in this issue - Payments Cards & Mobile...very encouraging reading for the payment industry. All forms of non-cash payments, such as debit cards, credit cards, e-commerce and mobile

September | October 2013 | paymentscardsandmobile.com in this issueCard Notes Payment technology gets physical againEC payments Interchange caps hurt?Non-cash payments World Payments Reportm-payments Biometrics can revolutionise m-payment security

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www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 3

welcomeSeptember | October 2013 Volume 5, Number 5

Editor-in-chief and publisher Alexander Rolfe Tel +44 1263 711 800 [email protected]

Editor Victoria Conroy Tel +44 1263 711 800 [email protected]

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Gearing up for non-cash growth

The annual World Payments Report from RBS and Capgemini has established itself as a major benchmark publication for the payments industry in tracking and analysing trends in non-cash payments worldwide. PCM was given a sneak preview of this year’s report, which makes for very encouraging reading for the payment industry. All forms of non-cash payments, such as debit cards, credit cards, e-commerce and mobile payments are growing strongly globally, particularly in the emerging markets.

However, one of the notable findings of this year’s report was in relation to mobile payments: despite strong growth expectations, the report has uncovered a surprising black hole between estimated usage and actual usage – in some cases the gap is as much as 50%. Clearly, this highlights the need for more timely and accurate statistical collection by regulators and central banks, along with other stakeholders, if m-payments are to fulfil their true potential.

Another factor touched on in the report is a subject that PCM is tracking with interest, along with the rest of the industry – the rise of virtual currencies. In less than a year, the pace of activity in this field has been breathtaking and regulators around the world are struggling to keep up. While some regulators and central banks are of the opinion that the likes of bitcoin should be illegal, others regard them as being just as valid a payment method as cards and coins, which is muddying the picture for consumers and the industry.

Meanwhile, the European Commission has finally published its proposals on interchange regulation in the European Union. As expected, the proposals aim to introduce maximum levels of interchange fees for transactions based on consumer debit and credit cards, along with a ban on surcharges. While it’s not surprising that the payment industry has come out fighting, what is surprising is that some pro-consumer groups are also urging the Commission to rethink its proposals, arguing that interchange caps will ultimately hurt and not help consumers – merchants stand to gain the most from the caps as they stand.

It is now up to the industry to galvanise themselves ahead of what is expected to be a fiercely-fought battleground over this long-running issue.

Victoria Conroy, Editor, Payments Cards & Mobile

Average net circulation July 2011-June 2012: Printed 8924 • Digital 708

8

12. China UnionPay extends lead over Visa and MasterCard The number of payment cards worldwide increased by 12% in 2012 to reach a landmark 10 billion, according to a new report from research and consulting firm Retail Banking Research (RBR), which also found that China UnionPay has continued to extend its lead over other card schemes as a result of continued rapid expansion of the Chinese card base.

■ Risk-based segmentation not relevant

for m-payments. ■ UK has lost 40% of bank and building society branches

since 1989. ■

14. Bank IT costs set to increase The issue of core system replacement is at the fore once again, with new research from Deutsche Bank finding that banks operating ageing IT platforms can expect to experience a material increase in running costs over the coming years, only partially offset by the introduction of smaller cheaper-to-run branch outlets.

■ Fed considers faster payments and

mobile. ■ Apple forgoes NFC again. ■

payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com4

contents

8. Payment technology gets physical again It’s only over the last few years that consumers worldwide have become familiar with using contactless technology and mobile phones to make payments – but could these methods find themselves consigned to the bin just

as they are starting to take off? ■

US judge and Federal Reserve in debit

fee fight. ■

10. Cash usage set to plummet even further The UK Payments Council is predicting that UK consumers will turn their backs on cash over the next 10 years as cards and mobile payments continue their

ascendancy. ■ Security fears hold back

mobile payments. ■

news in brief

6-7. The payments world in 60 days

card notes

16. Cover story – Digital currencies: a boon or scourge?

PCM looks at how emerging (and

unregulated) methods like bitcoin could

impact the payments industry. In less

than a year, the pace of activity has been

breathtaking. ■

18. EC payments – Interchange caps hurt?

Proposed caps on debit and credit

interchange across the EU have drawn

strong responses from players on all sides

of the industry. Has the Commission fully

understood what it is proposing? ■

20. Non-cash payments – World Payments Report The annual World Payments Report from RBS

and Capgemini is a major benchmark for the

payments industry in tracking and analysing

trends in non-cash payments worldwide. ■

16

features

The Cartes 2013 Secure Connexions

Event will be taking place at the Paris-

Nord Villepinte Exhibition Centre from

19 to 21 November. ■

contents


30. Groupon moves into POS terminal market Groupon has linked up with POS terminal

manufacturers Ingenico and VeriFone

to integrate its Breadcrumb service with

the companies’ respective terminals.

■ Swiff chip and PIN approved by Visa

Ready programme. ■ Chase Paymentech

launches Chase Checkout. ■ Adyen

Shuttle mPOS now available in 17

European countries. ■

pos terminals

contactless

mobile payments

38. Industry gears up for Cartes 2013

conferences

28. Visa showcases Slovakia as a contactless leader Visa Europe has highlighted Slovakia as

a showcase market for the adoption of

contactless technology, with 1.43 million

cards in circulation recording one million

contactless transactions per month. ■

Octopus to offer mobile NFC. ■ e-Revenue

Gateway partners with ElectraCard for

contactless. ■

29. First NFC-enabled iPhone prepaid mobile wallet launches in Europe

Kalixa Group, DeviceFidelity and

MasterCard have announced the UK

launch of the moneto prepaid wallet.

■ RBC launches cloud-based NFC

m-payment service. ■

35. Oberthur selected by Movistar Chile and Banco Santander Chile Oberthur Technologies has been selected

by Movistar Chile and Banco Santander

Chile to be their Trusted Service Manager

(TSM) and provide an end-to-end solution

for their NFC pilot. ■ Monitise, Visa Europe

and IBM accelerate cloud m-commerce. ■

EMVCo qualifies FIME’s automated RF test

tool. ■ Stripe launches in the UK. ■

32. Australian PSPs roll out MasterPass MasterCard has announced that 16

Australian payment service providers

(PSPs) will introduce MasterCard’s

MasterPass. ■ WorldPay e-commerce

transaction volume grows 45%. ■

China to become largest online market. ■

Facebook pilots e-commerce system. ■

37. Cardtronics acquires Payzone UK and German ATM businesses Payzone Group has agreed to sell its

ATM business in the UK and Germany to

global ATM services provider Cardtronics.

■ Giesecke & Devrient to take over UK’s

Currency Tech. ■ D+H closes $1.2bn

Harland acquisition. ■ DSIA acquires

Emmecom. ■ CVC Capital buys Skrill. ■

products

e-commerce

contracts

22. OP-Pohjola selects Equens as card processing partner European payment processor Equens has

been selected by Finland’s OP-Pohjola

Group as its new card processing partner

under a long-term contract for card

services. ■ mPOS World brief by Empiria

Group – Redefining card acquiring with

“Rich Merchant services”. ■

22. The changing face of UK regulation and the forthcoming FCA Thematic Review Having superseded the Financial Services

Authority on 1st April 2013, the Financial

Conduct Authority has stuck true to its

bold vision to be far more proactive than

its predecessor. ■

issuing & acquiring

risk & compliance

26. Biometrics can revolutionise m-payment security With the explosion in smartphone usage,

the number of payments done via mobile

devices has significantly increased over

recent years. ■ EC allows Telefonica digital

payments service. ■ FNB taps instant

messaging for mobile money transfers. ■

27. Consumers want banks to lead way in mobile European smartphone

shoppers would be more

confident engaging in

mobile commerce if they

could do so using services

provided by their bank. ■

PayPal launch Beacon. ■

28

30

A Russian man who managed to rewrite the terms of his credit card

agreement, without the provider noticing, has successfully sued the bank for breach of contract. Having received an unsolicited credit card offer from Tinkoff Credit Systems in 2008, the man rewrote the small print with more favourable details, including an unlimited line of credit, zero per cent interest rate and no fees. Tinkoff failed to check the details, signed off on the agreement and sent the man his card, which he used for two years before the bank decided to terminate it. A Russian court ruled that the revised contract was valid and made him pay the balance he owed but not the extra charges.

B a r n a b y Jack, a hack-

er who gained infamy for hacking into ATMs and making them dole out unlimited amounts of cash, has died in mysterious circumstances at the age of 35. Jack had demonstrated his ATM hack-ing technique at several technology confer-ences around the world, and had also gained notoriety for planning to demon-strate hacks on pacemakers and implanted defibrillators.

The European Commission has approved plans by Spain’s CaixaBank,

Santander and Telefónica to set up a joint venture offering digital services, including a mobile wallet. The Commission has concluded that the planned venture did not raise competition concerns, as there are already several competing digital wallet providers in Spain, with more in the pipeline.

Several small businesses in the Irish town of Wexford are ditching cash in a two-

month trial organised by the Irish central bank. Between 16 September and 17 November, all cash transactions at the 240 participating businesses will be rounded to the nearest €0.05. Prices of individual goods and services will remain unchanged, with only the total bill rounded. The experiment is part of Ireland’s National Payments Plan by the central bank.

A new system has been launched in the UK to enable bank customers to

switch their current account from one bank to another more quickly. The free service means that switches will be completed in seven working days, down from the current average of 18 to 30 days. The service, which has cost the banking industry around $750 million, has been in the pipeline for two years, having been recommended by the Independent Commission on Banking.

mPOS player Square has been fined $507,000 fine by the Florida Office of

Financial Regulation for operating in the state without a money transmitter licence. Square has consented to the regulator’s finding that it had engaged in business as a money trans-mitter in Florida without first getting a licence. Square applied for a licence in November 2012 but was fined because it had already been operating in the state since early 2010.

Visa Europe has appointed Nicolas Huss as its new president and CEO,

replacing Peter Ayliffe. Huss was previously CEO of Apollo Group’s Avant credit card business in Spain and Ireland. Before that, he worked for Bank of America as the MBNA European collections and portfolio optimisation executive for the card business, and was CEO for Spain at GE Money.

news in brief


US payments firm Braintree has launched a mobile tool designed

to help marketplace owners manage the relationship between buyers and sellers while cutting their regulatory burdens. Braintree says that its new service, which is free to existing customers, makes it easy for buyers to pay in a single touch and sellers to receive money directly on their mobile devices. Developers can imple-ment the service through Braintree’s API, with merchants able to customise how and when they pay their community members and specify collection fees on every transaction.

Virtual Piggy, a US company which aims to help children safely man-

age their money online, has integrated with social game Habbo Hotel to enable players to buy virtual credits. Habbo Hotel claims over 10 million unique visitors per month, 90% of whom are aged between 13 and 18. Players can now purchase the in-game currency credit from their Virtual Piggy wallet, which is controlled by parents to make sure children do not overspend.

PerkStreet Financial, a US online financial services start-up which

offered customers cashback rewards on debit card spending, is closing because of lack of funds. The company says that having failed over the last six months to secure new funding, it will cease all operations on 26 September. PerkStreet worked with Bancorp Bank and Provident Bank to offer customers online current accounts with cashback rewards on debit card spending. The firm paid out around $4 million in perks in total.

US start-up ByteLight is preparing to trial a light field communications

(LFC) reader in Chinese stores, enabling shoppers to use their mobile phones to access targeted loyalty rewards. The LFC readers emit a glowing light containing a unique signal that any camera-equipped smartphone can pick up, without the need to unlock the handset, launch a check-in application or search for the store they’re in. With the reader plugged into a store’s existing POS systems, it can securely verify customer location for mobile loyalty and redemption programmes.

MasterCard and Visa have agreed to license their respective US debit

technologies to each other to help ease the EMV migration in the US. Visa, MasterCard, Discover and American Express have laid out a roadmap for the migration to EMV in the US, with liability switching to retailers that have not upgraded in October 2015. Visa and MasterCard have now made certain proprietary EMV chip technologies available to each other and other networks, meaning that a debit chip transaction originating from a single chip application can be routed by the merchant to Visa, MasterCard or any other US PIN debit network that signs up.

Isis, the US m-commerce joint venture established by a group of US telcos,

will launch its NFC-based wallet nationwide later this year. The Isis Mobile Wallet uses NFC technology to allow consumers to pay, redeem coupons and present loyalty cards with a tap of their smartphone. The venture, owned by US telcos AT&T Mobility, T-Mobile USA and Verizon Wireless, says it is now finally nearly ready for a full roll-out across the US following extensive trials.

UK m-com-merce com-

pany CloudZync has signed up 280 merchants for the launch of its mobile wallet, which will let cus-tomers download a free app and load it with funds from their bank account, enabling them to open the wallet with a PIN and select a payment option at participating retailers. The app automati-cally generates a unique QR code which the customer then presents to the shop assis-tant to scan. CloudZync says that, unlike many card schemes, it does not charge its merchants any set-up fees or administration costs to make payment and no additional hardware is required.

Members of a US cybercrime ring which trafficked more than 95,000

stolen credit card numbers have been jailed following a trial in New York. The members were part of an internet-based criminal enter-prise, dubbed the “Western Express Cybercrime Group”, which between 2001 and 2007 was dedicated to trafficking in stolen credit card numbers and other personal iden-tifiers. They sold thousands of stolen credit card numbers though internet forums, mak-ing millions of dollars, which was mainly paid in digital currencies such as Egold and Webmoney, and then used a company called Western Express to launder the money.

PayPal has struck a deal with money transfer specialist MoneyGram which

enables its 55 million US account holders to withdraw money at MoneyGram locations around the country. Customers can now initi-ate a withdrawal online or via their mobile and then pick up the cash at any of MoneyGram’s thousands of sites. PayPal customers will also be able to load money into their accounts at select MoneyGram locations in Dallas, New York and San Francisco, with a wider roll-out following.

news in brief


Visa is working with several Indian banks in order to utilise

the country’s biometrics-based national identity system to bring financial services and electronic payments to millions of people. The ‘Saral Money’ account from Visa, Axis Bank, HDFC Bank, ICICI Bank, Indian Overseas Bank and the State Bank of India is designed to solve the long-standing problem of how to authenticate the many millions of Indians without existing bank accounts or adequate forms of ID. They plan to tap into the government’s Aadhaar national identity system which uses fingerprint and iris biometric information to verify users and authorise payments. There are currently 210 million Aadhaar card holders, with the government planning to expand this to 600 million by 2015.

Just 3% of UK organisations have made preparations for the intro-

duction of SEPA for direct debits, lagging behind rivals in France and Germany as the countdown to the 2014 migration begins. The survey of 300 businesses in France, Germany and the UK conducted by Edgar Dunn & Company on behalf of Steria, finds that almost 70% of European businesses are aware of SEPA in general, and more than 80% of businesses have heard about SEPA Direct Debit in France and Germany. However, only 26% of UK businesses are aware of the mandate.

Sweden’s Swedbank is piloting the use of mobile couponing with

merchants in Uppsala, the country’s fourth-largest city which is attempting to eradicate cash as part of a local crime-fi ghting initiative. Swedbank is trialling the use of MasterCard’s mobile application Koy with high street merchants who can use the app to post deals to subscribers that can be redeemed from the user’s smartphone.

VeriFone has had the wind taken out of Sail, its app and dongle-based

system for turning smartphones into card acceptance devices. Having failed to gain traction with merchants, VeriFone will instead off er the technology to banks. Sail was launched in May 2012, but according to the company, the standalone economics of micro-merchant acquiring ultimately proved to be unprofi table.

Vietnamese payment switch operator Smartlink is working with Singapore

tech vendor Tagit to build a mobile bank-ing service. Tagit’s Mobeix platform will be available to over 40 million cardholders belonging to Smartlink’s more than 50 mem-ber banks. Vietcombank will be the fi rst to roll out the service, enabling customers to download an iOS, Android, BlackBerry or Java app that can be used for account information queries, fund transfers, bill payments and mobile top-ups. Through the Tagit system, Smartlink customers will also be able to con-nect with third parties such as utility compa-nies and government agencies.

Royal Bank of Scotland, Lloyds TSB and NatWest in the UK are in

a generous mood, having set aside £10 million to refund customers who forgot to pick up cash dispensed at the ATM. The banks are set to compensate hundreds of thousands of customers who made a withdrawal at the ATM but walked away without the cash. Unlike other banks which automatically re-credit consumer accounts when the machine retracts the forgotten cash, the banks diverted the funds into their own reserves account and only paid up if the customer asked for a refund.

US start-up Movenbank, which has positioned itself as a mobile-only, card-

less, branchless bank, may be forced to off er companion plastic cards to customers in order to be compliant with MasterCard rules. Movenbank is working with MasterCard on a planned February 2013 launch which will see customers issued with contactless stickers that they can attach to their mobile phones, says founder and CEO Brett King. However, he maintains that the fi rm is still “anti-card”.

news in brief

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bizarrely, tap-dancing, to make payments. Her project, entitled ‘Money No Object’

relies on RFID tags and readers that are worn by the merchant and customer and transmit payment data when physical con-tact is made. Hinder says the work questions concepts of value, explores alternative eco-nomic ideas and considers a new signifi-cance for material and physical currencies ‘in an increasingly immaterial world’.

According to Hindler, the hug-and-pay concept could be used in a cultural institu-tion, as a reinvention of the clear plastic donation box. Visitors could buy wearable objects from gift shops, load them up with credit and use them to make purchases, “gaining some alternative emotional value to their payment transaction”.

Meanwhile, online payment giant PayPal is trialling a ‘pay-with-face’ technology in the UK, based on mobile payment technol-ogy which lets customers verify themselves at the POS using a photo and their first name. The new feature, called ‘check in’, is embedded within PayPal’s Android, iOS and Windows apps and highlights nearby shops and restaurants that accept PayPal. The customer then checks in by clicking on the retailer and pays by sliding a pin down in the app. Once a user has checked in, their name and photo appears on the shop’s payment system, and when they agree the amount to be paid, the cashier charges them by clicking on the image. The customer gets an alert on their phone to let them know how much they’ve paid, as well as PayPal’s usual e-mail receipt. ■

It’s only over the last few years that con-sumers worldwide have become familiar with using contactless technology and

mobile phones to make payments – but could these methods find themselves con-signed to the bin just as they are starting to take off? A few recent developments in the area of futuristic payment technology are going far beyond what is now in the mar-ketplace and taking biometric technology to a whole new level.

At the recent TechCrunch Disrupt technol-ogy event held in the US in early September 2013, one innovation was unveiled which lets consumers make a payment using a unique hand gesture, dubbed a ‘secret payment handshake’. Matthew Drake, an employee of advertising firm 22squared, demonstrated the technology which is based on the Leap Motion gesture control-ler, combined with a shopping cart POS API.

Should the technology prove success-ful, consumers will no longer need a card or indeed a mobile phone or any other physical form factor. According to Drake, as long as a merchant’s POS system works with the secret handshake software and the Leap Motion controller, users can make a payment with just their hand and a sequence of gestures which would approve the transaction and charge funds to an account linked to the secret hand-shake via an online dashboard.

Drake added that if the solution was combined with facial recognition and other identifying data like a name and phone number, the transaction process could be made even more secure.

Elsewhere, RFID tags are being experi-mented with by artist Heidi Hindler, who is developing a ‘hug-and-pay’ system, incor-porating ‘wearable’ technology allowing users to use physical gestures like hugs, high-fives, handshakes, and somewhat

US

Payment technology gets physical again

US judge and Federal Reserve in debit fee fight

A US judge has ruled that the Federal Reserve disregarded the intent of the US Congress by setting too high a cap on interchange fees for debit card transactions.

The Durbin amendment to the Dodd-Frank financial law required the Fed to ensure that debit swipe fees reflected the actual cost of processing card transactions. In 2011, the Fed set the cap at $0.21 per transaction, rather than the $0.12 limit proposed in earlier consultations.

In response, several US merchants filed a lawsuit against the Fed and were backed by Washington district court judge Richard Leon in mid-August 2013, who granted their motion.

In his ruling, Leon stated that the Fed had “clearly disregarded Congress’s statutory intent by inap-propriately inflating all debit card transaction fees by billions of dollars”.

However, after an outcry from US banking industry groups which claimed that they would need to charge the fees to offset the costs of offering debit cards, the Fed respond-ed with an appeal against Leon’s rul-ing, and it likely that the Fed’s cap will remain in place until the appeals pro-cess has been concluded. No timeline has yet been set out.

“The Federal Reserve’s decision to appeal is the right thing to do for con-sumers who value debit cards and the financial insti-tutions that serve them,” Frank Keating, president of the American B a n k e r s Association, said. ■

Source: Nilson Report, The Wall Street Journal.

Fee FallUS debit merchant processing fees paid as a pecentage of purchase volume

1.5

1.0

0.5

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transactions in 2012 to 186 million in 2022. Meanwhile, another survey states that

UK consumers foresee the demise of cheque books and some coins in the near future as they are displaced by mobile and biometric payments. According to a survey from UK processor WorldPay, 77% of surveyed UK consumers anticipate that certain coins will have been discontinued within 10 years, while 76% anticipate the end of the cheque book.

In contrast, most respondents see elec-tronic money methods on the rise, with nearly two-thirds believing that they will regularly buy purchases via their mobile handset or other card payment methods.

A significant minority also expect bio-metrics to become increasingly common:

around half believe they will be using fin-gerprint recognition systems to autho-rise payments, while another 39% predict that facial recognition or iris scanning tech-nology will be a feature in a decade and 32% believe that they will be able to speak to pay. ■

The UK Payments Council is predict-ing that UK consumers will turn their backs on cash over the next 10 years

as cards and mobile payments continue their ascendancy. The number of cash pay-ments made in the UK will fall by a third from 21 billion in 2012 to around 14 billion in 2022, the Council predicts.

In contrast, consumer card usage will rise by 75% from nearly 10 billion payments in 2012 to around 17 billion in 2022, with debit driving the growth.

Mobile payments and internet banking will help drive up consumer use of one-off payments from their accounts from 356 million payments in 2012 to around 1.5 bil-lion in 2022. Cheque usage is expected to fall significantly, from 477 million consumer

UK

Cash usage set to plummet even further

Security fears hold back mobile payments

UK consumers are being put off mak-ing mobile payments through existing providers by security fears, lengthy sign-up processes and problems mak-ing payments outside of individual schemes, according to new research published by UK mobile payments scheme Zapp.

The survey of 2,000 UK consum-ers found that just 17% of consumers have made a mobile payment and the majority (60%) of these payments were limited to simple bank transfers between accounts rather than paying for goods and services.

Respondents were asked which fac-tors prevented them making mobile payments, with half saying they saw current mobile payment options as a security risk and one in ten saying com-plex registration processes put them off. Of those already making mobile payments, one in five (20%) said there are not enough people and places to make payments and 18% said it was dif-ficult to pay people who don’t use the same mobile payment system.

However, the study also found a strong appetite to pay for a wide range of items if a simple system using exist-ing bank accounts and mobile phones was available that didn’t need addition-al registration. 86% of those already making mobile payments said they would make more payments with such a system. In total 40% of all respon-dents said they would use this type of payment system which is a 33% uplift from a similar study conducted in February 2013.

Peter Keenan, CEO of Zapp, said: “The research paints a picture of pent up demand and frustration. People want to pay with mobiles, but they need to be convinced that payment is secure, and it has to work everywhere and be totally hassle-free.” ■

with around 1,000 new users each day.According to Transport for London, sav-

ings of up to £24 million per annum by 2019/20 will be expected due to reduc-tions in the cost of handling cash over the network.

The consultation process will run until October 2013, at which point the transport authority will submit its proposals to the Mayor of London for approval. ■

Transport for London looks towards cashless future

Following its successful adoption of con-tactless payment cards, UK transport body Transport for London (TfL) has opened a public consultation on proposals to remove the option to pay by cash on all bus services London in 2014.

TfL says that cash fares are expected to fall to less than 1% of total bus journeys this year. Currently around 23,000 trips per day are made using contactless payment cards,

UK payment and cash acquisition volumes summary

Number of transactions millions Annual volumes 2011 2012 2022 (forecast)Cheques For payment 934 823 334 For acquisition 36 25 7 All cheque transactions 970 848 341

Plastic card payments Credit/charge/store cards 2,160 2,234 3,480 Debit cards 7,308 7,649 13,776 All plastic card payments 9,468 9,883 17.246

ATM withdrawals 2,874 2,915 2,633 All plastic card cash acquisition 2,911 2,960 2,663 All plastic card transactions 12,379 12,844 19,920

Source: 2013 UK payments statistics report.

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Visa and MasterCard are issued in a much larger number of countries than UnionPay, but in both Asia-Pacific and the Middle East and Africa (MEA), Visa and MasterCard brands together account for less than half of cards issued.

There are many countries, not just in MEA, where domestic schemes are demonstrat-ing impressive growth. These include ELO in Brazil, which is targeted at low income customers and people claiming benefits, and CMI in Morocco, which is aimed at customers who rarely travel outside the country. In India, RuPay’s appeal is partly the result of lower processing fees than the international schemes (a common feature of domestic schemes) making it more attrac-tive to banks. ■

The number of payment cards world-wide increased by 12% in 2012 to reach a landmark 10 billion, according

to a new report from research and consult-ing firm Retail Banking Research (RBR), which also found that China UnionPay has continued to extend its lead over other card schemes as a result of continued rapid expansion of the Chinese card base.

According to RBR, strong growth in devel-oping markets will drive the global market to 13.6 billion cards by 2018. With 10 billion cards in circulation worldwide, this corre-sponds to an average of 2.3 cards per adult. As the banked population grows in devel-oping markets, card numbers will increase rapidly, rising to around 13.6 billion cards worldwide by 2018.

China UnionPay continues to benefit from the rapidly expanding Chinese banking market. With a share of 34% of the global card base, RBR indicates that UnionPay extended its lead over the other card schemes in 2012 as a result of continu-ing impressive growth in card numbers in China. UnionPay’s volume and value of payments remains considerably lower than those of Visa and MasterCard, however, owing to low card usage in China, where more than 99% of UnionPay cards are found.

UK

China UnionPay extends lead over Visa and MasterCard

Risk-based segmentation not relevant for m-paymentsAccording to new research from Auriemma Consulting Group (ACG), which looked at unique consumer seg-ments based on consumers’ interest and usage of mobile and emerging payments, no significant differences existed based on risk profiles or credit lines, meaning the traditional risk-based segmentation used by banks is not relevant for mobile and emerging payments. Instead, attitudinal segmen-tation should be used to better align with consumer needs.

According to the research, mobile adopters and enthusiasts were found to be highly interested in all potential ways of making mobile purchases and payments. They were most strongly interested in making mobile payments using contactless (93% of enthusiasts interested), mobile wallets (90% of enthusiasts interested), and making payments by using a unique barcode through a mobile payment app (84% of enthusiasts interested).

Matt Simester, managing director of ACG’s Payments Insights Practice, said: “To gain consumer loyalty and usage, mobile payments must be well designed and solve for a clear consum-er ers if they want to grow adoption and usage.” ■

in the fall of branch networks, the rate of closures has actually slowed in recent years. Between 2003 and 2012, the rate of decline has been -1.7%, compared to -2.5% between 1995 and 2003. The research also reveals that branches have been closing at a faster rate in more deprived parts of the country, with the least affluent third of the population bearing the brunt of two-thirds of net closures from 1995 to 2012. ■

UK has lost 40% of bank and building society branches since 1989

More than 40% of UK bank and building society branches have disappeared since 1989, although the rate of closures has declined since the turn of the century, according to research from Nottingham University, which found that between 1989 and 2012 there was a net loss of nearly 7,500 branches.

Although the rise of online and mobile banking are often cited as driving forces

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The recent launch of Apple’s iPhone 5C and 5S models has disappointed NFC enthusiasts once again as the tech giant appears stubbornly unconvinced by the merits of the technology. However, while the inclusion of a biometic fin-gerprint scanner on the 5S model has eliminated the need for password entry on Apple’s iTunes and app platforms, the path is still open for the inclusion of NFC in the future.

The fingertip scanner, Touch ID, is built into the home button of the 5S and uses a laser-cut sapphire crystal along and sensor to take a high-resolution image of a user’s fingerprint. The sensor removes the need to activate the device by entering a PIN code. All fingerprint information is encrypted with Apple stating that the information will not be stored on the company’s servers.

Speaking to PCM, Neil Garner, CEO and founder of NFC m-commerce com-pany Proxama, said: “Apple’s desire to incrementally build its own platform ecosystem rather than integrate with others comes through loud and clear with the iPhone 5S. It’s of particular interest to see Apple enhancing user authentication and device security with the home button fingerprint swipe. This also makes payments through iTunes even simpler and more secure, which sets the bar for other retail pay-ments services.

“Apple is now the only major phone manufacturer not including NFC tech-nology as a standard smartphone fea-ture. The infrastructure for NFC inter-actions is gaining pace globally, with millions of contact payment cards and terminals being installed. In parallel, consumers are becoming increasingly familiar with ‘tap’ interactions as part of their daily routine.” ■

A recent analysis of the US payment sys-tem conducted by the Fed highlighted criti-cal issues around the need for faster, near real-time payments, closed payment com-munities, obstacles in international pay-ments, the mobile technology revolution and lack of contemporary features in tradi-tional payment channels.

The Fed is also requesting input on poten-tial strategies and tactics to shape the future of the US payment system. Responses to the paper are being sought by 13 December, to be followed by a new policy draft in the second half of 2014. ■

Fed considers faster payments and mobile

The US Federal Reserve is seeking public input on a set of new policy ideas aimed at modernising US retail payments sys-tems, while at the same time addressing key themes such faster payments and mobile technology.

The ‘Payment System Improvement – Public Consultation Paper’ has been launched by the Fed in order to “to share Federal Reserve perspectives on the key gaps and opportunities in the US pay-ment system and identify the desired outcomes that close these gaps and capture these opportunities.”

operating costs and will be encouraged by an exponential increase in regulatory atten-tion given to operational IT risk.

The rise in IT spend will be offset by a 5% decline in branch costs, as banks look to introduce smaller banks with fewer staff. Some countries (Italy, Spain) are over-served by existing networks but overall we expect branch numbers to edge lower but not col-lapse,” states the report. It adds that new branches will likely incorporate cheaper set-up costs with increased flexibility.

The benefits of a more nimble branch strat-egy will include higher customer transaction volumes with little cost increase, quicker prod-

uct launches and increased customer loyalty.

“We see Big Data as a key driver of this in time, given the requisite invest-ment by banks,” the report adds. “Combined with the very significant upside to returns when interest rates rise, we think that retail banking remains a generally attractive invest-ment prospect.” ■

The issue of core system replacement is at the fore once again, with new research from Deutsche Bank finding

that banks operating ageing IT platforms can expect to experience a material increase in running costs over the coming years, only partially offset by the introduction of smaller cheaper-to-run branch outlets.

According to the research, most big bank core systems rely on too many applications patched too many times to cope with rising transaction volumes, regulatory change and digital channel changes in particular. Deutsche Bank forecasts that these factors will drive up to a 10% increase in overall

EUROPE

Bank IT costs set to increaseApple forgoes NFC again

Source: Monitise company data.

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Shavers raised at least 700,000 bitcoin in BTCST investments, which amounted to more than $4.5 million based on the average price of bitcoin in 2011 and 2012 when the investments were offered and sold. Currently, the value of 700,000 bitcoin exceeds $60 million.

Although the focus of the SEC’s investiga-tion centred on allegedly fraudulent activ-ity, it highlighted how regulators had been slow to catch up with the world of virtual currencies. All that changed in August of 2013, when a US federal judge ruled that bitcoin was a valid form of money, paving the way for the legal case against Shavers to continue.

Shavers had argued that the case should be ditched because the SEC has no jurisdic-tion given that the bitcoin investments he was offering were not securities because the crypto-currency is not money or subject to any regulations.

However, US Magistrate Judge Amos Mazzant rejected the claim, ruling that “it is clear that bitcoin can be used as money” and “is a currency or form of money, and investors wishing to invest in BTCST pro-vided an investment of money.”

This ruling could potentially have massive implications, not least because it conflicts with other US investigations into bitcoin. An example of this is the US Department of Homeland Security, which has served pay-ments start-up Dwolla with a court order

cover story


mounting interest from central banks and regulators across the world.

Regulators start to pay attention

In July 2013, a bitcoin exchange based in Thailand announced that the country’s central bank had effectively outlawed bit-coin by declaring it illegal to buy and sell the virtual currency or use it to make purchases. The exchange claimed that it had spent several months registering with various Thai government agencies and was initially told by the Bank of Thailand that it did not need a money exchange licence because bitcoin is not a currency.

However, the exchange subsequently announced that Bank of Thailand officials had concluded that bitcoin would be made illegal, “due to lack of existing applicable laws, capital controls and the fact that bitcoin straddles multiple financial facets.”

In the same month in the US, the Securities and Exchange Commission (SEC) charged a Texas man with running a bitcoin Ponzi scheme that raked in 700,000 bitcoins, worth $4.5 million at the time, from unwary inves-tors. The SEC alleged that Trendon Shavers, who is the founder and operator of Bitcoin Savings and Trust (BTCST), promised investors up to 7% weekly interest based on BTCST’s bitcoin market arbitrage activity, which sup-posedly included selling to individuals who wished to buy bitcoin anonymously.

It seems that every week virtual cur-rencies in all their forms are gathering momentum across the world, with more

merchants in all sectors starting to accept them as valid of forms of payment, and in some cases, being used to buy real estate and other big-ticket purchases.

The appeal of virtual currencies lies in the fact that they can be used anony-mously, leaving no trace, and carry little to non-existent transaction fees in some cases. bitcoin is by far the most widely used virtual currency and although market cap estimates vary wildly, it is thought that bitcoin currently has a total market cap of around $1 billion.

Virtual currency exchanges are springing up all over the world as users scramble to trade the currency online in much the same way as physical currencies and commodities are traded. And virtual currencies are also being incorporated into several consumer services as companies recognise the tan-gible interest in a form of payment that in most cases is anonymous to use and has no discernable transaction fees.

But there are mounting concerns over bit-coin, given that it essentially operates as an autonomous network spanning thousands of computers across the world. There is no central organisation or hierarchy to answer to. And despite many bitcoin exchanges being perfectly legal, the currency’s unreg-ulated nature is now attracting rapidly

Last year, PCM delved into the world of virtual currencies, looking at how emerging (and unregulated) methods like bitcoin could impact the payments industry. In less than a year, the pace of activity has been breathtaking.

by Victoria Conroy

Digital currencies: a boon or scourge?

cover story


as a liaison among businesses, customers and public officials.

Founding members of the commit-tee include the CEOs of BitInstant, BitPay, Coinsetter, CoinX, Epiphyte, eToro, Hub Culture (Ven), OpenCoin, Payward, QikCoin, SnapSwap, Tradehill, Yoyocard and ZipZap.

Jon Matonis, executive director of the bitcoin Foundation, said: “Self-regulatory organisations are excellent non-govern-mental solutions for industry best prac-tices and the bitcoin Foundation supports inclusive efforts to improve the quality of businesses engaged in exchanging Bitcoin.”

As PCM detailed in its feature on virtual currencies last year, the European Central Bank (ECB) has already conducted a study on the implications of virtual currencies. But according to Dr. Hugo Godschalk, managing director of the PaySys Consultancy, the ECB has failed to fully understand the nature of virtual currencies, which could confuse future regulatory efforts in this area.

“The ECB is not worried at the moment because the volume of virtual currencies is still low. Therefore it does not see them as a threat to financial stability. But the ECB notes that such virtual currencies could have a negative impact on the reputation of central banks,”

Dr. Godschalk told PCM.

“Moreover, the ECB points out that the high degree of anonymity of virtual curren-cies poses a challenge to public authorities because virtual currencies could be used as means of payment for illegal activities and money laundering.

“Virtual currencies are not regulated per definition used by the ECB. Therefore elec-tronic money, which is regulated in the EU since the first E-Money-Directive of 2000, cannot be a virtual currency. Analysing the impact of virtual currency schemes, a prop-er definition and categorisation between virtual money and e-money, which is com-pliant with EU-regulation, is crucial.

“It is remarkable to see that the ECB is using an outdated definition of e-money

telling it to stop process-ing transactions linked to bitcoin exchange MT. Gox.

On 14 August 2013, the New York

State Department of Financial Services (DFS),

which has already sent out subpoenas to 22 bitcoin-related firms, confirmed that

it is pondering new rules for virtual currencies.The regulator warns that firms engaged

in money transmission are already required to post collateral to safeguard customer money, as well as undergo periodic safety and soundness examinations to ensure compliance with money laundering laws. It added that new rules could also be introduced specifically aimed at virtual currencies, tailored to their “unique char-acteristics”, and designed to stop the area turning into a “virtual Wild West”.

bitcoin groups push for self-regulation

The DFS highlights three areas of par-ticular concern: ensuring payments are processed quickly to build user confidence that money will not “get stuck in a digital black hole”; ensuring virtual currencies do not become the tool of choice for terrorists, drug smugglers, illegal weapons dealers, money launderers, and human traffickers; and making sure that the use of bitcoin as an investment is governed properly.

Additionally, the US Senate’s committee on homeland security has stepped up its interest in virtual currencies with the launch of an inquiry, and has written to Homeland Security secretary Janet Napolitano asking for details on her department’s policies and procedures relating to the likes of bitcoin.

In the face of this regulatory surge, vir-tual currency firms are joining together to create self-regulatory organisations in a bid to work with governments and help shape future rules. The committee for the establishment of the Digital Asset Transfer Authority (Data) says it wants to promote the prudent, responsible development of emerging payment networks, establish common rules to protect users, and work

(of the invalid EMD I) which is not comply-ing with the current e-money definition of the EMD II and the regulation within the EU. Second, no matter whether the EMD I (not relevant since 2009) is used or EMD II, the core characteristic of e-money has remained the same: issuance on receipt of funds (= prepaid). This implies that every virtual currency which is issued (not traded!) in exchange for traditional money is legally defined as e-money (if the other require-ments are fulfilled too).

“Thus, the equation ‘virtual currency = unregulated’ applies only in special cases like bitcoin. Otherwise, those currencies defined by the ECB as ‘virtual currencies’, which are issued via an inflow of traditional currency, are subject to e-money regulation in the EU! Linden Dollars or Liberty Reserve Dollars (both ‘prepaid’) would be subject to e-money-regulation if issued within the EU jurisdiction. All of these schemes would have to be redeemable at par. This is a regu-latory requirement (Article 11 of EMD II) and cannot be part of a definition or a criterion for categorisation, as in the ECB report.

“Third, the report states that e-money is (in contrast to virtual currencies) always issued in units of account of existing legal tender currencies. This is also not correct. Regulated e-money can be issued in fantasy units but the exchange rate vis-à-vis the legal tender currencies must be fixed (‘issu-ers issue electronic money at par value on the receipt of funds’, ‘issuers redeem, at any moment and at par value’).

“The denomination is not essential! The ECB is missing the point by stating: ‘lastly, the fact that the currency is denominated differently (i.e. not euro, US dollar, etc.) means that complete control of the virtual currency is given to its issuer, who governs the scheme and manages the supply of money at will.

“Central banks are monopolist providers of cash. So, they may be forgiven when they do not spend an awful lot of time observ-ing and analysing competitors. But central banks are also regulators and as such they should – at least after 10 years of experience – understand what they are regulating and what the regulations are.” ■

have drawn a strong response from the industry, and from groups supporting the interchange caps. Helen Dickinson, director general of the British Retail Consortium, said that current interchange fees cost UK mer-chants around £850 million a year, and that caps would help deliver merchant savings of up to £362 million.

“We’re delighted with this landmark proposal. While this is great news, there is a real opportunity for the government to go further and faster by making more substantial and immediate cuts through the proposed economic regulator for payments – this means that UK consumers

could benefit much more quickly.”

However, payment schemes are defiant in their response and have highlighted the perceived unfairness of the Commission exempting three-party schemes from the caps while at the same time claiming to be putting in place a level playing field. Before he stepped down as CEO and president of Visa Europe in July, Peter Ayliffe responded by saying: “We are concerned that these proposals will be detrimental to the innova-tion that will support European economic growth. There is little evidence to support the claims that these proposals will be ben-eficial to consumers.”

Meanwhile, MasterCard Europe president Javier Perez said that while MasterCard “fully supports the Commission’s goal of encouraging more secure, efficient, com-petitive and innovative electronic pay-

EC payments


posals is skewed heavily in favour of envi-sioned cost savings for merchants which would then be passed on to consumers. In its proposal, the Commission stated: “There is anecdotal evidence of price decreases happening in the USA, one year after the MIF regulation was introduced. In addition, from evidence in Australia, it seems that retailers would benefit integrally from lower interchange fees – as acquiring markets tend to be more competitive than issuing markets, whilst the potential increase in cardholder fees is limited to 30-40% of the amount of the interchange fee decrease. In addition after interchange fees are capped and trans-parency measures introduced, consumers using low-cost means of payment will no longer ‘subsidise’ the (often wealthier) ones using more expensive means of payment as merchants cannot steer consumers, espe-cially for the ‘must use’ cards.”

Payment schemes remain defiant

The Commission estimates that the cap will mean a decline in total annual EU interchange fee revenue from €10.5 billion to €6 billion. As expected, the proposals

On 24 July 2013, the long-awaited pro-posal from the European Commission on regulation of interchange fees was

published, which aims to introduce maximum levels of interchange fees for transactions based on consumer debit and credit cards, along with a ban surcharges.

During a transition period of 22 months, caps on interchange fees for debit at 0.2% and credit cards at 0.3% will apply to cross-border transactions, and thereafter these caps will also apply to domestic transac-tions. For cards not subject to the caps, such as commercial cards and those from the three-party schemes such as American Express, merchants will be able to surcharge for them or to refuse to accept them.

According to the Commission, the 0.2% and 0.3% caps are based on the so-called ‘Merchant Indifference Test’ developed in economic literature, which identifies the fee level a merchant would be willing to pay if he were to compare the cost of the cus-tomer’s use of a payment card with those of non-card (cash) payments (taking into account the fee for service paid to acquir-ing banks, i.e. the merchant service charge).

The Commission’s rationale for the pro-

Proposed caps on debit and credit interchange across the EU have drawn strong responses from players on all sides of the industry. Has the Commission fully understood what it is proposing?

by Victoria Conroy

Interchange caps hurt?

Source: Leappayments.com

$10 Average transaction$10,000 volume – 1,000 transactions

$330.00 $215.00 $115.00 35%

$100 Average transaction$10,000 volume – 100 transactions

$118.00 $26.00 $92.50 78%

$100 Average transaction$10,000 volume – 10 transactions

$97.35 $7.10 $90.25 93%

Debit transactions Old interchange costsInterlink 0.95% + $0.20 + $0.035

New interchange costsInterlink 0.05% + $0.21

SAVINGS

EC payments


change fees are largely misunderstood and the decision to regulate them could have major implications. If you look at the exam-ple of Australia where a similar proposal was carried out, it was initially hoped that by accepting a reduction in card payments, these savings would be passed on to the customer – this did not happen and in fact, the loss of revenue caused card issuers to hike up direct costs to cardholders.”

However, some are of the opinion that the proposed cap, while hurting the indus-try initially, could help spur momentum in mobile payments and e-commerce.

Could caps drive innovation elsewhere?

Gilles Ubaghs, senior analyst of financial services technology at consultancy Ovum, states that with payment cards still the primary method of funding most forms of mobile payments, these changes hold major implications for the sector. He also warns that the mobile payments business model based on telcos, issuers and other players sharing interchange revenue would be under threat.

“Given that most existing payment pro-viders have been extremely reluctant, to say the least, to share this revenue stream, the proposed interchange caps will make their willingness to share it virtually disap-pear. In a little more than two years, defen-sive moves to protect this revenue will be extremely strong. Business models for many potential mobile payment players have always been economically questionable, but they now face even greater pressure.”

Ubaghs adds that with banks and issuers across Europe continuing to face a chal-lenging environment following the global financial crisis and subsequent eurozone challenges, the decline in interchange rev-enue streams will likely provoke a strong reaction, particularly among larger players with high numbers of cards in issue.

“With a cap of 0.2% for debit transactions and 0.3% for credit transactions, the EC’s proposals involve a sizeable decline from existing rates, which frequently run at ten times that level, particularly for premium-

ments”, it is also concerned that caps on restrictions on the honour-all-cards rule “do not support these goals and will actually harm and inconvenience consumers and small merchants, as well as hinder competi-tion and innovation in the European pay-ments landscape.”

Consumer groups warn of rising prices

The Commission’s proposals also brought a strong coordinated rebuke from consumer groups in Latvia, Lithuania and Estonia. The Latvian National Association of Consumer Protection (LNACP) said: “Currently, the Commission has shown neither evidence nor proof that Latvian consumers will bene-fit from any arbitrary intervention. As Latvia plans to join the euro zone on January 1, 2014, this alone already holds a great risk that merchants will use the opportunity to raise prices.”

The Fair Banking Association of Lithuania said it viewed the proposal as “a hasty mea-sure which favours the interests of big mer-chants only.” Executive director of the Fair Banking Association, Kęstutis Kupšys, said: “It could be a perfect decision if it was to bring down the costs of maintaining and develop-ing the system, but what the Commission did was just artificially reduce one of the fee’s components that are supposed to cover the costs. This leads to the assumption that issue rates for the cards will rise as, now deprived of the interchange fee, banks will be forced to pass the costs to someone else. I have no doubts as to who that someone else will be: it’s us, the consumers.”

Enn-Toivo Annuk, chairman of the board of the Estonian Consumers Union, added: “The Estonian Consumers Union is con-vinced that pan-European compulsory reduction and unifying of interchange fees will increase prices for Estonian consumers, will decrease purchasing power of consum-ers with the smallest incomes and does not support the development of electronic pay-ments in Estonia.”

Phil Davies, managing director of UK pay-ment service provider PSI-Pay, added his voice to those criticising the Commission’s proposals, saying: “Merchant and inter-

branded cards. Although the limits will not be extended to three-party models from issuers that also act as schemes, such as Discover and American Express, these play-ers will nonetheless feel a knock-on effect of the regulations, through greater merchant reluctance to pay these now considerably less competitive interchange rates.

“Many payment providers may renew their focus on creating alternative payment revenue streams, particularly within the mobile payments space. For instance, there may be a heightened level of interest in better use of transaction data and integration of it with loyalty and reward-type features possible with mobile. It remains unclear what shape these innovations might take, but the likelihood of payment providers taking a business-as-usual approach is increasingly unlikely.”

Meanwhile Tim Wright, global sourcing section leader of law firm Pillsbury Winthrop Shaw Pittman, said: “In some countries such as Poland and Hungry where the current level of interchange fees is well above the caps, the impact will likely be substantial with a big uptick in merchant acceptance as compared to current levels.

“The regulation may signal the end of the Commission’s decades-long antitrust battle against MasterCard and Visa Europe. But the plan has a good way to go before it becomes law: it will be discussed and likely modified by EU member states and the European Parliament in a process which could take several years. The debate is far from over.” ■

Source: Federal reserve.

Average US debit card interchange fee$0.50

$0.45

$0.40

$0.35

$0.30

$0.25

$0.20

$0.15

$0.10

$0.05

$0.00

£0.44

2010

£0.24

Proposed

ments, ahead of e- and m-payments. Debit card use grew by 15.8% (to 124 billion trans-actions) globally during 2011 and credit cards grew by 12.3% (to 57 billion transactions).

According to Connors, the econom-ic recovery taking place in many regions around the world has led to renewed confi-dence and usage of credit cards in particular, something that the industry will cheer.

“There is a correlation in the uptake in using credit cards particularly in mature economies that are slowly emerging from recession, globally credit card usage rose by 12.3%. Debit card usage continues to grow with an uplift of 15.8% globally.”

Jean Lassignardie, corporate vice-pres-ident, chief sales and marketing officer of Capgemini Global Financial Services & Asia Pacific, added: “It reinforces what we said the year before last, which is that this indus-try is really embedded into the daily life of people on an individual and professional level. It’s not a surprise that we see extreme correlation between where credit increases as consumer confidence returns. We can see direct and immediate impact there.”

A statistical ‘black hole’?

Industry estimates suggest online and mobile payments will grow at 18.1% and 58.5% respectively through 2014. This raises the question of how banks can best compete against non-bank players, particularly in the field of mobile payments.

Lassignardie told PCM: “It’s a combina-tion of their strengths. Where customers of the bank are looking for more customer-

non-cash payments


transaction volumes with a 76.9% share. Forecasts show, however, that for all the growth in the surging economies of Asia and Latin America, it will still take at least 10 years for emerging markets to overtake mature markets in transaction volumes.

Speaking to PCM, Teresa Connors, head of client engagement for TS market engagement and international banking at RBS, said that besides greater levels of financial inclusion in emerging markets and the development of payment infra-structure, other factors are at play.

“In some markets, it’s as a result of govern-ment intervention and where there is a com-parable lack of what we would call traditional banking infrastructure in some countries, such as the African nations for example. Some markets have leapfrogged the last 30 years of infrastructure and gone straight to mobile payments.”

Debit and credit cards continue to be the most popular non-cash payment instru-

The latest edition of the RBS/Capgemini World Payments Report makes for very encouraging reading for the

payment industry. All forms of non-cash payments, such as debit cards, credit cards, e-commerce and mobile payments are growing strongly globally and total global non-cash payments volumes are expected to top 333 billion transactions in 2012 after transactions grew by 8.8% in 2011.

The key findings of the report include the rapid ascendency of non-cash payments in emerging markets. Central Europe, the Middle East, Africa (CEMEA) and Emerging Asia are leading the charge with growth in transaction volumes of more than 20%, while Latin America recorded growth of 14.4%. Growth in these emerging economies outpaced that of the developed markets of North America, Europe and Mature Asia, which recorded single-digit growth rates, though mature markets still account for more than two-thirds of global non-cash

The annual World Payments Report from RBS and Capgemini is a major benchmark for the payments industry in tracking and analysing trends in non-cash payments worldwide.

by Victoria Conroy

World Payments Report

Source: 2013 World Payments Report.

Number of global non-cash payment transactions, billions (2008–2012e)100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%2008 2009 2010 2011 2012e

121119

22

73

111

1414

24

26

75

113

17

17

26

27

79

117

20

21

29

30

82

124

25

27

34

33

85

130 North America (US and Canada)

Europe (including eurozone)

Mature Asia Pacific

Latin America

CEMEA

Emerging Asia

non-cash payments


some instances there is a 50% gap between estimates. We think that’s because of a lack of common definitions and standards, and it’s things like that which will help or hinder growth in all markets but particularly in emerging markets where mobile payments are routinely used. This gap can be closed with consistently defined data and statisti-cal collection.”

Improved statistical data collection would help payment services providers make more informed investment decisions as well as help combat future market risk.

Another ‘black hole’ is emerging in the area of virtual currencies, which are start-ing to gain traction worldwide. According to Lassignardie “Jean: Virtual currencies are something of a black hole. They are very difficult to define and quantify. They are in their infancy in relation to the scale and size of the market. But they do provide an answer to the appetite of customers in cer-tain circumstances. It’s too early to predict where virtual currencies will go, but they cannot be ignored.”

Innovation in payment acquisition

Innovation continues to be a key theme of the report, with payments acquisi-tion emerging as the area with greatest potential for customer-centric innovation. Drivers for innovation in payment acquisi-tion for payment service providers include: desire for proximity to customers, need to meet new and changing demands, and the fragmentation of the value chain.

Through payments acquisition innova-

centric services, banks can leverage their data. The larger retail banks are very well equipped to do that. There is a real intimacy between a bank and its clients. On the other hand, the technology com-panies have the ability to stimulate that and attack the bank by providing very interesting added value services.”

E-payments are expected to reach a total of 34.8 billion transactions by 2014, along-side 28.9 billion mobile payment transac-tions in the same year. But Connors says that there is much more value potential in e-payments waiting to be unlocked, par-ticularly in relation to e-commerce.

“In the e–payments space, volumes are really starting to grow. This year, we’ve done a lot more forecasting than in previous reports. Back in 2010, there were 17.9 billion e-commerce transactions and we now predict that there will be 34.8 billion in 2014. E-commerce is very much sustained and fuelled by online activity and online retailers. But the drop-out rate amongst online buyers is 60%. If that number could be improved, the volume

of payments would be staggering.”

However, despite such strong growth rates for e-payments and m-payments, the World Payments Report 2013 raises some important questions about the veracity of these estimates.

According to the report, assessing non-cash instruments such as e- and m-pay-ments, prepaid cards and virtual currency (offered by banks and non-banks) and growing transaction volumes in regions such as Africa, has unveiled a significant statistical ‘black hole’ due to inconsistent reporting of payments. This inconsistency is emerging as new regions become more active and non-banks take an increasing share of the market via instruments such as e- and m- payments.

Connors said: “We have found some gaps in the estimated size of the mobile market and the predicted size of the market. In

tion, payment service providers can offer both retail and corporate customers’ choic-es between instruments, locations, chan-nels and currencies which is increasingly being demanded.

Innovation is evolving in consumer-to-business (C2B) acquisition towards ‘any form,’ ‘anywhere,’ and ‘anytime’ payments which can be found in alternative models from PayPal (Order Ahead application with Jamba Juice) and WorldPay (accepting mul-tiple instruments.) In business-to-business (B2B) acquisition, innovation is seen in the SWIFT (3S Key security solution) and ErsteConfirming (supply chain solution.)

“Both new and legacy payments provid-ers recognise that not all players need to provide end-to-end services and are focus-ing on the four ‘Innovation Value Hotspots’ of origination, acceptance and capture, security and fraud, and value-added ser-vices,” said Lassignardie.

“In choosing one or more of these hotspots, payments providers have an opportunity to differentiate and meet the new and changing needs of both retail and business customers.”

Elswhere, the report urges that banks and other financial service institutions pay close attention to regulatory initiatives.

The report concludes that the trajec-tory of change in the payments acquisition space is too steep for payment service providers to stand still.

Strategies must be revisited and reformed in order for payment service providers to stay in the game and to benefit from the changes innovation will deliver. ■

Source: Capgemini Analysis, 2013. Note: numbers and percentages may not add up due to rounding.

Number of global m-payments transactions, billions (2010–2014f)

40

30

20

10

02010 2011 2012 2013F 2014F

2013 Industry estimates 2010–2014F CAGR

12 1212

15.7

25.2

3.8

2.1

1.1

0.60.3

28.9

17.8

11.1

7.04.6

Total 58.8%

Non-bank providers 92.3%

Bank providers 55.4%


“In card payments, Finland is a super-power where cards have established their position as an easy and safe means of pay-ment. Co-operation with Equens is part of our plan to develop and improve the effi-ciency of our card services further as well as to improve our capability to respond to our customers’ changing needs,” said Kasimir Hirn, director of the cards and payments business at OP-Pohjola.

According to Equens, the new agreement will enable the company to establish a solid position in the Scandinavian cards market and strengthen its position in Europe. ■

First Data signs merchant services deal with Talmer Bank and Trust

Russian banks increase analytics usage

Global payment processor First Data has signed a long-term strategic merchant services partnership with Talmer Bank and Trust, a community bank of the US.

Under terms of the agreement, First Data will partner with Talmer Bank and Trust to distribute payment processing services to the bank’s clients through-out their client-facing channels, includ-ing its 42 retail branches. First Data will manage operations, risk management and merchant sales activities. ■

FICO, a global predictive analytics and decision management software com-pany, and the National Bureau of Credit Histories (NBKI), a Russian credit bureau, have announced that Russian banks have dramatically increased their use of credit scores and credit bureau data in risk management.

Six of the top 10 Russian lenders, and 15 of the top 30, now use FICO Scores based on NBKI data.

“Russian banks and microfinance insti-tutions are demonstrating a responsible approach to risk management,” said NBKI CEO Alexander Vikulin. “During the first half of 2013, credit grantors ordered 41% more credit reports than in the same period last year, and twice as many as in the first half of 2011.”

”Russian banks are adopting more advanced risk management systems,” said Evgeni Shtemanetyan, who directs FICO’s operations in Russia. “We are see-ing increased interest across the banking market for consulting services and soft-ware solutions for application process-ing, debt collection, customer manage-ment and fraud protection.” ■

European payment processor Equens has been selected by Finland’s OP-Pohjola Group as its new card

processing partner under a long-term contract for card services. The first card transactions will be processed in the fourth quarter of 2014.

The two entities already had an agree-ment for the processing of SEPA payments as well as their regular cross-border euro payments since 2008. With this new agree-ment OP-Pohjola Group will also entrust their debit and Visa Electron card process-ing to Equens.

OP-Pohjola selects Equens as card processing partner

Citi has expanded its global commercial cards footprint by adding Turkey to its pro-prietary platform, further strengthening its offering throughout Europe, Middle-East and Africa (EMEA).

Citi has offered commercial cards in Turkey for some time, but migration onto Citi’s global platform enables both multi-national and local clients to benefit from a

Thousands of unbanked households risk being made homeless unless they are allowed to choose how they receive their benefits under Universal Credit, the social benefit disbursement scheme recently introduced in the UK, according to Prepaid Financial Services (PFS), a UK prepaid pay-ment provider to local authorities.

PFS is calling on the UK government to give individual local authorities the free-dom to choose how they pay out benefits. It is also asking it to broaden its planned pilot projects on Universal Credit in Wigan, Warrington and Oldham next month to include a prepaid card programme for

Citi expands commercial card platform into Turkey

Prepaid cards can help families hit by Universal Credit

globally consistent customer experience, unsurpassed global acceptance and digital tools that enable greater visibility of their corporate spend, according to Citi. Later this year, Citi intends to formally launch the platform in Russia, where certain clients are currently on a pilot programme. Launches are also planned in Ukraine and Kazakhstan before the end of the year. ■

benefits payments. The aim is to study how unbanked individuals – of which there are more than 1.5 million in the UK – could budget better and pay their rent through prepaid cards.

According to Noel Moran, CEO of PFS, “What has been overlooked are the poten-tial benefits of prepaid cards to these households if they are allowed to choose their own restrictions, in order to improve how they budget and manage their benefit payments. We need to have a mature, fac-tual debate about how prepaid technology can help vulnerable groups in the move to Universal Credit.” ■

issuing and acquiring IN ASSOCIATION WITH

23

First Data has been chosen by Raiffeisen Polbank as a key supplier of outsourcing services including issuing and servicing debit, credit and charge cards along with processing and settling the payments.

First Data also provides Raiffeisen Bank Poland with a suite of value-added services, such as WDX (Web Data Access eXchange),

Paysafecard Group has announced that five months after the launch of its “my paysafecard”online account across Europe, 150,000 of its customers are already using the new service.

my paysafecard, which has been intro-duced in several European countries earlier this year, allows paysafecard customers to

JCB International (JCBI) and Caixa Economica Federal (CAIXA), the largest public sector bank in Latin America, have signed an agreement for the issuing of JCB cards in Brazil starting in April 2014. Starting with credit cards for a total of 5 million accounts in the next 3 years, CAIXA plans to add debit and prepaid JCB brand cards in the near future.

Datacard instant issuance helps flooding victims in Canada

which links the bank’s channels with First Data’s systems in order to provide custom-ers with basic information related to the use of payment cards, such as their card balance, and a transaction monitoring ser-vice based on PRM system (Proactive Risk Manager) that generates alerts in instances of suspected fraudulent transactions. ■

manage their paysafecard PINs via an online account. Instead of having to enter individual PINs for each payment, the online account enables customers to pay with their unique user name and password. Personal data or credit card details are not required to make a payment. my paysafecard is not linked to any bank account. ■

JCB is a global payment brand with over 24 million merchants and 80 million card members around the world. In Brazil, with a partnership with Cielo, Brazil’s largest credit card acquirer, JCB card is now accepted at all of the more than 1.2 million Cielo merchants, representing almost every credit card accept-ing merchant in Brazil. ■

Datacard Group has announced that their financial instant issuance solu-tions were used to help issue pre-

paid cards to those affected by the recent massive flooding in Canada.

Severe flooding had forced thousands of residents to evacuate their homes through-out southern Alberta, which led to the Alberta government setting up a flood assistance programme that included issuing prepaid cards to affected Albertans. Those

First Data and Raiffeisen Polbank extend processing agreement

Paysafecard hails success of online account

JCB extends international issuing capabilities

who qualified were able to receive $1,250 per adult and $500 per child.

Datacard sent an expert member of its financial instant issuance team to Calgary to help with service and support of issuing the cards; along with Datacard CardWizard issuance software securely loaded and con-figured onto laptops; and Datacard CD820™ instant issuance systems that facilitated the printing, card personalisation and issuance of prepaid cards. ■

IN ASSOCIATION WITH

Redefining card acquiring with “Rich Merchant services”Multi-screen world, constant connectivity and contextual relevance are changing both the offline and online shopping experience. New “digitally connected” consumers expect a more integrated experience that is quick and consistent. Changing consumer behaviour demands a change in commerce. Retailers are rethinking their digital strategies to create personalised and engaging shopping experiences with a simple checkout and efficient payment process. Retailers realise that they cannot monetise well if they don’t deliver the right interaction and user experience.How are these new challenges merchants face disruptive also for payment providers and how are both, merchants and payment providers, challenged to stay relevant and competitive? All these challenges on the merchant side require a different mindset of payment providers, due to the transformation of traditional transaction centric to customer centric card acquiring and services. A need to define a new range of merchant services connecting payments, commerce and loyalty has emerged.In response to this, the new concept of “Rich merchant services” (RMS) was identified by the Empiria Group and presented at the MPE 2013, the biggest European payment acceptance event, staged in Berlin. RMS represents a new generation of merchant services reflecting interaction between commerce and payments. RMS is currently being built around digital retail technologies and solutions, like mPOS, digital wallets, coupons, QR codes and others. Understanding the need to explore new challenges and further educate the industry, the team of Empiria has started to prepare and distribute series of briefing materials, particularly “Rich Merchant Services“, “Interaction Beyond Payments” and “mPOS Brief”. As part of 7th annual MPE 2014 preparations, 2nd editions of mentioned briefs will be released during Q4 2013 and Q1 2014. All published materials are available for free to download upon request at:www.merchantpaymentsecosystem.com.


risk & compliance


• Consumer awareness and understand-ing – the potential risk that while ser-vices are new and consumers are less familiar with using them, it is more likely that payments will be made in error, such as paying the wrong person or pay-ing an incorrect amount.

• Anti-money laundering systems and controls – the potential risk that mobile banking is used for the facilitation of money laundering activities, particu-larly where a mobile payment service is not linked to the customer’s current account and there aren’t additional checks to verify the identity of the payee and recipient.

So what does this mean for the payments industry

The FCA has now engaged a number of firms of ranging sizes to be used as a sample of the industry. Each participating firm will be asked to submit documenta-tion with onsite visits to follow. According to the FCA their findings will be published in a formal report in the first half of 2014.

It is difficult to pre-empt the findings, but it is of course not beyond the realms of possibility to suggest changes to the mobile payments industry will be recommended. Mobile payments continues to move at a pace, and whilst the FCA is keen to not hin-der innovation, they appear equally keen to ensure that the industry evolves in line with the FCA statutory objectives of protecting consumers, protecting and enhancing the integrity of the UK financial system, and promoting effective competition in the interests of consumers.

The changing face of UK regulation and the forthcoming FCA Thematic Review

Having superseded the Financial Services Authority on 1st April 2013, the Financial Conduct Authority has

stuck true to its bold vision to be far more proactive than its predecessor.

Not only have there been a number of high profile fines across financial ser-vices, but following quick on the heels of the recent Mobile Phone Insurance Thematic Review, the FCA has now launched a Thematic Review into Mobile Banking and Payments. The FCA at the same time also launched their interim report into Mobile Banking.

In publishing their interim report, the FCA is seeking to help consumers under-stand some of the potential risks of mobile banking and set out to firms an early view of what it will be reviewing.

Mobile Banking – The Potential Risks

The potential risks in mobile banking as identified by the FCA within their Interim Report are:

• Fraud – the potential risk that fraudulent access to mobile banking accounts could result in customers being unable to access their money or make payments, resulting in financial loss, inconvenience and stress.

• Security – the potential risk of consumers receiving malware or a virus when down-loading a mobile banking application.

• Technology risk/ interruption to ser-vice – the potential risk of a systems failure or an IT problem preventing con-sumers from accessing their accounts.

“The technol-ogy that is now con-tained in a smart-phone is greater than most comput-ers had only a few years ago. The retail banking sector has embraced this technol-ogy and innovated, delivering new ways for their customers to transact,” comments Clive Adamson – FCA Director of Supervision.

“This has been a strong driver in shift-ing consumer behaviour and many now expect access to at least basic banking ser-vices through their smartphones. Research published earlier this year showed that one in five adults in the UK has already made a payment using their phone; over a quarter of us use our mobiles to check bank bal-ances, and more than half of us would pay with our phone if it was an option in the local supermarket,” continues Adamson.

“As mobile banking continues to devel-op and grow in popularity, we have seen greater choice for consumers, as different types of firms launch a variety of mobile banking products. We recognised in the 2012/13 Risk Outlook and 2013/14 Business Plan that mobile banking has the potential to rapidly increase in popularity. Having identified this, we wanted to carry out thematic work to understand the potential risks, as well as the measures being taken by firms to address them.

We approach this review with clear outcomes in mind. We want to support innovation that provides consumers with products that meet their needs and expec-tations while also ensuring their interests are protected,” Adamson concludes. ■

Paul Asare-Archer is head of compliance at Telefonica Financial Services UK, and money laun-

dering reporting officer at Telefonica UK. Paul Asare-Archer has an MBA and a law degree and

13 years’ experience in compliance and regulation.

Paul Asare-Archer

FEATURED SPEAKERS

Neira Jones, Partner, Accourt Ltd; Chairman, Cybercrime Advisory Board, CSCSS

John Burns, Senior Manager, Compliance Advisory, Transaction Banking, Lloyds Banking Group

Peter Sidenius, Director, Edgar Dunn & Company

Jean-Stéphane Gourévitch, Director, Mobile Convergence Ecosystems

Robert Courtneidge, Chairman, Prepaid International Forum; Global Head of Cards and Payments, Locke Lord LLP

Paul Simmonds, CEO, The Global Identity Foundation; Co-founder & Board member, Jericho Forum

Michael Rolph, Chief Creative & Commercial Officer, Yoyo

Charmaine Oak, Director, Digital Money Practice Lead, Shift Thought

Dr Thaer Sabri, Chief Executive, Electronic Money Association

Stewart Room, Partner, Field Fisher Waterhouse LLP

Richard Braham, Head of Payments, British Retail Consortium

Gary Munro, Senior Consultant, Consult Hyperion

What will the most innovative and successful business models in mobile payments have in common? They’ll embrace risk management and compliance as an opportunity...

“ Very interesting agenda and excellent speakers. I’m looking forward to a thought provoking day.” Jane Adams, Head of Marketing, Consult Hyperion

Contact us on +44 (0) 20 3397 7434 or [email protected]

DATE:5th November 2013

MOBILE PAYMENTSRisk, Regulation & Innovation in

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the regulatory and policy framework is rapidly evolving. It’s a regulatory

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It’s also a critical opportunity to identify and stimulate innovation and

growth. Understanding the current rules, the drivers for these, and what

might be next on the horizon is crucial for strategic board level decisions as

well as technical progress.

A successful strategy will go beyond mere compliance and will seek higher

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MOBIO (Mobile Biometry) project is note-worthy, with the aim to develop advanced biometric tech solutions for authentication on personal mobile devices. Leveraging the existing technologies embedded within these devices (e.g. headphone, microphone and camera), the optimal solutions included voice and facial recognition, and bi-modal authentication.

“The time is now right for biometric tech-nology to emerge as a secure solution for mobile applications that require high levels of security, particularly payment,” added Georges. “From a pure-payment security point of view, biometrics has already deliv-ered significant advantages.

“One potential mobile development could have a huge impact on biometric security solutions; rumours persist that the next iPhone will include a fingerprint sensor. Given that Apple acquired Authentec – with its TouchChip product family – in 2012, this is a strong possibility,” said Georges. “We expect to see biometrics becoming increas-ingly prevalent over the course of the next 3-4 years, driven by a desire among vendors and consumers alike to be better protected when accessing mobile services.” ■

FNB taps instant messaging for mobile money transfers

ValidSoft warns of phone phishing scams

Pan-African banking group First National Bank (FNB) has registered a patent in South Africa for using instant messaging within a smartphone app to transfer money. Once users have reg-istered for the service, they can send money between FNB e-wallet accounts to contacts as instant messages.

According to the bank, although instant messaging and mobile bank-ing on their own aren’t patentable, the combination of the two is what makes the technology unique and patentable. Funds are sent from and received to an FNB e-wallet, a service which is open to non-FNB customers and linked to a user’s mobile phone number. Users that aren’t FNB customers can only load money into their e-wallet at an FNB ATM that supports automated deposits after registering at an FNB EasyPlan branch. ■

Wall Street regulator FINRA has warned investors and consumers about an uptick in phone-based phishing scams, involving fraudsters cold-calling people claiming to represent at least one well-known brokerage firm in order to dupe people into handing over personal or financial account data.

According to Pat Carroll, CEO of ValidSoft, this remains a prevalent secu-rity issue for consumers and financial institutions alike.

“The first part is mutual authentica-tion, whereby the bank has to prop-erly authenticate itself to the customer. Banks not only need to highlight the types of scams in existence but also explain to consumers how security tech-nology could work for them.” ■

With the explosion in smartphone usage, the number of payments done via mobile devices has sig-

nificantly increased over recent years. As e-commerce becomes m-commerce, the industry has to focus on payment security, according to research firm Frost & Sullivan. “During a ‘card not present’ process, a personal account number (PAN), expiration date, and card validation code (CVC) are not enough to completely secure a transaction. Biometrics that provide high levels of secu-rity and an intuitive customer experience might be the solution for secure mobile payments,” it states.

“Protecting the mobile device itself is a first step, necessary to secure mobile pay-ments. Although a personal identification number (PIN) can do the job, in 2011 more than 60% of smartphone users were not using a PIN to protect their mobile access,” said Frost & Sullivan global programme director of ICT in financial services, Jean-Noel Georges.

According to Georges, over the past decade many biometric projects have emerged with the aim of enabling user iden-tification on mobile devices. In Europe, the

The European Commission has given proposals by CaixaBank, Santander and Telefonica to set up a joint venture to offer digital financial services the green light.

After looking into the concerns over competitiveness the Commission stated there are already several providers of similar services in Spain, with more still to emerge, therefore the trio may join up to devise their own.

Included in the services is a mobile wal-let to allow enterprises and consumers the ability to pay using a handheld device. Users will need to connect through a

Biometrics can revolutionise m-payment security

mobile or other internet connection in order to access their wallet and the Commission concluded Telefonica would not have the ability to block the access of other providers on its networks, there-fore no competition laws are in danger of being broken.

Officials also assessed the impact of the transaction arising from the relationship between the market for providing digi-tal wallet services, including peer-to-peer payment functionality, and the market for issuing payment card services, where Caixa Bank and Santander are active. ■

EC allows Telefonica digital payments service

mobile payments


Consumers want banks to lead way in mobile

PayPal announced PayPal Beacon, a low-powered Bluetooth device that will allow consumers to automatically check-in at local stores.

The company describes it as a “complete hands free experience” that will “reinvent today’s in-store shopping experience.”

“PayPal Beacon opens the door to a funda-mentally different way to use technology to make shopping more valuable and more per-sonal for consumers and retailers,” explains David Marcus, president of PayPal.

“We challenged ourselves to find a better experience than swiping a credit card. We figured the only better way to pay would be to do nothing. Just walk in a store, and, like magic, when you’re ready to pay, money

PayPal launch Beacon is transferred securely. No wallet. No card. Nothing to do. Not even touching your phone.”

Paypal say that by leveraging Bluetooth Low Energy (BLE), transactions can take place without having to open up an app, without GPS being turned on, and even without a phone signal.

Consumers will also have full control of stores they will want to check in to, those they will want to get prompted to confirm payment for, and stores they will want to enable a complete hands-free experience for.

“PayPal Beacon won’t constantly track a user’s location,” Marcus continues. “If a consumer enters a store and declines to check in, or just ignores the prompt entirely, no information is transmitted to PayPal or the merchant.”

European smartphone shoppers would be more confident engaging in mobile commerce if they could do

so using services provided by their bank, according to research published by the Future Foundation and commissioned by mobile payment service provider Monitise.

The research reveals six in 10 UK smart-phone users (57%) would feel more confi-dent buying goods and services by mobile if they could use apps provided by their bank.

This confidence is even stronger among Spanish consumers at 68% while 50% of smartphone owners in Germany feel the same way.

The report found that more than 50% of UK respondents are already buying goods on their smartphones. Leading factors likely to prompt UK consumers to buy products and services via a bank app include ease-of-use at 60%, incentives such as loyalty schemes at 49%, direct insights from their

bank on the state of their finances and budgets at 46% and convenience at 37%.

Meanwhile, separate research from Monitise and Cognizant into US consumer expectations around m-banking and payments, has found that consumers are increasing-ly expecting their banks to help improve their mobile lifestyles by providing anytime, anywhere capa-bilities, customised user

experiences, shopping and social features, and value-added services.

This, the study states, represents a new opportunity for retail banks to drive cus-tomer loyalty, attract new business, and generate more revenue. Among the key findings of the report are that tablets have emerged as a unique and valued user interface with 41% of survey respondents wanting to use tablets compared with smartphones, and 60% of tablet owners preferring a tablet for mobile banking.

Consumers are now using both devices for different purposes and want features optimised to suit each device’s form factor.

Significantly, the report finds that con-sumers are seeking services that drive security, ease mobile payment use and provide insights on spending and bill pay-ment patterns, and they’re willing to invest in these products.

More than one-third of consumers sur-veyed are willing to pay for advanced security features such as biometrics and nearly 30% of respondents indicated a willingness to pay for mobile payment capabilities. ■

The online payment company said in a statement that it will be opening up its mobile in-store API soon for 100 develop-ers to imagine ways to make the shopping experience better, from being able to self-checkout on a mobile phone to automatically placing a customer’s usual order as soon as they walk through the door.

PayPal expects PayPal Beacon to become broadly available from early 2014 and the US, UK, Australia, Canada, Hong Kong, and Japan will be the first locations to get the dongle. ■

Source: Monitise, Future Foundation.

“I would feel more confident in buying goods and services through a mobile phone if I could do so through an app offered by my bank”

100%

80%

60%

40%

20%

0%Spain UK Germany

Agree strongly Agree

contactless


Making purchases with a smartphone is gaining a foothold in Hong Kong, and it has changed the habits of Sunny Cheung Yiu-tong, a die-hard fan of smart cards.

Octopus Cards, which runs the city’s earliest and dominant contactless smart card system, says competition from banks in payment technology is intense but it fights to maintain its pioneering advantage by providing a variety of ways to pay, such as Octopus watches instead of cards, and now by flashing the mobile.

HSBC and Hang Seng Bank have launched services using near-field com-

ElectraCard Services (ECS), an Indian pro-vider of software and processing solutions for electronic payment systems, is pow-ering e-Revenue Gateway (e-RG), a pay-ment processing and electronic transaction switching company, to launch contactless electronic payments in Nigeria.

ECS’ PA-DSS compliant platform will help e-RG to launch programmes with multiple financial institutions and channels including ATM, POS, internet and mobile on the same platform. The eRG payment cards offer con-

Octopus to offer mobile NFC

e-Revenue Gateway partners with ElectraCard for contactless

munication (NFC) technology to allow holders of credit cards to pay for transac-tions with smartphones linked with the card accounts.

The Hong Kong Monetary Authority has said it aims to facilitate the development of NFC mobile payment services in Hong Kong, following the USA, Britain, France, Japan and South Korea, which are planning or launching such services.

“When I don’t want to carry a bag or a wallet with me, I usually pay using the mobile phone,” Cheung, who has more than 10 Octopus cards, told the South China Morning Post. ■

sumers a choice of debit or prepaid cards with the first NFC capabilities in Nigeria.

The launch of this card by e-RG enables all card users to pay their bills in a safe, secure and seamless environment along with the use of the card for personal requirements. The electra iTx suite of products will assist e-RG in its plans to increase the card base to 50 million users in the next five years, in line with the Central Bank of Nigeria’s “Cashless Policy”, aimed at promoting electronic pay-ments in the country. ■

transactions. The value of transactions con-ducted by the bank’s 630,000 cardholders has risen from €3.3 million in 2011, to €16.5 million in 2012.

Tatra recently joined forces with telecom firm 02 for a full-scale commercial launch of mobile contactless payments. Customers of the bank who have an NFC-enabled smartphone can go into a local O2 branch and have their SIM card replaced with a con-tactless SIM to make payments at around 12,000 contactless terminals in retailers across Slovakia. ■

Visa showcases Slovakia as a contactless leader

Visa Europe has highlighted Slovakia as a showcase market for the adoption of contactless technology, with 1.43

million cards in circulation recording one million contactless transactions per month. Almost 7% of Visa transactions in Slovakia are contactless, with an average spend of €9 per card.

Tatra Banka, the first of the local banks to introduce contactless payments in 2010, has recorded explosive growth in the use of the technology over the past year, where it has gained a 44% share of the bank’s card

Wind and BNL to test NFC payments in Italy

Republic of Kosovo rolls out contactless ID card

Italian telecom group Wind and BNL BNP Paribas Group, in collabora-tion with SIA and MasterCard, have announced the start of a trial of NFC technology, which allows users to make purchases in contactless mode via Samsung smartphones, with a clas-sic credit card issued by BNL on the MasterCard platform and virtualised on a NFC SIM provided by Gemalto.

To utilise the service, users select the method of payment on the ‘YouPass BNL’ smartphone app and place the smartphone close to a con-tactless POS terminal.

The trial will use the SIA infrastruc-ture, which has created a hub interop-erable between banks and telcos for contactless payment via smartphone and other NFC services. ■

The Republic of Kosovo has chosen European payment technology special-ist Giesecke & Devrient (G&D) to manu-facture and deliver its multifunctional contactless smart ID cards. As prime contractor, the Munich-based technol-ogy company is assuming responsibility for all aspects of project management as well as for system development and manufacture of the cards.

Sub-contractor for the Automated Fingerprint Inspection System (AFIS) and for the smartcard person-alisation machinery is Berlin-based Bundesdruckerei.

G&D is also in charge of implement-ing and structuring all system compo-nents necessary to support every step in the ID documentation process, from applying for a card to delivering it. The new ID cards will be issued to Kosovo citizens by the end of 2013. ■

contactless


Canadian banking giant RBC has launched its RBC Secure Cloud mobile payments service. This new technology, a first in Canada, will allow clients to more safely and securely pay for purchases using their mobile devices. RBC will bring RBC Secure Cloud to market by the end of the year with debit and credit on a number of smart-phone platforms.

With RBC Secure Cloud, the financial institution assumes the security burden, since sensitive client data remains with the bank, as opposed to keeping it on the phone, as is the case with other models. The data is transmitted encrypted and decoded locally on the client’s mobile device at the

RBC launches cloud-based NFC m-payment servicepoint of sale through partnerships with mobile service providers. While the solution thoroughly protects client financial data by leaving it at its source, clients are also pro-tected by the existing Zero Liability Policy for Interac, Visa and MasterCard.

Initially focused on NFC, the RBC solution is flexible and can support new technolo-gies such as bar or QR codes, or other stan-dards, and allows offline transactions. Other benefits for the client include simpler and faster provisioning of account information, card lifecycle management including card replacement for lost, stolen and expired cards as well as setting preferences an open wallet architecture. ■

not accept contactless payments.“The UK is one of the fastest growing pre-

paid markets in the world and is a leader in terms of NFC and contactless acceptance at the point of sale. By enabling iPhone users to make smart, simple and secure NFC trans-actions we are taking an enormous step towards making mobile money an everyday reality for consumers,” said Ed Chandler, CEO of Kalixa Group. ■

First NFC-enabled iPhone prepaid mobile wallet launches in Europe

Kalixa Group, DeviceFidelity and MasterCard have announced the UK launch of the moneto prepaid wal-

let. The wallet enables NFC functionality on an iPhone, allowing users to tap and pay for goods at thousands of MasterCard retail outlets across the country. The ser-vice will soon be compatible with Android mobile phones, and is set to be rolled out across other European countries in the coming months.

moneto integrates NFC technology into a consumer’s mobile phone using DeviceFidelity-patented microSD NFC tech-nology and combines it with an app to offer the control and flexibility of prepaid in a secure and mobile environment. Users can access account information on the move, check their balance in real-time, locate mer-chants and ATMs and, unique to moneto, make wallet-to-wallet transactions.

The wallet works irrespective of the user’s mobile operator. The companion EMV prepaid MasterCard allows users to withdraw cash at ATMs, make online pur-chases and shop at retail outlets that do

Isis moves beyond NFC with AmEx Serve tie-up

SingTel and Visa team on mobile NFC payments

US mobile wallet initiative Isis has moved to extend its upcoming mobile wallet beyond NFC payments by part-nering with American Express to inte-grate the card network’s Serve platform onto the wallet. In 2012 AmEx agreed to add several of its cards, including Serve, to the Isis wallet, enabling users to make mobile NFC payments from their accounts.

The new deal means that when Isis launches across the US later this year, all customers will be offered an integrated AmEx Serve account, enabling them to also pay bills online and make person to person payments.

Michael Abbott, CEO of Isis, said: “By adding American Express Serve to the Isis Wallet, we can immediately provide millions of consumers the opportunity to participate in mobile commerce as we continue to enrich the consumer experience.” ■

Singapore telco SingTel and Visa have announced a strategic alliance that will enable consumers in Singapore and Australia to pay for goods and services using their smartphones at all Visa pay-Wave acceptance points worldwide.

Visa is working with SingTel to link Visa prepaid accounts to mCash, SingTel’s mobile money solution. Planned for launch in early 2014, the ser-vice allows customers to wave and pay with their NFC-enabled smartphones for low-value purchases at Visa payWave acceptance points. There are currently 12,000 Visa payWave acceptance points in Singapore and over 100,000 across Australia. Payments will not be lim-ited to Singapore and Australia, and will extend beyond NFC transactions. ■

pos terminals


B+S Card Service launches payment terminals to UK merchants

Groupon moves into POS terminal market

B+S Card Service has announced the launch of its PCI PTS 3.0-compliant VX820 DUET and VX680 payment ter-minals to the UK market. The VX820 is a contactless-enabled countertop termi-nal whilst the VX680 is its contactless-enabled mobile terminal that is suit-able for use in the hospitality sector.

Additionally the terminals will make B+S’s multi-currency technology – B+S Dynamic Currency Conversion (DCC) – available to UK merchants. B+S DCC enables the terminal to automatically identify the payment card’s country of origin. The terminal then displays the sales amount in sterling, and sub-sequently shows it in the cardholder’s domestic currency including the cur-rency conversion rate. ■

VeriFone hosts m-payments for French rail operator

mPOS payment provider Swiff has received approval for its chip and PIN mPOS solution for use with Visa pay-ments through the Visa Ready programme. The Visa Ready programme is aimed at enabling payment providers to collaborate with Visa in m-commerce.

“We believe that the approval by Visa rewards the level of security and flexibility

Global merchant acquirer Chase Paymentech has announced the launch of Chase Checkout, a range of solutions to help merchants accept payments across an array of channels, including in-store and online.

Chase Checkout enables merchants to

Adyen has announced that Shuttle, its mPOS solution, is now available in 17 European countries following recent launches in Switzerland, Norway and Denmark. Shuttle became the first fully EMV-compliant mPOS device available in Europe last year, delivering payment accep-

Coupon specialist Groupon has linked up with POS terminal manufacturers Ingenico and VeriFone to integrate

its Breadcrumb service with the companies’ respective terminals. The move follows Groupon’s launch of an app and dongle-based system for turning phones and tablet devices into payment acceptance devices.

The integration of Groupon’s Breadcrumb service will be aimed at merchants which already accept card payments or which are not yet ready for

Swiff chip and PIN approved by Visa Ready programme

Chase Paymentech launches Chase Checkout

Adyen Shuttle mPOS solution now available in 17 European

of our chip and PIN solution,” said Etienne van den Bogaert, Swiff’s chief technology officer. “Both Swiff’s hardware and software have been approved by Visa to ensure the solution meets all quality and security met-rics for mobile payment acceptance.”

Over the last year, the number of mPOS terminals increased 111%, and is expected to grow over 300% by 2017. ■

accept card payments from their smart-phones with the new Chase Mobile Checkout app and encrypted card reader, which is available on Apple and Android platforms, or online or at a physical store location. ■

tance via smartphones or tablets through a Bluetooth connection.

Since the launch of Shuttle in December 2012, Adyen says it has witnessed huge demand from businesses ranging from high street retailers to taxi services and caterers. Shuttle is available on Apple and Android. ■

mobile-based services. Merchants can either configure their existing VeriFone or Ingenico machine with Breadcrumb, buy a Verifone vx520 from Groupon for $150, or rent one to own for $15 per month on a year-long contract. ■

POS terminal manufacturer VeriFone is providing its PAYware Wynid man-aged payments solution to power passenger ticket purchases aboard France’s national railroad operated by SNCF Group.

Deployment began in April with the first 1,000 handheld devices that are planned to number 12,000 over three months and handle an esti-mated 1,650,000 million payment transactions annually across the SNCF-managed rail systems, including the high-speed TGV trains.

PAYware Wynid is a managed servic-es platform that delivers acceptance on mobile handheld devices used by conductors to accept domestic and international EMV card payments and process other functions such as tick-et sales and exchange, invoices and information services for passengers. ■

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e-commerce


China to become largest online market

Facebook pilots e-commerce system

Australian PSPs roll out MasterPass

According to data from China’s Ministry of Industry and Information Technology (MIIT), China could over-take the US in 2013 as the world’s largest online retail market, if the coun-try’s e-retail sales hit the equivalent of $280 billion at the end of 2013. The US e-commerce sector accounted for $225 billion in 2012, according to the US Department of Commerce, and the current US e-retail growth rate of 16% would bring the 2013 total to $261 bil-lion. In the first half of 2013, online retail sales in China rose by 60.2% to reach the equivalent of $139.63 billion.

Results show that more mobile traffic and sales can be expected as Chinese consumers purchased 244.4 million mobile phones in the first half of 2013, with 91% (or 222.4 million) of them being smartphones.

Data from MIIT also shows that total e-commerce in China reached the equivalent of $810 billion in the first half of 2013. ■

Facebook is planning to test a sys-tem that will allow users to make in-app purchases using their Facebook log-in details. The system will work by enabling online shoppers to give Facebook their credit card details and make purchases on partner e-com-merce mobile apps without needing to enter their billing details.

Although Facebook’s move into the e-commerce space has brought com-parisons with PayPal, payments made via this test system will still go through an e-commerce app’s regular payment processor. Facebook benefits by get-ting data about whether Facebook ad clicks lead to sales. ■

The e-commerce division of WorldPay has announced significant growth across all product groups with transaction volumes up 45% compared to H1 2012. In H1 2013, over 257 million gateway transactions were processed. Online transactions reached a record rate of 320 transactions per second.

Alternative payment transactions were a strong driver of growth, with the value of payments processed increasing by 46% in H1 2013 compared to the same period in 2012. The business is confident that it can deliver 20% growth in 2013, with alternative payments growing the fastest.

“The growth that we have seen in the first

MasterCard has announced that 16 Australian payment service providers (PSPs) will introduce

MasterCard’s MasterPass e-commerce prop-osition across their respective merchant customer bases, giving consumers the abil-ity to shop online.

The 16 PSPs – Advam, ANZ, Ashop, BuyReply, Card Access Services, Commonwealth Bank, Ctel, EstarOnline, eWAY, IP Payments, Merchant Warrior, NAB, NoQ, Paycorp, Payment Express and Powerfront – will integrate MasterPass by displaying the

WorldPay e-commerce transaction volume grows 45%

half of 2013 is testament to the business com-mitment to product development and sector-specific relationship management. We have signed significant partnerships which further strengthen our end-to-end services, and the new customer wins in 2013 demonstrate the recognition and demand among global merchants for our international reach through over 200 alternative payment types, industry expertise and data insights. The second half of 2013 looks set to be even more successful,” comments Floris de Kort, CEO, e-commerce division WorldPay.

A study by research company eMarketer forecasts that UK business-to-consumer (B2C) e-commerce sales will reach £62.49 billion in 2013, increasing to £89.73 bil-lion or 16% of total UK retail sales by 2017. According to eMarketer, at £44.06 billion, UK retail e-commerce sales will represent 70.5% of B2C e-commerce sales in 2013. This percentage is expected to rise to almost 72.5% or £65.05 billion in 2017.

The study also shows that sales via mobile phones and tablets are expected to grow by 71.8% in 2013 to reach £6.61 billion, accounting for 15% of UK retail e-commerce sales, and predicts that retail m-commerce sales will continue to increase by more than £2 billion per year over the next four years to reach £17.24 billion in 2017. ■

MasterPass button on their websites.MasterCard’s head of market develop-

ment and innovation for Australasia, Matt Barr, said: “Having so many technology partners onboard illustrates the increas-ing consumer demand for digital wallets. MasterPass technology offers shoppers peace of mind that their personal details are safe, as well as a wider selection of payment options and quicker transaction times, which can ultimately translate into increased customer satisfaction and an uplift in sales.” ■

Source: eMarketer, June 2013.

Global e-commerce penetration 2013

UKGermany

JapanFrance

SwedenAustralia

NetherlandsSouth Korea

CanadaArgentina

ItalyUS

WorldwideRussiaBrazilIndia

Mexico

87.2%

80.2%

78.3%

78.1%

76.3%

76.2%

74.6%

71.1%

63.1%

54.5%

49.3%

45.7%

40.5%

39.7%

36.0%

23.5%

20.4%

Payments takes a starring role at RBTE 2014

www.rbtexpo.com | +44 (0)20 8874 2728 | [email protected]

RBTE is Europe’s largest gathering of the retail community. As the landscape of payments evolves, RBTE provides the platform for the changing needs of many vendors specialising in payments – many of which are increasingly offering solutions beyond pure payments, such as analytics and loyalty.

As well as being of interest to the finance department, other stakeholders including operations, marketing, eCommerce, fraud and risk, store systems and of course the IT department are getting involved in the decision making process - and all of these job functions visit RBTE.

Meet thousands of top retailers such as:Agent Provocateur, Ahold, American Apparel, Anthropologie, Arcadia Group, Argos Limited, Asda, ASOS, Auchan, Aurum Holdings Ltd, B&Q, Benetton Retail, Carrefour, Debenhams, El Corte Ingles, Elkjøp Nordic AS, Gebr Heinemann, Harvey Nichols, Heathrow Express, Home Retail Group, Ikea, Jessops, Jimmy Choo, John Lewis, Morrisons, Moss Bros, Neals Yard Remedies, New Look, Next Retail Ltd, Odeon & UCI Cinemas Ltd, Otto, Paul Smith Ltd, Primark, Ralph Lauren, Tesco, The Disney Store, TJX Europe, Wilkinson

“We had Tesco, Asda, House of Fraser and Morrisons all on the stand at one time – you can’t get a better calibre than that.” Ian Patterson, Sales Director, Box Technologies

FOR THEENTIRE TEAM

Europe’s leading event for the retail industry

The new floorplan is filling up with 75% of the space already taken!

At RBTE you will meet all the decision makers and influencers:

RBTE14 General Ad 210x280.indd 1 18/09/2013 20:11

products


Largest

Payment Card Issuers

and Merchant Acquirers

a 2013 Nilson Report Publication

© HSN Consultants Inc. 2013 THE NILSON REPORT, www.nilsonreport.com/largest issuers. Reproduc-

ing or allowing reproduction or dissemination of any portion of this document in any manner is a

copyright violation subject to substantial fines.

Worldwide

Fifth Edition

Asia/Pacific, Canada, Latin America, Europe, United States, and Middle East/Africa

Also lists

250 Merchant Acquirers from 64 countries in all world regions

New for 2013

85 pagesFigures include cards in circulation and spending formore than

880 credit & debit card issuersfrom 115 countries in all world regions

Order Todaywww.nilsonreport.com/largestissuers

Stripe aims to enable businesses to accept card payments on websites and in mobile apps, with the aim of replacing legacy merchant processors and banks.

According to Stripe, it has already achieved significant scale in the US and Canada, processing millions of dol-lars each day for companies including Heroku, Foursquare, Evite, Grooveshark and Reddit.

Businesses can accept all major card types including Visa, MasterCard and American Express, while retaining full control over the check-out experience on their website. For the first time, Stripe is launching support for multiple currencies: UK users can charge in US dollars, sterling and euros immediately. Pricing in the UK starts at 2.4% + £0.20 per transaction + VAT, with volume dis-counts available upon request. ■

Stripe launches in the UK

of the year. The NFC solution provided by Oberthur Technologies includes a TSM to deploy and manage the service over-the-air (OTA), NFC SIM cards, a mobile PayPass payment application and a mobile wallet allowing end-users to activate their pay-ment cards and view their transactions his-tory from their Samsung Galaxy S3 phones.

Banco Santander’s MasterCard payment card will be fully secured by the NFC SIM card. Once the payment card is activated on their NFC SIM cards, the end-user can tap the phones onto contactless terminals. ■

Oberthur selected by Movistar Chile and Banco Santander Chile

Oberthur Technologies has been selected by Movistar Chile, a major mobile operator in Latin

America, and Banco Santander Chile, one of the largest retail and commercial banks in Latin America, to be their Trusted Service Manager (TSM) and provide an end-to-end solution for their NFC pilot.

After the initial trial with selected end-users and participating shops in the Santiago area, the service will be opened throughout Chile with 5,000 compatible payment terminals expected by the end

MasterCard, UnionPay and Visa. It accredits laborato-ries and qualifies test tools that in turn can deliver EMV product approval.

This particular EMVCo contactless specification describes the minimum functionality required for operation and market interoperability. ■

IBM’s Smarter Commerce initiative, member banks from Visa Europe can accelerate the deployment of a range of mobile services on all types of devices.

Visa predicts that by 2020, more than half of its transac-tions will be carried out on a mobile device. Monitise’s Bank Anywhere, Pay Anyone and Buy Anything solutions form the basis of Visa Europe’s forthcoming mobile offerings. ■

EMVCo has approved the latest version of FIME’s automated EMV contactless analogue test bench for EMV Contactless Specification Level 1. The tool is available for purchase as an off-the-shelf product for in-house test-ing and is currently used by FIME as part of its EMVCo accredited laboratory offering to validate EMVCo Proximity Integrated Circuit Cards (PICC).

EMVCo is the EMV standards body col-lectively owned by American Express, JCB,

IBM, Monitise and Visa Europe have teamed up to enable Visa Europe to pro-vide its member banks with new mobile banking, payment and commerce services in the cloud for its customers.

IBM will help Monitise extend and scale the adoption of these services with Visa

Europe and develop addi-tional services to bring

to the mobile mar-ketplace.

By support-ing Monitise

solutions with

EMVCo qualifies FIME’s automated RF test tool

Monitise, Visa Europe and IBM accelerate cloud m-commerce

www.paymentcardyearbooks.com

Stay one step ahead with deep industry information and a wealth of statistics from central banks, interbank companies and associations and individual banks.

2013-14 EDITION Payment Cards Statistical Yearbooks 2013-14

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In order to respond to the changing and new payment industry markets, the 2013-14 edition Yearbooks have been enhanced by adding:

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by acquirer• More on contactless cards and digital wallets• More e-/m-commerce information, e-payments

mix and statistics • More on notable mobile payments initiatives• More on basic fraud trends and statistics• Mobile merchants and MPOS terminals • Notable market trends – battlefields in the

payment industry

European Payment Cards Yearbook and Eurasian Payment Cards Yearbook 2013–14 are published in November 2013 and will be available as a complete volumes or as individual country profiles.

For further details, to view full synopsis or download a sample country report visit: www.paymentcardyearbooks.com

contracts


European payment processing group SIA has acquired a 51% stake in Italian telecom firm Emmecom, which spe-cializes in fixed, mobile and satellite telecom networks, with an option for the remaining 49% to be exercised as of 2016.

SIA will also launch new network solu-tions for remote monitoring based on M2M (machine to machine) technology, which permits various devices – such as sensors, probes, video cameras, etc. – to be controlled remotely, and the automatic transmission of status reports to central information collection and handling points.

SIA’s objective is to create a single technology infrastructure operative at European level, capable of simplifying communication between merchants and banks.

This platform will gather the traffic of cards payments generated by the multi-channel POS terminals and deliver it securely and reliably to the authorisa-tion systems of banks, terminal handlers and other acquirers. ■

Private equity firm CVC Capital Partners has announced a deal to buy a majority stake in UK online payments provider Skrill Group from Bahraini investment firm Investcorp for around €600 mil-lion. Investcorp will keep a “substantial” minority in Skrill and retain a seat on its board when the deal closes, subject to regulatory approvals.

Skrill was established in 2001 and is one of Europe’s largest online payment systems and among the world’s biggest independent digital wallet providers, with over 36 million account holders. In 2007, Investcorp paid €25 million for a controlling stake in the company. By 2012 Skrill’s revenues were more than €200 million. ■

SIA acquires Emmecom

CVC Capital buys Skrill

machines in the UK, of which 1,800 are free-to-use ATMs, located primarily at independent convenience stores and ser-vice stations. In Germany the business trades as Cardpoint where it operates 800 ATMs.

In conjunction with this deal, Cardtronics will launch a new corporate identity for its European operations, Cardtronics Europe, which will combine Cashzone, Cardpoint and Bank Machine, Cardtronics’ existing UK subsidiary.

From a consumer point of view, the Bank Machine and Cashzone brands remain intact in the UK, as well as the Cardpoint brand in Germany. ■

Cardtronics acquires Payzone UK and German ATM businesses

Payzone Group, a European payments and ATM terminals company, has agreed to sell its ATM business in the

UK and Germany to global ATM services provider Cardtronics. Payzone Group is majority-owned by private equity firm Duke Street, which has restructured the business in order to effect a phased sale of Payzone assets.

Payzone will continue to own pay-ment terminals operations in Ireland, UK, Sweden, Romania and Greece and the group will be debt-free following the disposal.

The total cash consideration for the sale is £107.5 million. Cashzone has 7,100

cross-selling and create new revenue oppor-tunities by providing existing and new clients with a more powerful set of tools.

Gerrard Schmid, CEO, D+H, said: “We look forward to using our complementary tech-nologies and expanded capabilities to meet the broader needs of our combined client base of 6,200 and to forge an even stronger value proposition for the future as we con-centrate on growing our presence among the 13,000 banks and credit unions who form our available market.” ■

of the cash handling and banknote busi-ness. Pursuing our growth strategy, we now have an excellent base from which to expand the business, enter into new mar-kets and enhance our offering to existing customers. With our innovative technol-ogy we are ideally positioned to leverage Currency Tech’s potential to the fullest”, stated Donald MacDonald, managing director of GDGB. ■

Canadian financial technology firm Davis and Henderson (D+H) has completed the $1.2 billion cash acquisition of US counter-part Harland Financial Solutions. Previously owned by Harland Clarke Holdings, Harland claims thousands of financial institution clients for technology covering branch automation, business intelligence, core pro-cessing, enterprise content management, compliance, payments, risk management and self-service.

D+H hopes that the deal will fuel product

European payment technology provider Giesecke & Devrient Great Britain (GDGB), and UK cash-handling specialist Currency Tech have entered into a definitive agree-ment, under which GDGB will acquire all shares of Currency Tech. By acquiring Currency Tech, GDGB is complimenting its existing product and service portfolio.

“G&D has longstanding and excellent expertise along the complete value chain

D+H closes $1.2bn Harland acquisition

Giesecke & Devrient to take over UK’s Currency Tech


conferences

demand for added-value services, the introduction of high-end SIM cards includ-ing EMV, as well as the promise of smart identification in the largest country of Latin America, promises huge growth opportu-nities for the industry.

One of the highlights of this year’s event will undoubtedly be the “Digital Wallets & eMoney” session on 21 November, chaired by Daniel Chatelain, founder and manag-ing director of BayPay Forum of the US. When it comes to wallets and e-money, each of the key players in the eco-system, retailers, financial institutions, MNOs, tech-nology providers, cell phone manufactur-ers, and payment providers are going to have very different strategies. This session will explore the forces that are changing money in the digital age. ■

Industry gears up for Cartes 2013

The Cartes 2013 Secure Connexions Event will be taking place at the Paris-Nord Villepinte Exhibition Centre

from 19 to 21 November. This year’s theme, “Building Trust in Mobile Life”, will look to the rapid pace of development occurring across all fields related to mobile payment, access and ID technology

Brazil will be this year’s guest of honour country. With a population of over 180 million people and sustainable economic growth, Brazil offers numerous oppor-tunities for the smart card industry. The

BAI Retail Delivery P34 www.bai.org/retaildelivery/index.asp

Cartes 2013 Cover P3 www.cartes.com

Datacard P9 www.datacard.com

FIS P13 www.fisglobal.com

Merchant Payments Ecosystem 2014 P31 www.merchantpaymentsecosystem.com

Nilson Report P35 www.nilsonreport.com/largestissuers

Nordic Card Markets P15 www.nordiccardevent.co.uk

OpenWay Group Cover P2 www.openwaygroup.com

Payment Cards Yearbooks P36 www.paymentcardyearbooks.com

Retail Business Technology Expo P33 www.rbtexpo.com [email protected]

Risk, Regulation & Innovation P25 www.mobilepayments-rri.com

Six Payment Services P11 www.six-payment-services.com/solutions

VeriFone Cover P4 lp.verifone.com/global/cartes Email:[email protected]

Advertisers index

Pay 360 2 October, London www.yourgx.com

Money 2020 6-10 October, Las Vegas www.money2020.com/

11th CEE Retail Banking Forum 2013 9-11 October, Budapest, http://finance.flemingeurope.com

Digital & Mobile Wallet 10-11 October, London www.dmwsummit.com/

GSMA NFC & Mobile Money Summit 14-17 October, New York www.nfcmobilemoneysummit.com

SmartCards Expo 2013 16-18 October, New Delhi, www.electronicstoday.org

Gitex 20-24 October, Dubai www.gitex.com

Apps World Europe 22-23 October, London Apps World Europe

Merchants & Payments 2013 22-23 October, London www.icbi-events.com/FKP2354MPW

Risk, Regulation and Innovation in Mobile Payments 5 November, London www.mobilepayments-rri.com

The Future of Nordic Banking 5-6 November, Copenhagen http://marketforce.eu.com/events/

BAI Retail Delivery 5-7 November, Denver www.bai.org/retaildelivery

Mobile Money Global 5-7 November, Dubai www.mobile-money-gateway.com/event

4th Mobile Payment China 2013 7-8 November, Shanghai, China www.mobilepaymentchina.com/

Cartes 2013 19-21 November, Paris www.cartes.com

Conference diary

wide community of innovators beyond just payments and financial services to include retail, mobile, advertising and marketing services and other sectors that are pro-foundly changing how consumers and busi-nesses manage, spend and borrow money.

Money2020 explores the macro trends that form the common thread in payments and financial services innovation, such as the mobile internet, open platforms and consumer empowerment.” ■

The inaugural Money2020 event in 2012 established an entirely new scale and stan-dard for events in emerging payments and financial services. This year’s event is expected to bring 4,000 attendees, includ-ing over 300 CEOs, from more than 1,250 companies and 50 countries around the world to Las Vegas between October 6-10.

The event aims to connect the world-

Money 2020

19,072 Visitors

435 Exhibitors

137 Countries

BUILDING TRUSTIN MOBILE LIFE

EXHIBITION & CONFERENCESECURE SOLUTIONS FOR PAYMENT, IDENTIFICATION AND MOBILITY

Paris Nord Villepinte FRANCE

19-21 NOVEMBER 2013Register on www.cartes.com

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Documents

in this issue - Payments Cards & Mobile...very encouraging reading for the payment industry. All forms of non-cash payments, such as debit cards, credit cards, e-commerce and mobile