• Businesses in Hong Kong are favouring cash
over credit cards as a mode of payment…
• Malaysia’s Alliance Bank is confident of
positive growth in its credit card business…
Go deeper with GlobalData
• Sri Lankan Airlines has partnered with
American Express and Nations Trust
Bank to launch a frequent flyer credit card…
• Chilean retailer Ripley says that in the
third quarter of 2008 it had a total of 5.2 million private-label
credit cards in issue in Chile…
• US airline Delta and American
Express (Amex) have extended their co-brand partnership,
which dates back to 1996 and includes Amex Membership
Rewards…
Asia-Pacific
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Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData• Guangdong Development Bank stopped issuing
credit cards for undergraduates from December 2008. The bank was
the first to issue credit cards for students in 2004. According to
local reports, other banks such as China Merchants Bank and China
Citic Bank have also stayed away from the market because student
cardholders had higher default rates. The banks will be focusing on
their existing creditworthy customers.
• China Construction Bank and Jin Jiang
International Hotel Management, a local hotel operator,
have launched a co-branded card, the Jin Jiang Dragon Card. The
dual currency credit card doubles as a membership card and is
targeted at frequent guests at Jin Jiang’s four and five-star
hotels.
• Global payment processor Rahaxi has announced
expanded revenue streams on its recent agreement with
ChinaPay by providing access to European
internet-based travel and hospitality sites to Chinese internet
consumers. Rahaxi and ChinaPay, a subsidiary of national bank card
network China UnionPay (CUP), have created a platform that will
enable European banks and merchants to connect gateways to accept
Chinese credit cards for the first time. All CUP cardholders can
now book online flights and make hotel and car reservations, prior
to departing to Europe.
• Hang Seng Bank is to launch a
renminbi-denominated debit card together with China
UnionPay. The bank is first on the mainland to offer a
debit card without a minimum deposit.
• Businesses in Hong Kong are favouring cash
over credit cards as a mode of payment. Hong Kong has one of the
highest rates of credit card usage in the region but jittery
businesses are keen to hoard cash given a high level of uncertainty
in the market. According to retailers, banks have also extended
payment to retailers from 14 days to 30 or 90 days.
• Indian card issuers are withdrawing
cardholder benefits such as cash withdrawal facility or
restructuring rewards programmes to reduce unsecured loans and
manage rising delinquency rates. Barclaycard’s Indian unit has
removed the cash limit for some cardholders.
• Fraudsters are exploiting the magnetic stripe point of sale
card readers in South Korea by buying goods in
Korea with a chip-based credit card and then denying the purchase
when back home. This scam takes advantage of the liability on
Korean acquirers who use magnetic stripe readers for chip-based
cards. Although there are no industry figures on the extent of the
damage caused by this scam, only 20 percent of the readers in Korea
are chip-based card readers.
• A report by payment consultancy Mercator Advisory
Group on Japan’s credit card industry
highlights that while the average Japanese cardholder has 6.2
credit or debit cards per person – compared to 3.6 cards in the US
– the Japanese cardholder spent just $30 on their credit and debit
cards in 2007 compared to $180 in the US. Although there is still a
strong preference for cash, electronic payment methods such as
mobile payments might make it more attractive than cash.
• Malaysia’s Alliance Bank is confident of
positive growth in its credit card business. The bank plans to
introduce credit cards targeted at specific niches. Its
recently-launched personalised credit card allows cardholders to
choose the image that appears on their credit cards. Cardholders
can choose cash rebates of up to 2 percent on all retail purchases,
a flat interest rate of 9 percent per annum (compared to 18 percent
per annum offered in the industry) or double bonus points for every
ringgit spent.
• Card issuers in the Philippines expect to be
more selective in approving credit card applications in 2009.
Standard Chartered’s local credit card unit was
expecting a 10 percent to 15 percent growth in its cardholder base
by the end of 2008 even though it posted a 30 percent growth in
2007. The Philippines’ economy is expected to grow by only 3
percent to 4 percent in 2009 compared to 7.2 percent growth in
gross domestic product (GDP) in 2007 and an estimated 4 percent in
2008.
• Cebu Pacific is offering free seats as part
of the reward programmes for card issuers such as American Express,
Bank of the Philippine Islands, Citibank, Metrobank, Rizal
Commercial Banking Corporation, SB Cards and Unionbank. The issuers
may reserve seats for their clients online or issue Cebu Pacific
gift certificates in denominations of PHP500 ($10.51) to
PHP5,000.
Global Payments’ Asia-Pacific joint venture with HSBC in payment
processing has paid $20 million for HSBC Philippines’ merchant
acquiring business. The deal is scheduled to close in the second
quarter of 2009.
• EZ Link, Singapore’s transport payment card,
has introduced a new card which will allow usage in public
transport, road pricing payments and parking. In addition, the card
can also be used as a mode of payment in retail outlets and
libraries. There are currently 8 million EZ Link cards in
circulation.
• Seven in 10 surveyed participants of a near-field
communication-enabled mobile payment trial in
Singapore said that they were likely to adopt the
new payment mode.
The trial was conducted by EZ-Link,
Starhub (a local mobile operator) and retail
partners such as McDonald’s and 7-Eleven. Users could not only pay
by tapping their near-field communication (NFC) phones, they could
also check their transaction histories and balance and also tag
chip tags in smart posters to download coupons. Only 11 percent of
respondents said that they would be unlikely or very unlikely to
adopt the technology.
In the trial, 83 percent of respondents said they used their
phones during the trial to pay train and bus fares while less than
70 percent said they checked transaction histories. Some 20 percent
said they made retail purchases with their phones. Around 57
percent of the respondents also said they would prefer to have the
application in their SIM card to enable easy transfer to another
handset.
• Sri Lankan Airlines has partnered with
American Express and Nations Trust
Bank to launch a frequent flyer credit card. Cardholders
will receive an activation bonus on miles travelled, double miles
bonus, discounts on duty free purchases and check-in
privileges.
• Thailand’s Government Savings
Bank and Krungthai Card will
launch a co-branded credit card in February. As part of their ‘One
Branch, Two Banks’ policy, Government Savings Bank will be able to
issue its first credit card. The bank has more than 20 million
customer accounts in the kingdom and plans to open 20 new branches
and install 500 new ATMs in 2009.
Europe, Middle East, Africa
• Afribank of Nigeria has launched what it
claims is the first true revolving credit card in Nigeria.
Denominated in NGN and US dollars, the card is a Visa-branded
product that can be used to make purchases on the internet,
something which most Nigerian payment cards do not offer. Afribank
also says that the card is the first product of its kind in the
Nigerian market that does not require collateral from the
cardholder.
• Nigeria’s Diamond Bank has launched a new
range of Visa-branded EMV-enabled credit cards in classic, gold and
platinum formats. The card is denominated in NGN, meaning that
Nigerian cardholders travelling abroad will be billed in their
domestic currency rather than US dollars as is standard on most
Nigerian credit cards.
The credit cards will also soon offer customers secure online
functionality with Verified by Visa (VbV), a password-protected
identity-checking service for online transactions. The credit cards
are also linked to the bank’s Diamond Gems Reward scheme. The
bank’s first partner under the Diamond Gems Reward scheme is
airline Virgin Nigeria.
• Welcare Diagnostic and Treatment Center, in
partnership with National Bank of Oman (NBO), is
offering customers a 15 percent discount on medical treatment bills
provided they use their NBO card to make payments. The promotion is
scheduled to run until 31 January 2009.
• Arab Bank of the UAE has launched a new
service allowing its cardholders to pay the monthly outstanding
amounts on their credit cards through over 75 Al Ansari Exchange
branches across the UAE.
Ruba Abdul Hadi, head of retail banking at Arab Bank, said:
“Through this new service, Arab Bank Visa credit cardholders will
have one additional convenient channel to pay their monthly credit
cards bills. The vast branch network of Al Ansari Exchange will be
at their disposal to make their cards payments, in addition to Arab
Bank’s 8 branches, ATMs, phone banking and online banking
services.”
• Bahrain Islamic Bank has opened its first
drive-in ATM at the Muharraq Club Fuelling Station in Muharraq. The
bank also plans to expand the number of drive-in ATMs throughout
Bahrain.
• National Bank of Abu Dhabi (NBAD) has
launched a Visa-branded prepaid card for use on the Visa Electron
platform. The NBAD prepaid card is available from all NBAD branches
or designated merchant outlets and can be uploaded at any NBAD
branch or cash deposit machine 24 hours a day. NBAD says that the
prepaid card is suitable as a gift or as a company reward and
incentive card. The card has a minimum load amount of AED100 ($27)
and a maximum of AED5,000.
• Postbank, a joint venture between Benelux
banking group Fortis and Irish post office
An Post, plans to expand its offering of credit
products in 2009 by launching a personal loan and entering the
mortgage market. Just over a year and a half after its launch,
Postbank has about 130,000 customers and is opening about 400 new
accounts each day. To date, the bank has brought a range of nine
financial products to the market, including a credit card launched
in November 2008.
• UK credit reference agency Equifax has loaded
the first batch of credit card behavioural data from a number of
major UK consumer credit providers including Barclaycard, Capital
One, GE Money, HBOS and MBNA, as part of a banking industry
initiative to support responsible lending.
Traditionally, shared data for credit cards has included the
customer’s balance, credit limit and whether payments are up to
date. The new data now also includes the amount of their last
payment, and whether this was equivalent to the minimum payment;
changes to credit limits; the extent to which they withdraw cash on
their account and if the customer is signed up to any promotional
deals.
• Sales figures from e-commerce payment service
Ukash show that there has been a huge rise in
consumers using cash online. Ukash, a voucher-based online payment
provider, has seen sales increase by 140 percent in the last 12
months and the company predicts that there will be continued growth
in 2009 due to consumers becoming increasingly fearful of
spiralling spending on credit and the threat of online credit card
fraud and identity theft.
• UK prepaid solution provider Tuxedo Money
Solutions has announced that it has completed a
significant funding round worth £17 million (£24 million) with all
major shareholders participating.
Tuxedo has also announced the signing of an agreement with a
major UK retailer to provide payroll cards to the retailer’s staff,
and an agreement with the Post Office to enable all its existing
partner programmes – comprising of over 50,000 active cards – to be
topped up at 14,000 Post Offices in the UK from January.
• Global payment processor First Data has
signed a five-year processing agreement with
Unicard, a cards unit affiliated to Unipol
Banca. Unipol Banca is owned and controlled by Unipol
Gruppo Finanziario (UGF), the fourth-largest insurance group in
Italy, which announced its intention to consolidate the group’s
entire card business into Unicard.
Unicard manages the acquiring business of COOP, a leading
Italian retailer, including COOP’s Visa co-branded and private
label credit cards, and is currently undergoing MasterCard
certification. First Data will support Unicard’s transformation
into what will become UGF’s dedicated cards business, responsible
for all merchant acquiring and card issuing processing for credit,
debit and prepaid cards for the group.
• paysafecard, a European internet prepaid
payment solution provider, has gone live in two more countries.
Since February 2008, paysafecard has doubled its footprint in
Europe from 7 to 14 countries, with other recent additions being
Portugal and the Czech Republic. paysafecard is now available in
Austria, Germany, UK, Spain, France, Slovakia, Greece, Belgium,
Slovenia, Switzerland, Portugal, the Netherlands, Poland and the
Czech Republic.
• Luxury watch retailer LAKS and
Austria Card, a supplier of smart cards and
personalisation services, have completed their joint development of
a contactless-enabled PayPass wristwatch with the approval of
MasterCard. Austria Card contributed its PayPass technology to the
latest generation of contactless LAKS wristwatches. Dubai-based
Emirates Bank and Turkish Vakif Bank have already ordered the
product for their customers.
• First Bank Nigeria is surcharging customers
NGN100 ($0.73) for failure to use ATMs for withdrawals of sums
below NGN60,000. According to the bank, the surcharge is aimed at
encouraging customers to take up ATM cards for the withdrawal of
large cash amounts, rather than withdrawing cash in person within
the bank’s branches.
A bank spokesman said the move was aimed at making such
transactions more efficient and to reduce congestion within bank
branches.
Latin America
• TSYS Prepaid plans to expand into Canada and
Mexico, Heather Buffington, the US prepaid card processor and
programme manager’s vice-president of product development, tells
CI. TSYS Prepaid will launch a prepaid card pilot in Mexico in the
first quarter of 2009 as part of a new prepaid card joint venture
with Mexican card network Procesa. TSYS Prepaid’s
parent TSYS already has a credit card processing joint venture with
Procesa in Mexico, and also operates a card manufacturing plant in
the country.
“The trial will test reward-based and loyalty incentive prepaid
cards in Mexico,” Buffington says. “We also have a big pipeline of
prepaid card deals in Mexico for the first quarter of 2009.”
TSYS Prepaid’s policy when entering a new market is to always
leverage its parent company’s subsidiary in that market, she says.
“We see opportunities in general-purpose spending (for example
open-loop) prepaid cards in Mexico, and also payroll cards and food
voucher cards.”
Buffington says that in Canada, TSYS Prepaid sees opportunities
in gift cards, followed by government disbursement cards.
“We already have a presence in Canada, as our parent has 80
percent of the Canadian market for outsourced credit card
processing (for example, for those firms which outsource their card
issuing, TSYS handles 80 percent of the total processing – it does
issuer processing, not acquiring).
• Miami-based Latin American prepaid card firm
NovoPayment has published a forecast on the growth
of the Latin American food voucher electronic benefit transfer
(EBT) card market. It predicts that there will be 47 million
prepaid food voucher EBT cards in issue in Latin America with an
estimated purchasing power of $50 billion annually by 2015.
Currently, NovoPayment provides EBT benefits to more than 4,000
companies through 500,000 active cards in Latin America.
• MasterCard has revamped its Consumo
Inteligente personal finance education programme in Mexico. The
programme, which was first introduced in September 2007, and is
also available in Brazil and Costa Rica, aims to help consumers to
manage their personal finances and make responsible use of payment
cards.
• Chilean banking regulator SBIF
(Superintendencia de Bancos e Instituciones Financieras or
Superintendcy of Chilean Banks and Financial Institutions) says
there were 22.65 million active non-bank credit cards in issue in
September 2008 in Chile.
These included 1.84 million Presto cards issued by Servicios y
Administración de Créditos Comerciales Presto; 5.86 million CMR
Falabella cards issued by Promotora CMR Falabella; 6 million by
Cencosud Administradora de Tarjetas; and 2.84 million Ripley cards
issued by CAR, a subsidiary of Chilean department store firm
Ripley.
Comercializadora y Administradora de Tarjetas Extra, another
Ripley subsidiary, has 171,000 active private-label Xtra cards in
issue. Total non-bank credit card transactions in Chile rose to
55.27 million in the third quarter of 2008 from 53.33 million in
the second quarter of 2008.
• A Visa survey of Latin American micro, small
and medium-sized businesses (SMBs) has found that 40 percent of SMB
owners surveyed use their personal credit cards for business
purposes. Also, 76 percent of SMBs surveyed still pay for their
business expenses with inefficient payment methods such as cash or
cheques. The primary sources of financing for SMBs identified by
survey respondents are bank loans (54 percent); credit cards (31
percent); provider or vendor credit (25 percent); and family and
friends (6 percent). On behalf of Visa, the Nielsen Company
surveyed 1,200 SMBs in Mexico, Argentina, Brazil, Colombia and Peru
between June and August 2008.
• Between January 2008 and November 2008, Banco do
Brasil (BB) installed 8,000 new self-service banking
terminals, offering transactions such as account withdrawals,
deposits and bill payments. A further 4,000 self-service terminals
will be installed in the next three months. During 2009, BB plans
to install what it calls ‘full-function’ self-service terminals,
offering cheque issuance as well as withdrawals and deposits. BB
says it currently has around 40,000 self-service banking terminals.
Over half (54 percent) of BB’s customer transactions take place at
self-service terminals.
• Brazil’s Banco Santander is issuing
multi-function smart cards to students at São Paolo-based
Anhanguera University which contain an EMV payment chip and a
contactless access control chip. The cards, which are manufactured
by Gemalto, function as ID cards for accessing the university’s
campus buildings, and can be used to withdraw library books. They
also function as Banco Santander EMV debit cards, and can be used
to purchase meals at university cafeterias. Banco Santander expects
to have issued multi-function payment and ID cards to around
100,000 students at Brazilian universities by the end of 2009.
Separately, Banco Santander is issuing Gemalto-manufactured EMV
cards to students at São Paolo-based University of Campinas.
• Fitch Ratings has downgraded its ratings for
two Argentine credit card issuers, Tarjeta Naranja
(TN) and Tarjetas Cuyanas (TC). The move follows
Fitch’s decision to downgrade Argentina’s sovereign ratings.
• French contactless microprocessor vendor Inside
Contactless says it has signed a deal with
American Banknote (ABnote) of Brazil to produce
Visa type-approved contactless payment cards for the Brazilian
market. Inside is supplying ABnote Brazil with its MicroPass 4003
contactless payment processor which is Visa payWave-compatible.
• Brazilian MasterCard and Diners Card acquirer
Redecard has launched a service that enables
retailers to sign up over the web to become Redecard-affiliated
merchants. The retailers have to enter their corporate or
individual taxpayer reference number on the Redecard website
(Redecard.com.br) and provide information to prove their identity.
Redecard says that in cases where the merchant’s bank does not
belong to the Redecard network, or in the case of individual sole
traders, the applicant must submit paper documents to the acquirer.
Once Redecard has approved the application, the merchant is
supplied with a point of sale terminal.
• Chilean retailer Ripley says that in the
third quarter of 2008 it had a total of 5.2 million private-label
credit cards in issue in Chile, up from 5 million a year earlier.
Ripley issues two types of card: Ripley cards for use in its own
stores, and Xtra cards for use in cities without Ripley stores. In
the third quarter of 2008, Ripley’s private-label credit card gross
loan portfolio rose to CLP495.8 billion ($780 million) from
CLP417.2 billion a year earlier.
North America
• Americans have been increasing the balance on their bankcards,
says US consumer credit information agency
TransUnion. In the third quarter of 2008, the
average balance across all bankcards held by a single US consumer
was $5,710, up 1.57 percent from the previous quarter and up 6
percent from the third quarter of 2007. The ratio of borrowers
delinquent on one or more of their bankcards was 1.09 percent in
the third quarter, up 4.8 percent from the previous quarter and up
5.8 percent from the third quarter of 2007. TransUnion sees “an
upward trajectory in the national credit card delinquency rate for
2009 – reaching as high as 1.4 percent by year end.”
• Credit card issuers can attract relatively affluent,
low-credit-risk customers by offering them online bill payment
tools, says Aite Group senior analyst Ron Shevlin. This is because
cautious customers are looking for better ways to manage their
bills and avoid late payment fees. According to a survey by Santa
Clara, California-based bill payment firm Billeo, credit card bills
are more often paid online than any other bill and they are also
ahead of other bills in average transaction amount. The average US
credit card bill, according to the Billeo survey, is $602, compared
to $319 per insurance bill and $217 per utilities bill. Billeo
offers one-step password log-on for bill payment, online shopping
and online transaction record storage. The Billeo service is
available at 40 US-based card issuer sites, including Bank of
America, Wells Fargo, Wachovia, Chase, and Target.
• Aite Group is offering advice to US card
issuers who are concentrating on their reward programmes to help
them attract customers in a difficult climate. Simply increasing
the number of reward points will not help issuers to differentiate
themselves from competitors, Aite says. Instead, issuers should
develop new services. For example, they should offer rewards for
debit cards as well as credit cards, and they should expand the
range of goods and services that earn rewards. They should also
create reward hubs where customers can aggregate and manage their
rewards. As pressure on interchange funding and interest rates
increase, issuers should also look to develop merchant-funded
rewards, Aite says.
• The growth of network-branded prepaid cards in the US will
continue to outpace the growth of closed-loop prepaid cards by a
significant amount through 2011, Mercator Advisory
Group says. Closed-loop cards include in-store gift cards,
prepaid cellphone cards and food stamps. The load volume for
network-branded cards will grow at a compound annual growth rate of
42 percent compared to 7.94 percent for closed loop cards, Mercator
says. By 2011, the total load volume for all types of prepaid cards
will be $362.3 billion, made up of $237.7 billion for closed-loop
and $124.6 billion for network-branded cards.
• Credit card bills are at the bottom of the stack when US
households pile up their bills for payment each month, says
Online Resources (ORC). In an online survey
carried out by the US bill payment services firm, consumers said
they paid their mortgage, insurance, loans, utility, health care
and phone bills before they paid their credit card bills. However,
one in three delinquent households said they continued to pile up
credit card debt. ORC also found that although customer preference
for resolving debt delinquencies via a collector’s website had
increased by 18 percent over the past year, only 1 percent of
delinquent households had been contacted by a collector via the
internet.
• US online retailers lost $4 billion to fraud in 2008, up from
losses of $3.7 billion in 2007, estimates e-payments firm
CyberSource. However, rising online sales and
greater success at fighting fraud meant that, as a percentage of
revenue, the 1.4 percent fraud loss in 2008 was unchanged from 2007
and 2006. Merchants reported that around half their fraud was
reported (by customers) via card chargeback with the remainder
going through customer support. According to the survey, merchants
contest about 50 percent of the fraud chargebacks they receive.
Merchants that do elect to challenge chargebacks recover, on
average, 28 percent of their fraud chargebacks.
• US airline Delta and American
Express (Amex) have extended their co-brand partnership,
which dates back to 1996 and includes Amex Membership Rewards. Amex
said on 9 December 2008 that it would buy $1 billion worth of Delta
SkyMiles immediately and pay the airline an additional $1 billion
through 2010. In return, Amex expects to grow its co-brand cards
and increase loyalty through its Membership Rewards programme. The
card company sees Delta’s acquisition of Northwest Airlines as an
opportunity to expand in the Midwest market. Separately, Delta will
continue its existing corporate relationships with US Bank which
includes a debit card programme, merchant acquiring, and corporate
lending.
• Bruce Hammonds has retired as head of Bank of
America’s Wilmington, Delaware-based global card services
unit, which handles international credit card and unsecured
lending. Hammonds oversaw a credit card portfolio with 70 million
customers and $230 billion worth of global managed loans. Ric
Struthers, a consumer credit risk executive, succeeded Hammond on 1
January 2009.
• Leisure and travel operator Holland America
Line and Barclaycard US have launched the
Holland America Line Rewards Visa card. The credit card, Holland
America Line’s first such offering, will allow cardholders to earn
free cruises, onboard credits, special onboard amenities and
discounted airfare for card usage. Separately, Barclaycard says it
will open a new US administrative office in Long Island City, New
York.
• Prospera Credit Union has become Canada’s
first credit union to offer debit card scheme
Interac’s Email Money Transfer service to its
members. Up to now, the service has been available only to
customers of Canada’s banks.
Now Prospera’s 60,000 members will be able to send money from
one bank account to another using online banking and Interac’s
transaction network. The service is offered to credit unions by
Central 1 Credit Union, the central banking
facility for credit unions in British Columbia and Ontario.
• RBS WorldPay (formerly RBS Lynk), Royal Bank
of Scotland’s US payment processing arm, said on 23 December 2008
that its computer system had been “improperly accessed” by an
unauthorised party. The breach, which affected prepaid cardholders
and other individuals, was identified on 10 November 2008 and law
enforcement agencies and federal regulators were notified by RBS
WorldPay shortly thereafter. The prepaid cards affected include
payroll cards and open-loop gift cards, and actual fraud has taken
place on 100 cards, RBS WorldPay says.
