MasterCard Worldwide is urging the
government of Taiwan to adopt prepaid cards to replace government
consumer vouchers, after figures released by MasterCard revealed
that the country’s electronic payments sector suffered a 20.85
percent drop in sales for the month of January.

Figures from the Financial Supervisory
Commission of Taiwan showed that the country’s total spending on
credit cards fell by 16.46 percent to NT$102.5 billion ($2.93
billion) in January from the previous month’s NT122.5 billion, far
below the monthly average in 2008 of NT$120 billion. MasterCard
Worldwide attributed the drop to the NT$85.7 billion in vouchers
issued by the government, half of which were spent or cashed within
a month of being distributed on 18 January.

MasterCard Worldwide claims that migrating to
a prepaid scheme operated by banks would save the government around
NT$2 billion in current operating costs for the paper-based voucher
scheme, with cost benefits being used to promote point of sale card
acceptance among retailers in Taiwan. About 180,000 of Taiwan’s
500,000 registered retail shops are equipped with electronic POS
terminals.

Credit card
pricing
Survey highlights Australian card
fees

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A survey by global business
consultancy Fujitsu Consulting claims that Australian banks will
collect about A$5 billion ($3.20 billion) in fees from customers
this year for a range of banking services. Of that figure, A$1.5
billion is tied to credit card fees. The survey found that
Australians pay an average of 22 percent more in bank fees than
consumers in the UK and 11 percent more than US consumers.

Fujitsu’s survey stated that there are 300
different fees in Australia compared to 200 in the UK and are on
average higher, with fees going up by an average of 10 percent per
year. In relation to credit cards, foreign card transactions incur
a higher percentage charge from Australian issuers, and many bank
accounts have a monthly transaction account fee, whereas banking in
the UK is mostly free.

According to Fujitsu, Australian banks are
less efficient than their US or UK counterparts and use fees to
recoup gaps in revenues. However, Fujitsu also indicated that the
Australian banking sector is less competitive than elsewhere,
meaning that banks have more freedom to charge higher fees.
However, the Australian Bankers’ Association says that bank fees
are reasonable and are comparable to those found in Canada and the
Netherlands.

Card fees
ANZ
scraps foreign ATM fees

ANZ Bank of Australia has announced
the elimination of foreign ATM fees charged to customers who use
non-ANZ ATMs. The bank said there would be no charge for customers
who use ANZ ATMs and electronic funds transfer at the point of sale
(EFTPOS) withdrawal facilities.

The move follows a request from the country’s
central bank, the Reserve Bank of Australia, for financial
institutions to increase the transparency of ATM fees. ANZ will
remove the AS$2 ($1.28) fee which currently applies to customers
who withdraw cash from a rival bank’s ATM, and will directly charge
A$2 to non-ANZ customers who use ANZ ATMs.

Brian Hartzer, CEO of ANZ, said: “If other ATM
providers propose a charge for ANZ customers for using their ATMs,
our customers will see a notice on the screen informing them of the
charge so they will have a choice of whether to continue or not. We
would prefer our customers did not have to pay any ATM fees and so
we encourage our customers to use one of ANZ’s 2,500 ATMs or one of
the 670,000 EFTPOS cash-out facilities around the country.”

Smart cards
Taiwan transport operator looks for e-wallet partners

Taiwan’s subway operator, Taipei
Rapid Transit (TRT), is looking for partners to offer an e-wallet
function for its transport smart card Easy Card, which can be used
in the subway, buses and parking lots in the Greater Taipei area of
Taiwan.

The transport operator is looking to partner
with coffee chains, fast food operators, petrol stations, cinemas,
bakery shops and vending machine operators as early as June 2009.
TRT is targeting transactions below NT$500 ($14).

There are 15.2 million Easy Cards in
circulation with 3.2 million transactions a day. Convenience store
chain 7-Eleven in Taiwan is also slated to join in the fray through
its iCash prepaid card, which has 7 million cardholders.

Card spending
South Korea credit card spending growth slows

Figures from South Korea’s Ministry
of Strategy and Finance show that credit card usage posted
single-digit growth of 6.7 percent for February after an increase
of 10.4 percent in January.

The Ministry stated that private spending in
the country is likely to remain sluggish in the months ahead as
household incomes fall and asset prices decline. The government
will strengthen its policy efforts through the establishment of an
extra budget and restructuring of industries to support the
weakening domestic economy, it reiterated.

Electronic payment migration
Vietnam electronic payment system enters second phase

The second phase of Vietnam’s
Interbank Electronic Payment System, funded by the World Bank, has
commenced ahead of schedule.

The system is being managed by the
country’s central bank, the State Bank of Vietnam, and has been
launched to promote non-cash payment services and boost the
development of Vietnam’s economy and burgeoning banking
industry.

Mobile payments
Indian bank launches mobile payment service

Indian commercial bank Yes Bank is
to launch a mobile payment service, ‘Pay Anyone’, in partnership
with Obopay, a mobile payment services provider. The service will
allow customers to transfer money to customers of any other banks
via their mobile phones.

The new service will also offer ticket
booking, mobile top-up and other facilities. Currently, Yes Bank
offers a mobile payment solution enabling customers to send money
in real time only to those registered through Obopay mobile payment
solutions. There are around 5,000 customers using the service at
present.

According to Yes Bank, in India there are 250
million bank customers compared to 300 million mobile phone
customers, which represents a huge opportunity for Yes Bank to
capitalise on mobile payment solutions.

EUROPE, MIDDLE EAST,
AFRICA

Mobile payments
Saraf-Mobile launches p2p service in Sudan

Mobile money services provider Mi-Pay and
Isys Global Trading Group, a value-added service provider to mobile
operators and financial institutions, have combined forces to
launch a new person-to-person (p2p) money transmission service
which is now fully operational in Sudan, Africa.

Saraf-Mobile delivers secure payments
capabilities to companies and individuals using their mobile phones
and also includes a cash transfer channel for financial
institutions. The new service is the first phase in a planned
roll-out which will cover 22 countries within the Middle East and
North Africa.

With Saraf-Mobile, people in Sudan can
now transfer money immediately from one recipient to another
irrespective of their location. Money can be sent to family and
friends; businesses can receive payment direct from customers’
mobiles; and financial institutions can target and serve the
country’s mobile consumer base.

Contactless payment
Cornèrcard adds ID and access control

Swiss card issuer Cornèrcard is to modify
its Visa payWave contactless payment cards to incorporate ID
credentials and access control applications.

Cornèrcard says it will use transponder
technology from Swiss chip card technology outfit Legic to convert
the card to a multi-application credential-enabling access control
device. This will extend the use of the credit cards beyond pure
payments to incorporate access to leisure or club facilities, as an
e-ticket for public transport or as an identification badge for car
sharing.

Giovanni Bettoni, manager of special
projects at Cornèrcard, said: “Innovation is key to offering good
customer service. Our contactless Visa payWave card will allow our
customers not only to use the card for payment transactions, but
also to extend the use to access applications.”

Merchant acquiring
Amex appoints First Data in Poland

Global payment processor First Data and
American Express (Amex) have formed a new merchant services
agreement in Poland. Under the terms of the agreement First Data
will become the exclusive merchant acquirer and merchant processor
for Amex card transactions in Poland.

First Data will assume responsibility for
the range of merchant services including signing new merchants to
accept Amex-branded cards, managing relationships with existing
merchants and processing merchant transactions on the Amex
network.

First Data will also be responsible for
managing and implementing new solutions for Amex merchants in
Poland, including migration to the EMV standard. Amex card
acceptance will remain available to Polish merchants through a
number of acquiring agents, overseen by First Data.

Fees and pricing
Nationwide to impose travelling charges

UK building society Nationwide has
reversed its long-standing policy of not charging credit and debit
card customers when they use cards abroad. Nationwide will now pass
on to customers any charges for purchases in foreign currencies
made abroad from 6 May. Visa charges a fee for each foreign
currency transaction and Nationwide absorbs it on behalf of
customers. This fee is currently 0.84 percent but will rise to 1
percent.

Nationwide cited the economic slump as
the reason it can no longer absorb the charges, saying it had to
maintain the balance between offering competitive products while
ensuring they were sustainable in the long term. Nationwide added
that its cards remain commission-free when used anywhere in the
world and customers using their cards in Europe will not incur any
charges as the Visa fee does not apply in Europe.

EMV
Qatar banks pushed to replace ATM cards

The Qatar Central Bank has asked banks in
the country to replace all ATM cards with EMV-enabled ones.

There are an estimated 1.2 million ATM
cards in the country, and banks which have not yet switched over to
EMV cards have been requested to stop transactions on
magnetic-stripe cards.

The move by the central bank follows
recent reports about ATM cardholders being subjected to hacking
attempts, resulting in loss of money from their accounts.

Product launches
First Visa card launched in Guinea Bissau

Banco da África Ocidental (BAO) has
launched the first Visa card service in Guinea Bissau. BOA’s main
branch in Bissau includes an ATM where Visa cardholders can perform
banking operations.

At the moment cash withdrawals are not
available but the service will be implemented soon, with BOA
planning to increase the number of ATMs once technical and
logistical issues have been resolved. BOA was the first bank to
introduce debit cards in Guinea Bissau.

Prepaid cards
CredEcard launches MasterCard prepaid

UK prepaid solution provider CredEcard
has delivered a prepaid payroll card programme for Lloyds TSB
Commercial Finance.

The Acorn prepaid MasterCard card has
been launched to complement the current portfolio of products that
Lloyds TSB provides via its recruitment finance division.

The card delivers a prepaid application
supporting payroll provision in combination with a prepaid card
facility. Lloyds TSB Commercial Finance has introduced the Acorn
prepaid card to enable agencies to pay their temporary unbanked
staff in the same way as banked staff.

Matt Lanford, head of prepaid Europe at
MasterCard, said: “More companies are turning to prepaid cards.
Research from PSE Consulting suggests this trend will continue in
Europe, with payroll cards estimated to turn over €10.7 billion by
2015.”

Mobile payments
NXP transfers mobile services to Gemalto

Smart card manufacturer Gemalto and
semiconductor manufacturer NXP have entered into an agreement
whereby NXP will transfer its mobile services business to
Gemalto.

The related unit based in Sophia
Antipolis in France will continue to develop and market software
and service solutions compliant with the MIFARE4Mobile interface
specifications which manage MIFARE-based applications in
near-field-communication (NFC) mobile devices.

MIFARE is a contactless technology
predominantly used within transportation networks, ticketing and
access management applications. Both companies claim the move will
accelerate the global adoption of NFC technology in existing
contactless infrastructures, and further promotes the deployment of
MIFARE.

The specifications of the MIFARE4Mobile
interface and the associated intellectual property will remain in
the ownership of NXP who will ensure interoperability and full
availability to all market players.

LATIN AMERICA

Credit growth
Banco do Brasil to expand credit base

Banco do Brasil (BB), Brazil’s largest
government bank, is aiming to expand its client base and its credit
portfolios in 2009 despite the global credit crisis. BB expects to
expand its credit portfolios by 13 to 17 percent in 2009, having
ended 2008 with a total credit portfolio of BRL224 billion ($93
billion), a rise of 40 percent from the year before.

BB’s non-performing loan (NPL) rate
reached 2.4 percent at the end of 2008, compared with 2.2 percent a
year earlier. BB expects to invest BRL1.2 billion in 2009 in
technology and expansion and modernisation of its branches,
compared with BRL1 billion invested last year.

The bank has also reaffirmed its interest
in holding an initial public offering (IPO) of shares for Brazilian
payment card services provider VisaNet, which is 40 percent
controlled by Banco Bradesco and 32 percent by BB. ABN AMRO holds
14 percent, while Visa holds 10 percent. VisaNet unveiled its IPO
plans in September 2008, but suspended the plan due to adverse
market conditions.

Mergers and acquisitions
Itaú-Unibanco deny Banamex interest

Brazil’s largest bank, Itaú-Unibanco, has
denied it is in talks to buy Citigroup’s stake in Mexican bank
Banamex, saying it has not negotiated any stake in Banamex’s
capital. However, this runs counter to remarks made by
Itaú-Unibanco CEO Roberto Setubal in which he stated that the bank
was looking at possible acquisitions in Mexico.

Itaú-Unibanco was formed in late 2008 by
the merger of Itaú and Unibanco. The merged bank is Brazil’s
largest financial institution. Industry analysts estimate that
Banamex could be worth at least $9 billion. Mexican banking
regulators are analysing the legal implications of the US
government’s plan to boost its equity stake in Citi. Citi may be
forced to sell its stake in Banamex due to Mexican banking
regulation that prohibits foreign governments from holding equity
stakes in Mexican banks.

Regulation
Mexican politicians draft credit card interest capping
bill

Mexico’s Senate committee has begun drafting a
bill which would cap credit card interest rates despite opposition
to the plan from regulators and banking industry representatives.
The Senate Finance Committee is expected to present a proposal that
will authorise the country’s central bank to regulate credit card
interest rates, which in some cases are as high as 50 percent,
along with commissions and bank fees that have been described by
politicians as “usury”.

However, Guillermo Zamarripa, head of banking
and savings for the Finance Secretariat, told the Finance Committee
that regulating interest rates would be counter-productive and only
hurt low-income borrowers.

“Care must be taken to not be overly
aggressive because it can have undesired consequences for
customers,” he said.

The political mood is being driven by the
economic downturn following a boom period of credit cards being
issued to customers with patchy credit histories, but the banking
industry has rejected calls for increased regulation. Mexican
Bankers Association president Enrique Castillo said that improved
competition regarding transparency would better resolve the issue,
and that high interest rates reflect the risk factor of lending
money in Mexico. In December, lawmakers approved new rules that aim
to curb the practice of banks increasing credit limits without
first advising the cardholders, as well as the mailing out of
pre-approved credit card offers.

Financial
results
HSBC posts strong Latin America results

Global banking group HSBC posted a $2.04
billion pre-tax profit from its Latin American operations in 2008,
bringing the region’s contributions to the group’s bottom line to
22 percent, up from 9 percent in 2007. However, the region’s
profits were down 6.5 percent on 2007 due to higher impairment
charges. Pre-tax profits fell by 9 percent as increased revenues
were offset by higher loan impairment charges, mostly in Mexico and
Brazil, and increased operating costs across the region.

Net interest income was up 15.8 percent to
$6.46 billion, or half the pace it grew in 2007. Growth in average
personal lending volumes was mainly driven by vehicle finance and
payroll loans in Brazil, and credit cards and personal loans in
Mexico, HSBC said. Loan impairment charges in Latin America jumped
48.6 percent in the year to $2.49 billion. Net loans and advances
to customers in the region fell 11.8 percent to $42.3 billion as of
31 December compared to the same time in 2007.

HSBC’s Mexican unit saw pre-tax profits fall
27 percent in the year to $714 million as loan impairments rose 69
percent to $513 million due to a combination of higher lending
volumes from organic expansion, and higher delinquency rates that
were driven by a deterioration in credit quality as the portfolio
continued to season. HSBC Brazil booked a $910 million pre-tax
profit, up 3.5 percent on the previous year. In that country,
higher impairment charges were driven by balance growth and credit
quality deterioration in the vehicle finance and payroll loan
portfolios.

HSBC Argentina saw 2008 pre-tax earnings rise
11.4 percent to $224 million. HSBC Panama – which owns units in
Costa Rica, Honduras, Colombia, Nicaragua and El Salvador – saw
2008 pre-tax earnings jump 41 percent to $121 million. HSBC also
has subsidiaries in Chile, the Bahamas, Peru, Paraguay and Uruguay
and a representative office in Venezuela.

Financial results
Scotiabank reports growth in Latin America

Canada’s Scotiabank has recorded
2009 first-quarter net income of C$842 million ($651 million), up
C$7 million or 1 percent from the same period last year. According
to the bank, results were driven by strong deposit and loan growth
particularly in Peru and Chile, although positive revenue growth
was offset by increases in retail credit provisions in Latin
America.

The international units’ provision for credit
losses quadrupled to C$116 million in the first fiscal quarter
compared to C$30 million in the same period last year due largely
to acquisition-related retail asset growth in Peru and Chile, and
to higher retail provisions in Mexico.

Scotiabank’s risk and treasury head Brian
Porter said the risks on the international portfolio are manageable
and loans are well diversified by geography. The bank’s
international retail loan book stood at C$23 billion in the first
quarter, of which 76 percent was secured. Credit card loans
amounted to C$2.2 billion. In terms of geographical
diversification, 49 percent of total retail loans were from the
Caribbean and Central American operations, 22 percent from Mexico,
18 percent from Chile and 11 percent from Peru. Going forward,
international banking head Robert Pitfield said the bank will put
less emphasis on volume and more emphasis on margins and fee-based
businesses.

NORTH AMERICA

Payment networks
Retailers push ban on credit card companies

The Retail Council of Canada (RCC)
is pressuring the country’s finance minister Jim Flaherty to
prevent the debit market being opened up to credit card companies,
as it is feared the entry could lead to an increase in prices for
consumers (see page 1). Flaherty is being asked to use ‘moral
suasion’, a persuasion tactic used by authorities, with Visa and
MasterCard, after the RCC said that merchant fees could more than
double if this ingress is allowed.

These fears follow Canadian card association
Interac’s move to become a for-profit organisation from being a
low-cost non-profit one.

“If government were to indicate that it was
concerned about this, it was concerned about the cost this would
impose on small businesses and on customers, I think the large
banks would think very long and very hard before they bought in to
the Visa and MasterCard model,” the RCC’s vice-president of policy
and research, Peter Woolford, said.

Tim Wilson, head of Visa Canada said: “We
believe that competition will first and foremost drive innovation
in the market. I would say that the current Interac business model
with almost zero fees is unsustainable over the long term.”

Prepaid cards
CashStar launches e-gifting, marketing and promotions
platform

CashStar, a US interactive gift card
and incentive company, has launched a new e-gifting, marketing and
promotions platform, which could enable consumers to send virtual
and personalised gift cards, and also provide retailers with a less
expensive option than selling plastic gift cards.

The company will be making an initial
investment of $4 million, which it has already secured in funding.
Because of the platform’s virtual nature, retailers will have
greater scope of offering value-added customisation options while
enabling them to track and target their marketing.

The CashStar platform allows businesses and
consumers to securely e-mail monetary value such as interactive
gift cards, rewards, incentives and rebates. Several US companies,
including the restaurant chain Uno Chicago Grill, airline
Travelocity and Gorham Bike & Ski, are already on board with
the platform.

Consumer indebtedness
Delinquencies may be set to surge

The leap in the US unemployment rate
to 8.1 percent in February is expected to have an outsized negative
impact on loans made to consumers and businesses.

The unemployment rate is expected to
rise to 9 percent by the end of 2009 and 10 percent in 2010, with
credit card, home and auto loans expected to see a corresponding
rise in delinquencies and defaults.

Consumer spending accounts for 70
percent of the US economy. Charge-off rates on cards – loans that
have been written off as uncollectable – have shot up to 7.5
percent, and are expected to hit 9 percent by year-end.

According to Mike Dean, managing director and
head of consumer asset-backed securities at credit ratings agency
Fitch, unemployment and higher default rates move in tandem.

“We expect record delinquencies to continue
for the foreseeable future on consumer loans as consumer credit
quality worsens. A lot of times, credit card performance variables
are a leading indicator reflecting the strain and stresses on the
consumer in the economic cycles,” he said.

If unemployment rises to 9 percent, Fitch
expects a 20 percent increase in credit card charge-offs and a 24
percent increase in auto loan cumulative net losses.

Debit cards
KeyBank to launch premium MasterCard debit card

US bank and card issuer KeyBank is
to launch the ‘World Debit MasterCard’ product, a premium debit
card offering exclusive rewards and benefits to high net worth
customers.

KeyBank, a wholly owned subsidiary of KeyCorp,
is the first financial institution to introduce World Debit
MasterCard to its customers.

World Debit MasterCard cardholders are
eligible for discounts on a variety of products and services, and
have access to enhanced customer service and security features. The
KeyBank World Debit MasterCard will also feature MasterCard’s
contactless technology PayPass.

“The KeyBank World Debit MasterCard is a
significant breakthrough in KeyBank’s ability to meet the needs and
preferences of its diverse customers with a premium payment
product,” said Carl Stauffeneger, senior consumer product manager
at KeyBank.

“As a relationship bank, we understand and are
addressing our cardholders’ high expectations for value.”

Loyalty programmes
Citi partners MySpace on reward card

Citi has teamed up with social
networking website MySpace to launch a credit card that lets
customers earn reward points for acts of financial and social
responsibility. The ‘Citi Forward’ card includes free membership in
Citi’s ThankYou rewards network.
Citi Forward enables MySpace cardholders to earn ‘ThankYou’ points
for completing socially responsible acts, such as donating to food
drives, going paperless, switching to energy efficient light bulbs
and volunteering. The points can be used for rewards and
experiences from MySpace, such as music downloads, VIP concert
tickets, private concerts and trips to movie premiere
screenings.

The MySpace card is one variation on the Citi
Forward offering, which is designed to reward responsible financial
behaviour, with cardholders earning points for paying bills on time
and staying under the credit line. The card also lowers the
purchase interest rate by a quarter percent when customers use
credit wisely, according to Citi.

Citi Forward customers also have access to an
online spend tracker tool, categorised monthly statements that
break down outgoings to show where money is being spent, e-mail and
text alerts and free education tips at UseCreditWisely.com.

Merchant acquiring
Elavon to market Amex OnePoint programme

US Bancorp-owned acquirer Elavon has
been chosen by American Express (Amex) to market its OnePoint
programme to merchants, merchant service providers, third party
sales channels, and agent banks, providing merchants with one
processing relationship for all major card brands.

Elavon, which provides end-to-end payment
processing services to more than one million merchants in the US,
Europe, Canada and Puerto Rico, will offer processing, settlement,
funding, reporting and customer services for Amex, the card issuer
and network which is now a bank holding company.

According to Elavon and Amex, the OnePoint
programme will provide the ability to offer Amex card acceptance to
new small and mid-size willing merchants. The programme is also
open to bank-card accepting merchants that wish to add Amex card
acceptance and benefit from a single point of contact for their
processing needs.