ASIA-PACIFIC

Consumer indebtedness

Credit card debt on the rise in China

The amount of Chinese credit card debt that is at least six months
overdue rose to CNY4.97 billion ($727.6 million) in the first
quarter of 2009, a rise of 133.1 percent compared to the year-ago
period, according to figures released by the People’s Bank of China
(PBoC).

Debt overdue by six months or more accounted for 3 percent of the
total outstanding credit card debt at the end of March, or 0.6
percentage points more than in the same period last year, the PBoC
said.

The central bank has warned that increasing credit card debt would
pose a much greater risk for financial institutions which have
rapidly expanded their credit card operations over the last few
years.

As of 31 March, Chinese banks had issued more than 150 million
credit cards, or 0.11 card per person, up 42.9 percent
year-on-year.

Outstanding credit card loans rose 87.6 percent year-on-year to
CNY165.86 billion at the end of March.

 
Payment infrastructure

Strong Vietnam card market growth in 2009

Figures given by the director of the department of payment at
Vietnam’s central bank, the State Bank of Vietnam, show that more
than 16 million payment cards had been issued in the country by the
end of April 2009.

More than 98 percent are debit cards and 1.8 percent are classed as
credit cards, with 41 issuers operating in the country.

Most cards issued are of the magnetic stripe variety, although some
issuers are stepping up issuance of EMV cards.

Card acceptance is also rising, with more than 8,000 ATMs and
27,000 POS terminals now in operation.

However, the State Bank of Vietnam cites a lack of system
compatibility as being an obstacle to card growth.

There are three main card systems in Vietnam – Bank-netvn, the
Smartlink Card Service Joint Stock Company, and the DongA Bank’s
Vietnam Card Network.

Among the initiatives that the State Bank of Vietnam is promoting
is the use of e-wallet services.

The State Bank is supervising a pilot period in which some issuers
have been given permission to supply e-wallet services. If the
trial is successful, such services will be rolled out
nationwide.

 
Commercial cards

Citi launches commercial card in Indonesia

Citi Indonesia has launched the Citibank commercial card for
corporate clients across the country.

Citi is the first global bank in Indonesia to introduce the card as
part of a package including a Citi purchasing card, allowing
corporate clients to have real-time visibility of spending and
expenditure management.

The Citibank commercial card, which is MasterCard-branded, provides
companies with customised and online consolidated statements for
expense analysis through the Citibank Custom Reports System
(CCRS)

This solution enables integration of card transaction data into a
company’s expense management system, such as CONCUR, SAP, Oracle or
Citi’s Global Card Management System (GCMS).

 
Mobile payments

Bangkok Bank rolls out Fiserv m-banking
technology

Thailand’s Bangkok Bank has signed up for US payment solution
provider Fiserv’s Mobile Money service, which will enable customers
of the bank to access its internet banking platform from their
handsets.

The M-Com powered browser-based application, available in Thai and
English, lets users view account information, pay bills, transfer
funds and top up their mobile phone account.

According to Fiserv, Thailand’s mobile penetration rate is over 80
percent, one of the highest in the Asia-Pacific region, rapidly
growing from 44 percent in 2004.

Karen Campbell, executive vice-president of Bangkok Bank, says
people in Asia want portable banking tools to complement busy,
highly mobile lifestyles.

She cites a recent focus group of late teens which found that
participants consider using an ATM “too much effort”.

“The uptake of this cutting-edge consumer banking technology
demonstrates a significant shift in how banks across the world
connect with their customers,” says Campbell.

Mergers and acquisitions

Clear2Pay buys China’s ETH Tech

Belgian payments outfit Clear2Pay has moved to expand its presence
in the burgeoning Chinese market by agreeing a deal to buy Chinese
information vendor ETH Tech.

Clear2Pay China will acquire all shares in ETH Tech, which was
founded in 2004 and focuses on business intelligence for banks,
financial institutions, government agencies and large corporate
organisations.

The company’s clients include China Construction Bank, China
National Clearing Centre, Bank of China and the central bank,
People’s Bank of China.

ETH Tech will be rebranded as Clear2Pay Beijing. The unit will work
in conjunction with Clear2Pay’s Shenzhen office on developing,
integrating and implementing payments systems for Chinese banks and
other financial institutions.

 
Prepaid cards

Indian retailer launches reloadable gift
cards

Indian book and music retailer Landmark has launched its own range
of reloadable gift cards, which combine the features of credit
cards, debit cards, prepaid cards and gift vouchers in one
product.

The cards can be used to make online purchases and bear no expiry
dates, and cardholders can also check their balances online.

Landmark has also launched a corporate version of the card allowing
corporates to avail themselves of special discounts on bulk
purchases at Landmark locations.

The Landmark electronic gift cards are available across all the
major stores of company in locations such as Ahmedabad, Bangalore,
Baroda, Chennai, Gurgaon, Lucknow, Mumbai and Pune.

Consumer indebtedness

Australian consumers shunning credit cards

Australian consumers spent 7.5 percent less on their credit cards
in April than they did in March, according to figures from the
country’s central bank, the Reserve Bank of Australia (RBA).

The figures show the first annual contraction in credit card
lending seen since records began over 14 years ago.

Meanwhile, the amount of spending on debit cards has risen 31
percent in the last year, RBA figures show.

Figures published by the bank in May showed a 12.9 percent increase
in debit card spending over the course of March.

 
EUROPE, MIDDLE EAST, AFRICA

Prepaid cards

Raiffeisen and RêvEurope debut Romanian prepaid card

Raiffeisen Bank and RêvEurope have launched the Raiffeisen Bank
Visa prepaid card in Romania, which allows Romanian consumers to
send money domestically from their mobile phones.

The card is also the first prepaid proposition to be launched in
the Romanian market by a banking institution and is available at
Raiffeisen bank branches.

Customers who buy and load cash on the card can shop online, make
purchases anywhere Visa debit cards are accepted, withdraw cash
from ATMs worldwide and use the integrated YAP mobile service to
send money domestically to friends and family or check balances
from their mobile phones with a text message. They can also manage
their accounts online.

Raiffeisen Bank will soon extend the card’s availability beyond its
branch locations to merchants, giving retailers the opportunity to
participate in Romania’s fast-growing financial services
market.

“By providing convenient and familiar places where consumers can
access and top up funds, retail partners can enjoy an easily
deployable channel for increasing store traffic and boosting
consumer loyalty and purchasing power,” said John Mitchell, chief
executive officer of RêvEurope.

 
Business strategy

EnterCard celebrates 1m cards in Nordic region

Nordic card issuer EnterCard is marking the issuance of one million
MasterCard cards across Sweden, Norway and Denmark.

Since its launch in 2005 by Barclays Bank and Swedbank, EnterCard
has been managing a growing portfolio of customised payments
solutions, via a number of financial institutions as well as
directly to consumers through its re:member brand.

Håkan Nyberg, CEO of EnterCard, said: “We are proud of having
reached this 1 million card milestone which underlines our strong
partnership with MasterCard and our joint belief in the power of
systematic customer relationship management.

“MasterCard’s deep understanding of the opportunities within the
B2B and B2C card market in the Nordic region as well as their
powerful global network have been key in allowing us to grow our
portfolio in such a short time frame and to optimise loyalty and
profitability of our payment products. As we are extending our
operations across the Nordics, we are committed to continue to
drive value for our business partners and cardholders.”

 
Acquiring and processing

Global Payments acquires remaining stake in HSBC joint
venture

Worldwide payment processor Global Payments has acquired the
remaining 49 percent stake in its merchant services joint venture
in the UK from HSBC for $307.7 million in cash.

The buy-out comes a year after the two formed the HSBC Merchant
Services joint venture to provide payment processing services to
merchants in the UK and internet merchants globally. At the time,
Global Payments paid HSBC $439 million in cash to acquire a 51
percent majority stake in the bank’s UK card merchant acquiring
business.

Under the new agreement, HSBC will extend the current ten-year
exclusive marketing alliance agreement whereby the bank provides
merchant referrals and bank sponsorship to Global Payments until
June 2019.

Global Payments’ chairman and CEO, Paul Garcia, said: “Our
performance in the UK this year has provided a strong foundation
for long-term growth, as we continue to provide a wide range of
high-value payment solutions and world-class service to
merchants.”

Contactless payment

People’s Bank of Georgia and Oberthur team on contactless
payments

People’s Bank of Georgia has teamed with European smart card
manufacturer Oberthur Technologies to launch a combined contactless
Visa payWave payment and transport ticketing card in central
Europe.

The Voyage Card incorporates Visa’s payWave contactless payment
functionality and People’s Bank of Georgia plans to issue the cards
to students and teachers in Georgia’s capital Tbilisi, with payWave
technology introduced in pharmacies, railway stations, fast food
stores, schools and universities.

The card’s Mifare application will also let users purchase
personalised e-tickets for use in Tbilisi’s public transport
system.

The Voyage Card also uses Oberthur’s hot foil stamping card design
technique which sees part of its design stamped with holographic
material.

 
Prepaid cards

MasterCard and Ukash launch rePower prepaid service in
Europe

UK voucher-based prepaid online payments provider Ukash has entered
an alliance with MasterCard to roll out the MasterCard rePower
prepaid card reloading service in Europe.

The service will initially enter the UK market and then other
European markets via partners within the Ukash issuing
estate.

In addition, Ukash is collaborating with prepaid partners to
provide customers with voucher-based reloads as a complementary
service.

Ukash currently has 275,000 issuing points across the world and
processes several million transactions annually with values in
excess of €100 million ($140 million).

Additionally, European payment processor Metavante Technologies is
implementing rePower to service prepaid cards from Advanced Payment
Solutions, which outsources all of its card programmes to
Metavante.

 
Cash and cheque replacement

UK banks set two-year cheque deadline

The UK Payments Council, the national payment industry association,
has set a two-year deadline for the withdrawal of the Cheque
Guarantee Card Scheme, in a move designed to hasten the demise of
paper cheques.

In setting a provisional deadline of mid-2011 for the withdrawal of
the programme, the industry body says the two-year time horizon
should provide ample time for consumers and businesses to implement
alternative methods of payments.

“The payments industry will now need to confirm a viable date for
closing the scheme and for communicating and managing this process
with all users and acceptors,” the Council said in a
statement.

Last year, of the 1.4 billion cheque transactions recorded in the
UK, just under seven percent, or 95 million, were supported by a
cheque guarantee card. The Payments Council says the use of
guaranteed cheques is in rapid decline with volumes down a third in
the last year and by 70 percent in the past five years.

The Payments Council is due to report later this year over whether
it should proceed with a more ambitious plan to shut down the
central cheque clearing system in its entirety.

 
LATIN AMERICA

Payment processing

TSYS expands infrastructure to further support
Brazil

Global payment processor TSYS has announced the opening of a new
office in Campinas, Brazil to complement its existing presence in
São Paulo. TSYS has invested in the new facility to support its
first client in Brazil, Banco Carrefour, and to support all future
Brazilian projects.

Banco Carrefour is Brazil’s leading hypermarket chain and will
outsource its payment services to TSYS. The multi-year processing
and related servicing agreement includes the retailer’s hybrid and
private-label card business, and the launch of a new
MasterCard-branded hybrid card in July.

Antonio Jorge de Castro Bueno, director of business expansion of
TSYS in Brazil, said: “We view Brazil as a market strategic to
TSYS’s international expansion and are focused on developing the
infrastructure to support a long-term presence in the
region.”

TSYS’s global footprint extends to more than 300 clients across 75
countries and is supported by more than 8,000 team members in 21
offices.

 
Mobile payments

Visa teams with VisaNet Perú and Telefonica for mobile
payments scheme

Payment network Visa is teaming up with processor and acquirer
VisaNet Perú and telco Telefónica to pilot a mobile payment
programme in Peru.

Pago Móvil con Visa (Visa Mobile Pay) is a new service that allows
Visa cardholders in Peru to pay for products and services by
initiating a payment over the wireless network. The service is
available to Visa accountholders with credit or debit cards issued
by Banco de Crédito, Interbank, BBVA Continental and Scotiabank in
Peru.

Visa’s commercial mobile payment programme in Peru is the first
programme of its kind in Latin America. Initially, Visa
accountholders will be able to use their mobile phones to pay for
cab fares and send flower arrangements, as well as to top up their
wireless prepaid account.

Jurgen Wassmann, head of emerging products and channels for Visa’s
Latin America and Caribbean region, said: “Visa is bringing the
future of payments to Latin America with a technology that makes
consumers’ lives easier by allowing them to pay anytime, anywhere,
and in a way that is both simple and secure.”

 
IPO

VisaNet share sale

Global processor Visa’s Brazilian affiliate VisaNet will raise
BRL8.4 billion ($4.3 billion) in what will be the world’s biggest
initial public offering (IPO) in more than a year.

Shareholders of VisaNet are selling 559.8 million shares at BRL15
each, according to the Brazilian securities regulator. The sale
also includes a possible supplemental offering. The IPO is a record
in Brazil. A complete sale of all issued shares will make it the
biggest in the world since Visa, owner of 10 percent of VisaNet,
raised $17.9 billion in March 2008 with its own IPO.

Brazil’s credit card market expanded 22 percent in 2008 and about
20 percent every year since 1995, after the government introduced a
new currency to help bring down inflation from 5,000 percent a
year, according to Itaú Unibanco Holding, the nation’s largest
bank.

ATM infrastructure

NCR to build new Brazilian ATM plant

US ATM supplier NCR Corporation announced it is to create a new
manufacturing and research and development centre in Brazil to
produce technologically advanced, high-availability ATMs for
Brazil, Latin America, and the Caribbean markets. The innovation
centre and manufacturing facility will expand over time to include
self-service technologies for a variety of industries.

The new innovation hub will initially create approximately 250 new
jobs and enable NCR to strengthen its competitive position in
Brazil, which is a key market in NCR’s growth strategy. Brazil is
the third-largest ATM market in the world. Payment consultancy
Retail Banking Research predicts that the Brazil ATM market will
grow by 16 percent by 2012.

“NCR has been doing business in Brazil for 73 years,” said Bill
Nuti, NCR’s chairman and chief executive officer.

“Our strategic decision to develop an innovation and manufacturing
hub for self-service technology in Brazil is yet another step in
our commitment to this important market.

“This investment will move us further towards our goal of becoming
Brazil’s largest self-service solutions provider and the leader in
ATM market share.”

EMV

Migration growth levels slowing down

According to a recent report by US payment consultancy Mercator
Advisory Group, global EMV acceptance growth is slowing down.

The research group states that, while EMV benefits continue to be
acknowledged particularly in Europe, Latin America and Canada,
growth has decreased due to the economic downturn, which has driven
financial services providers to reconsider or postpone migration
plans. As far as the outlook of EMV migration beyond 2010 is
concerned, Europe will become totally compliant by that date.

“Demand for EMV products and services will continue to be driven by
the SEPA initiative in Western Europe, though emerging markets in
Latin America and Central and Eastern Europe have good potential as
well,” said Terry Xie, director of Mercator Advisory Group’s
international payments advisory service and principal analyst on
the report.

“China is finally moving as China UnionPay starts to replace its
POS terminals but the US is still on the sidelines, though
neighbour pressure from Canada and Mexico could start to break the
ice.”

Remittances

Western Union launches digital vendor
programme

Western Union, a global money transfer services specialist, has
announced the launch of its ‘Digital Vendor’ programme intended to
extend the reach and accessibility of Western Union money transfer
services to mobile finance initiatives in Latin America, Africa,
the Middle East and Asia-Pacific.

“Establishing a strong mobile vendor programme is a critical step
in the delivery of our ‘Western Union Anywhere’ service
proposition,” said Matt Dill, senior vice-president and head of
Western Union digital ventures.

“By collaborating on a global level with proven mobile platform
providers, we believe we can simplify deployments for our mobile
partners and introduce a more consistent Western Union experience
for consumers.”

Western Union entered the mobile finance space in the second
quarter of 2008, with an endorsement for a global pilot programme
by the GSM Association, a global trade association representing
more than 750 mobile operators worldwide.

The first providers to join the programme are four mobile finance
platform providers with both active and planned service
implementations: South Africa-based Fundamo, India-based mChek,
US-based Sybase 365 and Singapore-based Utiba.

NORTH AMERICA

Security and fraud

All financial services data at risk – report

US payment research firm TowerGroup has released a report that says
US financial services firms must now expect that all their clients’
data either has been, or will be, compromised.

The report says that despite increased media attention, increased
regulation, the massive costs associated with data loss and
negative customer reactions, firms are still losing millions of
customer data records every month.

The report states that financial institutions must now assume all
of their clients’ and prospects’ personal information has been
compromised or will be. Over 100 data breach incidents containing
millions of data records were reported in just the first four
months of 2009.

“While greater access to customer data is key for businesses to
improve customer relationship management and business processes,
there will always be repercussions, including the possibility of
personal data landing in the hands of the wrong parties,” said
George Tubin, senior research director for financial information
security at TowerGroup.

“However, while the battle to protect data has been lost so far,
TowerGroup firmly believes that the war can be won.”

Security and fraud

Veritec system lets users turn cards on and off via mobile
phone

Veritec, a US developer of mobile banking debit card solutions, has
announced the release of security software allowing users to turn
their debit cards off with their mobile phones.

The security software means card issuers and sponsors may provide
Veritec’s branded debit or gift cards to individuals with and
without demand deposit accounts.

With a Veritec card the cardholders can combat unpermitted and
fraudulent use of their debit cards by turning their card functions
on and off with their mobile phones.

In addition to this toggling feature, cardholders may apply for
their cards online, arrange for direct deposits to be made to their
cards, and transfer money to their card from another account.

Cardholders may also elect to receive various alerts on their
mobile phones about activity on their card.

Jeff Hattara, president and CEO of Veritec, says: “People no longer
have to completely rely on their card issuers to monitor possible
fraudulent activity on their accounts. Cardholders can now
de-activate their cards themselves, in real time, any time they
choose to do so.”

Legal issues

TJX agrees $9.75 million settlement with US
states

US retailer TJX has agreed to pay around $9.75 million as part of a
settlement with a group of 41 state attorneys general investigating
the theft of millions of credit and debit card numbers during a
security breach disclosed in 2007.

Under the settlement, TJX will pay $9.75 million, including $2.5
million to set up a new ‘Data Security Fund’ to be used by the
states. It will also certify that its computer systems meet data
security conditions specified by the states.

Jeffrey Naylor, chief financial and administrative officer of TJX
Companies, stated: “This settlement furthers our goal of enhancing
consumer protection, which has been central to TJX.

Under this settlement, TJX and the attorneys general have agreed to
take leadership roles in exploring new technologies and approaches
to solving the systemic problems in the US payment card industry
that continue to plague businesses and institutions and that make
consumers in the US worldwide targets for increasing cyber
crime.”

Payment processing

Metavante renews issuing agreement

Metavante, the banking and payments technology provider and payment
processor, has announced the renewal of its prepaid card processing
agreement with First National Bank of Omaha.

Extending an agreement that began in 2005, First National Bank of
Omaha will continue offering its smartOne prepaid solutions
products and services with account processing and real-time account
validation services from Metavante. First National Bank of Omaha’s
smartOne prepaid solutions portfolio includes payroll,
reward/incentive and corporate disbursement (travel expenses and
relocation funds) prepaid cards.

“Metavante delivers the processing stability and scale we need to
facilitate the growth of our smartOne prepaid solutions offerings,
as well as the flexibility to quickly offer new functionality,”
said Scott McCormack, vice-president of First National Bank of
Omaha.

“Shared core values between our two companies are at the heart of
our relationship, and those shared values allow us to quickly
enhance our offerings to meet the needs of the prepaid
marketplace.”

Prepaid cards

Mint Technology and Advanced Payments Solutions sign
issuing bank agreement

Canadian prepaid card provider Mint Technology announced that it
has entered into a business partnership and issuing bank agreement
with UK prepaid provider Advanced Payment Solutions (APS) for
Mint’s prepaid business in the UK.

APS Financial will act as the issuing bank for Mint’s prepaid
products in the UK. APS will provide services including interface
with MasterCard for the approval of programmes, legal and
regulatory oversight, assistance with marketing and consumer
communications, and oversight of money laundering, fraud, and
Serious Organised Crime Agency (SOCA) reporting.

Chris Hogg, president and CEO of Mint, said: “Both companies are
structured to be a successful player in prepaid financial services
by delivering a low-cost, high volume product to specifically
target under-banked facets of the population, such as immigrant and
migrant workers, youth, and the credit challenged.”

Card re-pricing

JPMorgan Chase to increase charges on card balance
transfers

US financial institution JPMorgan Chase is to increase some balance
transfer fees on its credit cards to 5 percent.

The financial services provider said the increase was wholly
necessary, citing increasing regulations and costs after the US put
new curbs on the industry. JPMorgan currently has around 159
million cards in circulation and over $176 billion in managed
loans.

The Credit Card Accountability Responsibility and Disclosure Act
that President Barack Obama signed recently requires issuers to
apply payments to balances with the highest interest rates first
and prohibits “universal default”, this is the practice of raising
rates on existing balances if cardholders miss payments to other
lenders, even when their card accounts are up to date.