Arik Maimon said: “Azugroup’s sidiaries during 2016. Financial terms of the to close in the coming weeks.
production, technology, and logistics capabili- transaction have not been revealed. < The move comes after the two companies
addressed competition concerns identified
TECHNOLOGY by CMA earlier this year. In January 2017,
Diebold Nixdorf introduces new CMA found that MasterCard’s acquisition
Essence ATM concept an EMV chip card reader. Diebold Nixdorf of VocaLink may reduce competition in the
said it has eliminated the traditional mag- supply of ATM network services in the UK.
Diebold Nixdorf has announced its new netic stripe card reader, receipt printer and VocaLink will add its team to the
ATM concept, Essence, which incorporates PIN pad, enabling the Essence concept to MasterCard business, and VocaLink CEO
a sleek, modern design and user interface to meet the requirements of busy, technologi- David Yates will join the MasterCard man-
enhance the consumer experience. cally aware consumers. agement committee and become executive
Essence, which is powered by software- Diebold Nixdorf vice-president for design chair of VocaLink. The company’s deputy
driven interactions, also features multi- and new technology incubation Richard CEO, Paul Stoddart, will become CEO.
touch functionalities such as swipe, scroll Harris said: “Our latest concept delivers the MasterCard chief product officer Michael
and smart zoom, similar to those found on future of consumer transactions by reimagin- Miebach said: “Adding bank account-
smartphones and tablets. ing what the self-service channel looks like. based payments alongside our card network
The Essence concept includes an antimicro- “Diebold Nixdorf is uniquely positioned extends what we can do and how we can do
bial glass touchscreen display and enhanced to connect physical and digital channels and it. Together, we’ll be one partner to meet all
user interface, an encrypted touchscreen for guide financial institutions and retailers into payment needs of businesses, governments
PIN entry, NFC authentication options, and the future of connected commerce.” < and consumers.” <
4 y April 2017 www.cardsinternational.com
CI 542.indd 4 02/05/2017 13:08:58
Cards International NEWS: DIGEST
MOBILE
Deutsche Bank launches Jan Lisaus, said: “Paying by smartphone is
contactless mobile payment already commonplace in Asia, North Ameri-
service in Germany ca and many European countries such as the
UK and Italy.
Deutsche Bank has introduced mobile pay- “We are convinced that it will also become
ments in Germany through its Deutsche established in Germany. From today, all our
Bank Mobile app for Android device users clients with an Android smartphone and a
enabled with NFC. Deutsche Bank MasterCard can make mobile
Customers will have to download the payments very easily.”
Deutsche Bank Mobile app and install it MasterCard’s head of digital payments
on an NFC-enabled smartphone running and labs for Central Europe, Arne Pache,
Android version 4.4 and above. After linking said: “The Deutsche Bank mobile payment
a MasterCard-branded debit or credit card, No PIN is required for payments up to €25 solution provides consumers with a simple,
users will be able to make contactless pay- ($26); however, users will need to enter a straightforward and safe way to make pur-
ments by tapping their smartphone against PIN for higher-value transactions. Users can chases at every location where contactless
a POS terminal. make payments at six million MasterCard MasterCard are accepted by merchants – in
Once a transaction is closed, a confirma- acceptance points worldwide, according to Germany and the rest of the world.
tion is displayed immediately. Customers are Deutsche Bank. “From 2018, contactless payments will be
also informed by smartphone that a payment Deutsche Bank head of cards and payment possible at all MasterCard acceptance points
has been executed. systems for private and commercial clients, in Germany.” <
PRODUCTS
Hungary’s Cellum targets up for the service and instantly receive a vir- Cellum Group COO Abel Garamhegyi
underbanked with new solution tual prepaid card. After completing the acti- said: “Prepaid cards currently represent an
vation process, the card can be used for all estimated $45bn market. Thanks to their
Cellum Group, a Hungary-based provider standard bank card transactions. ease of use and low barrier to entry, so many
of mobile payment solutions, has launched a Cellum said the new solution enables people already find them useful.
new solution to provide financial services to unbanked or underbanked consumers who “We believe that by introducing mobile
the unbanked and underbanked. did not previously have access to digital financial services based on prepaid cards we
The Connected Card technology uses pre- transaction services to join the open-loop can foster financial inclusion for those who
paid cards, enabling users to shop both online world of card payments immediately. need it the most. Cellum has always been
and in-store using NFC payments. Users can Connected Card supports online payments looking for ways to broaden the horizon for
also send funds directly to other users. through MasterPass, in-store payments using mobile payments. Connected Card is a new
Users need to install an app onto their NFC, as well as peer-to-peer transactions milestone in our efforts to bring meaningful
smartphones, through which they can sign between users. fintech innovation to the market.” <
M&A PRODUCTS
Co-op Financial Services buys Karnataka Bank, SBI Card to
TMG for $100m, restructures a simplified, predictive client experience. introduce co-branded cards
We will also leverage artificial intelligence,
leadership team
custom business intelligence, consulta- Karnataka Bank, a private commercial bank
US-based Co-op Financial Services tion and deeper security offerings that based in India, and SBI Card have launched
has purchased payments processor marry machine learning and human co-branded credit cards for the bank’s cus-
TMG from Iowa Credit Union analysis to perfect authentication, tomers. The two card variants are the Kar-
League in a cash transaction val- reporting and anticipation of nataka Bank Platinum SBI card and the Kar-
ued at $100m, and has restruc- fraud.” nataka Bank SimplySave SBI card.
tured its management team. As part of the organisational Designed to target affluent customers, the
Commenting on the transaction, structuring, Shazia Manus, for- Platinum SBI card offers benefits including
Co-op Financial Services president merly CEO of TMG, has been named accelerated reward points on international,
and CEO Todd Clark said: “The acquisi- chief product and strategy officer, and dining and departmental store spends, and
tion of TMG and the evolution of our lead- Nick Calcanes, previously with Fiserv, has complimentary fraud protection from Tata
ership team are designed to maximise ben- been appointed as CIO. AIG up to INR100,000 in the event of card
efits for the clients of both companies. Kari Wilfong, formerly CFO and EVP, theft or fraud.
“We are creating a new Co-op that has been promoted to CFO and CAO, while The Platinum SBI card will provide ben-
embraces technology and best-in-class ser- Samantha Paxson joins the executive man- efits such as discounted stays at over 55,000
vice delivery to create a seamless, secure agement team as chief experience and mar- hotels and villas worldwide, discounted car
and personalised experience for our clients keting officer. rentals, complimentary Priority Pass mem-
and their members, however they choose Additionally, Jim Hanisch, formerly EVP, bership, free access to more than 25 airport
to interact with their credit union using a network operations and corporate devel- lounges, and discounted golf memberships.
Co-op product. opment, has been appointed COO, while The SimplySave SBI card offers rewards
“We will offer the market greater integra- Mathew Kardell, previously with First Data, and features to enable customers to maxim-
tion of the two company’s product lines and joins the company as chief revenue officer. < ise savings on regular spends. <
www.cardsinternational.com April 2017 y 5
CI 542.indd 5 02/05/2017 13:09:05
DIGITAL: ALTERNATIVE PAYMENTS Cards International
Alternative networks begin
to challenge incumbents
The US has long been dominated by a small group of networks and service providers controlling transfers
of funds through banks. However, alternative providers are beginning to offer competitive networks that
banks can use to offer P2P transactions, bill payments, and POS payments. Robin Arnfield reports
T
he emergence of alternative pay- to enhance the US payment system to ‘meet more transaction data. Banks are saying that,
ment providers represents a funda- the changing demands of US consumers and whereas for a long time they had set ways of
mental shift in the way payments businesses’. handling payments, determined by their vari-
are offered to consumers, which The Fed is undertaking the initiative ous lines of business, they now want more
will lead to new products and services in conjunction with payments industry flexibility,” says Wester.
being built on top of those rails. Promi- stakeholders including private businesses, “They want to take advantage of faster,
nent examples include Chase Pay, Zelle, financial technology firms, banks, consumer cheaper, or more data-rich settlement sys-
PayPal and Dwolla. groups and government agencies. tems and offer these alternative services to
“For decades, the payment market has their consumer and business customers.”
meant an option between a small number of Lines of business
credit and debit networks connecting banks “Within every bank, there are siloed lines Payment hubs
to make payments possible,” James Wester, of business for different forms of payment, “Whereas in the past each of a bank’s dif-
IDC Financial Insights’ research director of which use various incumbent payment rails ferent lines of business had its own authori-
worldwide payment strategies, tells CI. for authorisation, clearing and settlement,” sation, clearing and settlement technology,
“That will begin to change as new com- explains Wester. banks are now deploying payment hubs
petitors leverage transformational technolo- “US banks use the various debit networks offering next-generation payment services
gies to offer compelling payment networks to for debit card transactions, the credit net- architecture,” says Wester.
banks. As banks recognise those alternatives, works [Visa, MasterCard, Amex, Discover] “These payment hubs integrate all the
they have more flexibility in how they man- for credit card transactions, and the ACH bank’s front-end interfaces such as mobile,
age their payment businesses.” [automated clearing house] system for bill ATM and POS, along with back-end connec-
The alternative payment providers offer payments. tions to different networks such as the ACH
banks and merchants benefits such as lower “We’re now starting to see the potential system, debit networks and wire transfers.
costs, faster settlement, and the ability to lev- for alternative rails that don’t use those “They include software that allows for
erage transaction data for loyalty and reward traditional networks and backbones,” says least-cost routing, as well as easier connec-
programmes, Wester says. Banks will also be Wester. “While these new rails may touch, at tions to mobile devices, ATMs or POS, and
able to use payment hubs for dynamic rout- some point, some of the traditional rails, they on the back end to different settlement or
ing of transactions across competing net- are still networks in their own right.” payment networks; the equivalent in the cor-
works based on criteria such as price and In addition, banking and payments tech- porate world is payments factories. Banks
settlement requirements, he notes. nology providers such as Fiserv, FIS and ACI want to be able to connect their various pay-
have the ability to authorise and route pay- ments across the cheapest route, which could
Faster Payments ments on behalf of bank clients, Wester says. be the ACH rail or a debit network instead of
In parallel with the emergence of alternative “These technology vendors have started to a more expensive network.”
payment networks, the Federal Reserve is partner with services like Zelle to provide What is spurring banks’ investment in
working to improve the speed, efficiency and lower-cost authorisation, clearing and settle- alternative networks is the desire to make
security of the US payments system through ment services,” he explains. their payment products and relationships
its Faster Payments initiative. “The vendors’ selling point is that they can with customers as profitable as possible,
Announced in a January 2015 document, do things the incumbent networks are either Wester says. “It’s a change away from the
Strategies for Improving the US Payment incapable of or unwilling to do, such as move idea that payments are stratified and set in
System, the plan includes several strategies money more cheaply or faster, or provide stone,” he notes.
6 y April 2017 www.cardsinternational.com
CI 542.indd 6 02/05/2017 13:09:09
Cards International DIGITAL: ALTERNATIVE PAYMENTS
Zelle and Venmo In 2013, Chase signed a 10-year deal don’t have a very good track record when
Zelle was set up by Early Warning Services, with Visa under which a private portion of it comes to changing consumer payment
a joint venture between many of the largest VisaNet, called ChaseNet, was carved out behaviour in pre-existing shopping environ-
US banks, as a response to PayPal’s Venmo to allow Chase to process transactions in ments such as retail.
P2P service. a closed-loop environment. According to a “Retailers are transforming themselves
“Venmo has been very popular with mil- Chase investor presentation, Chase Net was largely due to the threat from Amazon and
lennials,” says Aite Group senior analyst expected to process $50bn worth of transac- other types of digital commerce, so new pay-
Thad Peterson. “Zelle will be a direct com- tions in 2016, up 100% from 2015. ment instruments have a chance to ride the
petitor, targeting an older demographic and Launched in November 2016, Chase Pay wave of transformation – for example using
offering real-time bank-to-bank transfers.” offers on-us transactions which are cleared PayPal to order ahead for your restaurant
In 2016, Venmo launched Pay with Venmo through Chase Net and have fixed-fee pric- take-out,” Oglesby continues.
for in-app mobile purchases, offering pay- ing with volume-based discounts plus zero “But those payment providers that want
ments for merchants at a lower price than merchant fraud liability and no network fees. to drive new behaviours within otherwise
accepting cards. PayPal said in July 2016 “ChaseNet is a private extension of pre-established, unchanged shopping envi-
that Pay with Venmo had been added to over VisaNet, so even though ChasePay ‘touches’ ronments – such as tap-to-pay at an in-store
10 apps offering consumer services such as Visa, it’s a completely separate system,” says checkout – have a much longer road ahead.”
booking hotel rooms, buying tickets and Wester. “Chase Pay involves Chase routing
ordering meals. transactions on both sides of the relationship Dwolla
A replacement for the ClearXchange bank- – card issuance plus card acceptance via its Having started as a mobile payment app
operated P2P network, Zelle plans to launch merchant services business. developer, US-based Dwolla now provides
in the first half of 2017, with 19 banks signed “Chase can say that, as it has a relation- its open application programming interfaces
up so far. ship with half the households in the US, and (APIs) to banks so they can leverage the ACH
In February 2017, Bank of America as it is the largest acquirer by dollar volume, system’s overnight and same-day services.
became the first bank to incorporate Zelle it owns both sides of the relationship. So it “Our APIs enable access to the ACH,
in its mobile app. As yet, Zelle has not can offer a discount for on-us transactions but are device-agnostic, meaning banks can
announced any plans for in-app payments. on a private instance of Visanet. build Dwolla into any internet-connected
Participating banks will allow customers “We’re going to look back in 10 years’ device, including smartphones,” says Dwolla
to send money via Zelle from their digital time, when all these alternative rails have spokesperson Jordan Lampe.
apps, and there will also be a standalone been established that banks will connect “We offer the ability for payment platform
Zelle app. Anyone with a US chequeing or into,” Wester continues. providers to offer purchases in stores or at
savings account will be able to receive pay- “We will realise that it was at that moment m-commerce retailers, but we no longer offer
ments by registering at ZellePay.com, or by when Chase said, ‘we own both sides of the our own branded m-payment app.”
using the Zelle app with a debit card. relationship, so why can’t we operate our
“The banks behind Zelle are the power own private network?’ when alternative net- PayPal
base behind Visa, MasterCard and the debit works really started taking off. “PayPal was historically the most signifi-
networks, so the fact that they have joined up “We’re going to start seeing banks say, cant competitive alternative to Visa and
to form a payment network presents a long- ‘we like the scale and security of Visa or MasterCard in the US,” says Oglesby. “How-
term potential challenge to the networks,” MasterCard, but where we have other pri- ever, PayPal has signed deals with these
says Rick Oglesby, president of US-based orities, whether these be settlement, cost or networks whereby it will utilise Visa and
consultancy AZ Payments Group. security, we’d like the flexibility and capabil- MasterCard services while serving Visa and
“However, in the short term, Zelle is focus- ity to use different providers to potentially MasterCard member banks.”
ing on P2P payments, not POS transactions, lower our costs.’” In June 2016, PayPal signed a deal with
and is using Visa Direct and MasterCard Visa under which PayPal will no longer
Send P2P services, so you can’t really call A congested market encourage Visa cardholders to link their
Zelle a challenger right now.” The challenge is whether Chase customers bank accounts instead of their Visa cards to
Early Warning said in November 2016 are going to be willing to download a sepa- their PayPal accounts.
that it is partnering with payment processors rate app – Chase Pay – for payments, says PayPal also agreed to start sharing data
Co-op Financial Services, FIS, Fiserv and Wester. about Visa card-funded transactions with
Jack Henry, as well as with MasterCard and “That is going to take some time. One of Visa, similar to the data collected when Visa
Visa to offer financial institutions multiple the realities of the payments industry is it cards are used in stores or online.
integration pathways onto Zelle. takes a while to change consumer behaviour. Additionally, PayPal joined the Visa Digi-
However, Chase will have the flexibility of tal Enablement Programme (VDEP), which
Chase Pay offering loyalty rewards to its ChasePay app enables Visa partners to access Visa’s tokeni-
“Although Chase Pay only involves one bank users that they can redeem within the app.” sation services. Participating in the VDEP
– Chase – Chase Pay is a direct competitor to “It’s important to remember that consum- means PayPal’s digital wallet can be now be
Visa and MasterCard,” says Oglesby. ers don’t shop in order to pay, but pay after used at physical retail locations where Visa
“It constitutes a closed-loop network, they’ve shopped,” says Oglesby. “Alternative contactless cards are accepted.
similar in nature to Amex, and Chase is payments services have an excellent track PayPal signed a similar deal with
large enough to make that work. Chase has record of gaining prominence in emerging MasterCard in September 2016, including
already done deals with several major retail- commerce environments – such as PayPal the use of MasterCard’s tokenisation system
ers, including Shell, Phillips 66, Best Buy, on eBay, Amazon Payments within Amazon, for NFC POS payments from PayPal wallets.
Walmart, Starbucks and Best Buy to accept and the iTunes and Google Play wallets in In December 2016, Citi signed an agree-
Chase Pay.” the Apple and Android app stores – but they ment with PayPal to tokenise Citi cards for
www.cardsinternational.com April 2017 y 7
CI 542.indd 7 02/05/2017 13:09:12
DIGITAL: ALTERNATIVE PAYMENTS Cards International
things, currently they don’t have a whole
load of options, unless they are large like [US
discount store chain] Target and can create
their own closed-loop card system. Target
routes around 20% of its tender via its RED-
card private-label credit and debit cards.”
“With merchant payment coalitions, each
merchant has its own needs, and the question
is, if another coalition is formed to replace
MCX, whether the participants can all work
together and get a critical mass of users,”
says Ed O’Brien, EVP research and strategy
at US-based Power Consulting.
“There is merchant appetite to reduce cost,
and improve efficiency and effectiveness, but
there are so many different priorities. I’m not
aware of any initiatives looking to fill the
vacuum from MCX.”
The cost of success
Michael Moeser, director of payments at
Javelin Strategy & Research, wrote in the
US consultancy’s Future Trends for Digital
Banking and Payments 2017 report that the
new payment networks provide merchants
with a payment form that works like the
card networks’, but at a lower cost. He cited
Alipay in China, Paytm in India and Chase
Pay as examples.
Citi MasterCard and Visa cardholders wish- nology from PayPal subsidiary Paydiant and “In Chase Pay’s case, it leverages almost
ing to use PayPal for in-store purchases in from FIS to build a payment network com- the entire infrastructure built by the card
the US. peting with the card brands. The plan was to networks, including the leased VisaNet,”
“PayPal was a bellwether of the trend use PayNet, FIS’s open-loop payments sys- Moeser wrote.
towards alternative networks,” says Wester. tem, for authorisation and settlement of pay- “The allure of a cheaper and better pay-
“It created its own network by connecting ments taking place on MCX’s mobile app. ments process is resonating, as big US mer-
both sides – consumers and retailers – and In March 2017, Chase announced an chants have signed up for Chase Pay. Many
routing payments over the cheapest possible agreement to buy the MCX payments tech- of the new payments networks have a focus
route, the ACH. nology to help expand Chase Pay’s accept- on smartphones, tapping into the growth of
“What’s interesting is that PayPal suc- ance. MCX had been a launch partner of mobile purchases. By aligning themselves
ceeded in taking sufficient transactions away Chase Pay, with MCX members able to to the digital world, they are harnessing the
from Visa and MasterCard, that the two card accept Chase Pay payments via the MCX fastest-growing segment of commerce. As
networks decided it was better to do deals mobile wallet. retailers roll out their mobile apps and build
with PayPal than to fight the firm.” “MCX’s members were already connected their e-commerce offerings, adding another
“PayPal’s path to physical POS payments, to MCX payments technology, which made payment acceptance brand such as Chase Pay
which is something it has always struggled it seamless to connect to Chase Pay,” Chase is very easy to do.”
with, will be via its partnerships with Visa said in a statement. “Chase executives want- Moeser said that card networks and their
and MasterCard’s rails,” says Peterson. ed to acquire the technology to use in lieu of bank partners need to respond to alternative
“I can see PayPal becoming accepted as a building separate parallel technology to serve networks by emphasising mobile capabilities
payment mechanism within Apple Pay or non-MCX members.” to their e-commerce merchant clients. He
Android Pay, for example, because of its also said acquirers, ISOs and processors need
partnership with Visa and MasterCard.” Transparency to integrate new payment networks into their
Oglesby says that for banks, due to Pay- “Although MCX didn’t succeed, what payment gateways to better service merchant
Pal’s deal with Visa and MasterCard, part- prompted MCX isn’t going away – the idea clients.
nering with PayPal is more of an option than that merchants want a cheaper, more trans- Finally, Moeser recommended that banks
it was in the past, as this no longer means parent way of handling payments,” says with large card portfolios and merchant-
circumventing Visa and MasterCard. Wester. “MCX was the retailers coming acquiring businesses should consider devel-
together and saying ‘why can’t we do some- oping an on-us-type network similar to
Merchant coalitions thing like the US banks did 40 years ago Chase Pay.
Wester cites the Merchant Customer when they created BankAmericard?’ “However, it is also possible for a large
Exchange (MCX) coalition of 50 major US “With the rails and networks that mer- acquirer to work with a bank or set of banks
retailers as an example of a shift away from chants use now, pricing isn’t transparent, set- to piece together an on-us network to com-
existing payment models. MCX, which ulti- tlement is slow, and costs are relatively high. pete with the traditional card networks,” he
mately failed to come to fruition, used tech- But, if merchants want a better way of doing wrote in the Javelin report. <
8 y April 2017 www.cardsinternational.com
CI 542.indd 8 02/05/2017 13:09:24Cards International DBC DEBATE: BIOMETRIC SECURITY
Can passwords
be replaced by
the human body?
As banking and payments become increasingly advanced, the security protecting them needs to be more
advanced as well. An often-touted solution is biometric security, but can this ever truly replace the tried-
and-tested password? Patrick Brusnahan reports from the Digital Banking Club’s latest debate in London
T
he f i rst of t he Dig it a l B a n k i ng He said: “The password has become need 25. No wonder, then, that a third of
Club’s debates of 2017 honed in known and understood by everyone, but people claim they forget a password at least
on the topic of biometric security. when the most common password is 123456, once a week.
Hosted at the prestigious Law Soci- surely we can do better. We don’t need to “Worse still, under Moore’s law, pass-
ety in London, the debate took the tra- replace passwords; we simply need better words are becoming easier to crack with
ditional form with two teams slugging it ones. every passing year. Yet, despite decades of
out over the motion: This house believes “However, authentication via body parts user education, we aren’t making our pass-
the password will never be replaced by is complicated and expensive. Your body words any stronger. The time seems ripe for
your body. will never replace a password. Body parts do biometrics to take over from passwords as
not provide a better counterpart. Body parts the principle way we authenticate ourselves.
Is the password past its prime? cannot be reset. Behavioural biometrics can’t But then again, we’ve been saying that for a
Simon Cadbury, director of strategy and help you if they don’t know you.” very, very long time now.”
innovation at Intelligent Environments, Cadbury added: “Effective passwords rely On the opposing side, Daryl Wilkinson,
opened the debate with admiration for the on randomness – something that we just MD of DWC and former head of innovation
maligned password. He stated that while aren’t equipped to generate or remember. at Nationwide, argued that the password
passwords were not perfect, they could be Creating and remembering one good pass- was an outdated piece of kit.
the best, with some improvements. word is a serious challenge, but most of us “Biometrics not replacing passwords
sounds like cars not replacing the horse and
cart,” Wilkinson explained.
“Passwords are over 50 years old. Even the
originator of the password considers them
to be a nightmare. Research from Equifax
showed that people shopping online actually
preferred to use biometrics.”
Are biometrics enough?
Ian Bradbury, CTIO financial services at
Fujitsu, claimed he had no problem with bio-
metric solutions, but there were flaws that
limited its usefulness.
He said: “I’m not here to say biometrics do
not have a part to play. My point is that it is
not infallible.
“Biometrics can only ever be one factor. If
biometrics don’t work, what’s the backup?
www.cardsinternational.com April 2017 y 9
CI 542.indd 9 02/05/2017 13:09:28EVENT: BIOMETRIC SECURITY Cards International
“More will change in the next five years
than in the past 50. You can’t put on noise-
cancelling headphones and turn off the
world.”
Are biometrics reliable?
Enza Iannopollo, security and risk analyst at
Forrester, stated: “Banks would prefer any
other magic tool than something like facial
recognition in terms of replacing passwords.
“Passwords are very easy to integrate and
are straightforward, whereas body parts
have false positives and negatives. The future
is not a place where body parts will replace
passwords, but enhance them.”
However, Chris Gledhill, CEO and co-
founder of Secco Aura, was much more posi-
tive about biometrics.
He said: “At some point between now and
It will be a password or a PIN. If someone able. There are a number of good and proven our bodies being replaced, passwords will
breaches my fingerprint, I can’t grow another solutions out there that are developing. Pass- be replaced. Biometrics can help people gain
finger,” Bradbury pointed out. words are just a lock on the door with its key control on their finances and can greatly aid
“In addition, from an inclusion perspec- in sight. financial inclusion.”
tive, not all of us can use biometrics. There “51% of passwords used today are for- As an example, he explained that custom-
are people who are not comfortable using gotten within a week. People probably have ers who are unable to type or remember
biometrics. That’s not going to change.” somewhere between 70 and 80 various passwords could be able to use their voices
Paul Trueman, SVP, global enterprise risk accounts. If you only have a couple of dif- to gain access to their finances.
and security at MasterCard, started by claim- ferent passwords, those are now everywhere. While there are voice-replication pro-
ing that all passwords are probably written The reason passwords survived so long was grammes being launched, they cannot yet
down somewhere, whether we like it or not. because they were cheap and easy to imple- recreate dialects, and while in the short term
This, in turn, needs to change. ment.” there will be problems, as there are with all
“We’re changing our password model, Trueman added: “There’s a need for intel- forms of biometrics, they will improve in the
because we have to. Passwords are not a ligent friction. There is no one solution, future.
horse; at best, they are a lame donkey,” True- no one perfect lock on the door. You need “Behavioural biometrics are truly unique,”
man quipped. backups, but the backups do not need to be he continued. “There are fundamental prob-
“Now that everything is connected a password. It’s down the list, but there are lems with passwords, and there problems
through the internet of things, there’s a lot many options and that’s what multilayer is with biometrics, but to say they will never
more to steal and passwords are not accept- all about. replace passwords is impossible.” <
Results of the debate
The motion under discussion was: This
house believes the password will never be
replaced by your body.
Prior to the debate the first of two polls was
taken, with a resounding verdict against the
motion.
The audience voted 19% for the motion, with
81% against.
At the conclusion of the debate, the second
vote resulted in a dramatic shift of opinion
and a win on the day for the team of Simon
Cadbury, Enza Iannopollo and Ian Bradbury.
The audience voted 43% for the motion, with
57% against. <
10 y April 2017 www.cardsinternational.com
CI 542.indd 10 02/05/2017 13:09:35You can also read
