• Korea’s largest lender, Kookmin
Bank
, plans to spin off its credit card unit after setting
up a holding company as part of efforts to beef up its non-banking
business..
Vodafone Italy and financial services provider
Citi have renewed their existing partnership with the introduction
of the Citi Vodafone One Visa credit card…
Rwanda Commercial Bank has announced that it
will be installing 100 ATMs throughout the country..
• Brazil’s Unik plans to launch a credit card
targeted at people receiving pensions from the Brazilian
government’s INSS (National Institute of Social Security)…

ASIA-PACIFIC

 
China Merchants
Bank
, China’s largest credit card issuer, said that its
2007 net profit has increased by 124.36 percent from the previous
year due to increased interest income. In 2006, its profit
increased by 81 percent over the previous year. About 83 percent of
its 2007 revenue came from interest income, which has increased by
57.62 percent year-on-year. The stellar financial results have seen
its shares gaining 3.83 percent despite news that the central bank
raised the reserve requirement ratio to a record high of 15.5
percent in March.
China UnionPay and the
French Tourism Office have signed an agreement
that will allow Chinese tourists to France to pay with their China
UnionPay credit cards in large shopping centres and duty free shops
in tourist spots. China UnionPay started offering its card services
and allowing cardholders to withdraw Euros from 20,000 ATMs in
France in April 2006.
Guangdong Development Bank’s
credit card customers will be able to pay their bills in 2,000
convenience stores across Shanghai. The bank will now have nearly
3,000 payment points in the city.
Industrial and Commercial Bank of
China
(ICBC) has launched China’s first fleet card, the
Peony-PetroChina Fleet Card that targets companies and government
institutions.
• The Monopolies and Restrictive Trade
Practices Commission
has issued a notice to India’s
ICICI Bank and its insurance arm ICICI Lombard for
imposing “unfair and unjust” conditions on insurance cover for its
credit card customers. Customers were reportedly denied insurance
claims on the grounds that the cards were not used two times within
90 days from the day of accident. Although ICICI denied receiving
the notice the Commission said that terms and conditions were not
conveyed to customers while issuing the card and were only
mentioned in the welcome kit.
• Korea’s local press has reported that 40
million IC chips will be in demand by credit card companies due to
the plans by the local regulator to replace all cards with
IC-installed ones by 2008. KB Card and BC
Card
plan to issue 10 million each while Shinhan Cards
plans to issue 6 million in 2008. Woori Card and
Lotte Card are looking at 3 million and 2.8
million cards respectively while Samsung Card and
Hyundai Card intend to issue around 2.5 million
cards. Around 30 percent to 70 percent of cards have been replaced
by the credit card companies. Companies that do not meet the
deadline will receive penalties.
Barclays Bank has rolled out
its Hello Money service for mobile banking transactions in India.
Account holders will be able to pay credit card and utility bills.
The bank began operations in India in 2007 and now has 100,000
deposit/loan customers and 500,000 credit card customers.
• India’s Tata Group is
considering the introduction of a common credit card and loyalty
scheme for its subsidiary companies. The proposed card will be
launched by Tata Capital and all group companies have been asked to
participate.
• The Indonesian authorities are still
investigating a card counterfeiting scheme that is estimated to
have cost $3 billion in losses. A police spokesperson said that
investigations are under way and that the figure could increase.
The scheme was uncovered during a drug and gambling raid in
Jakarta, the nation’s capital.
• In Japan, Sagawa Express, a
delivery company, will offer to verify the identities of credit
card recipients in person starting 21 April. For an additional $2
on top of the regular delivery charge, Sagawa’s delivery will
personally verify the identity of the card recipient by showing a
driver’s licence, passport, passbook or registration certificate
for foreigners.
• The South Korean government has unveiled
plans for a debt bailout scheme for individuals. The government
will help around 290,000 credit delinquents to pay back their debts
by allowing them to retrieve their deposits in the national pension
fund ahead of schedule. There were 1.42 million credit delinquents
at the end of 2007. The plan is meant to stimulate economic growth.
In 2004, about 1 million credit delinquents were bailed out after
the credit crisis but credit problems have since grown again.
• Korea’s largest lender, Kookmin
Bank
, plans to spin off its credit card unit after setting
up a holding company as part of efforts to beef up its non-banking
business. The holding company is tentatively named KB Financial
Holding and will be set up in September, and the credit card
business will be spun off within a year. If its application is
successful, Kookmin will be the country’s fifth holding company
with eight subsidiaries such as banking and securities.
• Korean issuer Lotte Card has
jointly developed with Lotte Data Communications company an
integrated dongle (a gadget that authenticates a piece of software)
for its IC chip card to be deployed in retail outlets such as Lotte
Department Stores and Lotte Mart. The service will allow Lotte’s 19
retail affiliates to share their customer information with each
other and provide a customised service such as offering a discount
coupon on the customer’s birthday. The company plans to roll out
other chip-based services.
Citibank Singapore’s credit
card customers can no longer pay with their fingerprints as
PayByTouch, the bank’s development partner, filed for US Chapter 11
bankruptcy protection. The One-Touch biometric service was launched
in November 2006.
• After the decline in bankruptcy petitions in
Singapore in the last four years, the delinquency rate is rising
again. In January 2008, there were 292 petitions for bankruptcy and
215 bankruptcy orders passed. Last year, 268 petitions were filed
and 230 orders passed on average each month. In December 2007, the
delinquency rate for credit cards was 1.42 percent. In July 2007,
the rate was 1.16 percent. The majority of credit delinquents are
between 21 and 44 years old and 70 percent are men. Around 80
percent have credit cards with at least two banks.
• Thailand’s opposition Democrat
Party
will submit three draft laws that call for legalised
debts, credit information and credit cards. Currently there are no
laws protecting credit card customers, claimed the party’s
spokesperson. The draft laws seek the establishment of an
independent organisation which will oversee the debts of
cardholders and allow them to complain if issuers use illegal
measures to demand debt payment. There would also be a limit on the
number of cards held by each cardholder. The number of credit cards
in use increased by 995,763 as of end of January, according to the
central bank.


EUROPE, MIDDLE EAST, AFRICA

• UK payments association APACS has announced the
formation of the Payment Industry and Police Joint Intelligence
Unit (PIPJIU), the result of the amalgamation of the banking
industry’s Fraud Intelligence Bureau – the body that previously
circulated information between the banking industry and law
enforcement within the UK – and the intelligence section of the
Dedicated Cheque and Plastic Crime Unit. The PIPJIU will be staffed
by fraud specialists from the banking industry working alongside
officers from the City of London and Metropolitan Police. There was
a 25 percent rise in the fraudulent use of UK credit and debit
cards last year, according to APACS. APACS has also unveiled a new
Fraud Intelligence Sharing System that will enable the banking
industry to share information on all confirmed, attempted and
suspected fraud in a central, shared database.

• Payments processor First Data Middle
East
has unveiled the new MasterCard offering from
Pakistan’s largest credit card issuer Bank
Alfalah
, on the company’s VisionPlus processing platform.
The bank’s existing card and merchant portfolio will soon be
migrated to the First Data platform.
• Vodafone Italy and financial services
provider Citi have renewed their existing partnership with the
introduction of the Citi Vodafone One Visa credit card, exclusively
dedicated to subscribers of the Vodafone One rewards programme. The
card comes free of charge and offers consumers one Vodafone One
point for each €20 ($31) spent. Upon activation of the card, the
cardholder receives 100 points as a welcome bonus. Cardholders can
request the activation of Citi Alerting Service, which sends an SMS
notification of all transactions, the month-end balance and a
warning when the credit line limit is about to be reached. The Citi
Vodafone One Visa also offers several free insurance
coverages.
Barclaycard has partnered
with payment services vendor Card Commerce to
launch a service for UK retailers looking to offer prepaid gift
cards to customers. Offered by Barclaycard Business, the gift card
service will enable retailers to offer own-branded gift, savings
club and refund cards to customers in a more cost-effective and
convenient way. The new scheme will allow retailers access to
real-time online management information, enabling them to track
transaction details and monitor outstanding card balances. The
prepaid technology can be integrated into its existing payment
terminals, with no additional equipment required. “The set-up is
very quick and easy and retailers are attracted to the all-in-one
solution whereby they only have to deal with one supplier.
Barclaycard Business will be working with Card Commerce and its
business customers in order to take a lead role in this market and
we anticipate significant retailer demand for this product,” said
Bill Thomson, managing director of Barclaycard Business.
• Société Générale’s Romanian offshoot
BRD Finance has teamed up with Renault
Romania
and Raiffeisenbank subsidiary RCI
to launch a MasterCard-branded credit card for Renault vehicle
owners. The new financial product is both a credit card and a
discount, benefit and loyalty tool. Issued free of charge, the card
comes with a 2.2 percent monthly interest rate and a maximum
overdraft of RON15,000 ($6,450). Cardholders will also benefit from
car part and/or service price discounts in the Renault network and
loyalty points according to the amount spent and place of
purchase.
• Payments processor FreeStar
Technology has launched its POS terminal-based dynamic currency
conversion solution with Monex FS throughout
Europe. The two companies are planning to target the airline
industry, hospitality sector and car rental industry, such as
established industry leaders Hertz and Budget Car Rental. “This is
a superb milestone for FreeStar as it allows the company to widen
our pan European footprint as part of our overall global strategy.
The significant investment by FreeStar in the new service over the
last 12 months has come to fruition and will lead to potentially
significant revenue growth for the Company in the foreseeable
future,” said Paul Egan, CEO of FreeStar.
• At its seventh annual Debit Conference,
MasterCard Europe revealed the emergence of a
series of important cross-border purchasing trends in Europe
coinciding with the official launch of SEPA, including a 24 percent
rise in Maestro debit card usage for cross-border payments over the
last 12 months. Furthermore, growth at traditional debit card usage
locations such as petrol stations is being joined by other
categories including supermarkets and clothing, up 28 and 30
percent year-on-year in 2007, respectively. “One trend we are
noticing is a growth in the use of debit cards in neighbouring
countries. For example, Maestro spend by German consumers in major
population centres along the country’s borders including Belgium,
Austria, the Netherlands and Poland, is increasing rapidly,” said
Eric Tomlinson, senior vice-president, MasterCard Europe
Debit.
Rwanda Commercial Bank has
announced that it will be installing 100 ATMs throughout the
country. Currently there are fewer than 17 ATMs in the entire
country, which are said to be under-utilised because of their
unreliability. Banks in Rwanda have always blamed Simtel, a
consortium formed by the banks and government to provide electronic
banking transactions, for failing to provide an adequate service.
The government is aiming to modernise the national payment system
and set up a national payment council, according to François
Kanimba, chairman of Simtel and governor of the National Bank of
Rwanda.
• Following the contentious decision to
withdraw thousands of Egg credit cards from customers that were
labelled ‘risky’, the head of consumer business at
Citigroup UK has quit. Ian Kerr, who has headed
Egg since November 2006, will be replaced by Bert Pijls, country
manager for Citigroup in the Czech Republic. Kerr joined Citi when
it bought Egg last year, and was given responsibility for Citi’s
consumer business in the UK. with the goal of transforming it into
a sizeable player. “We are building a business that will have the
products and services to ensure that we are first choice for
consumers as they look to meet their financial needs,” said
Pijls.
The Office of Fair Trading,
the UK consumer watchdog, has announced plans to launch a credit
card comparison website to help consumers better understand
potentially confusing credit card terminology, charges and
products. This follows a statement from the Office of Fair Trading
that credit card companies must stop using complicated jargon in
small print, and must provide clearer terms and conditions on
marketing materials and statements. “It is essential that consumers
are given the right tools to make comparisons between credit cards
more easily, and we can achieve this through some of the
recommendations announced today which have received widespread
support,” said an industry official.


LATIN AMERICA

• Five multinational banks – Citibank (including Banamex), BBVA,
Santander, Scotiabank and HSBC – are jointly responsible for 70
percent of all Latin American and Caribbean (LAC) ATM transactions,
Ricardo Saenz, technology company NCR’s marketing
and deployment manager, LAC financial systems division, tells CI.
The total installed base of ATMs from all vendors in LAC is
224,369. Saenz says this figure will rise by 6 percent to 237,000
by the end of 2008. Brazil and Mexico respectively account for 63.8
percent and 12 percent of total LAC ATMs, he says.

• Chilean banks’ fee income rose by 4.3 percent
in 2007, Fitch Ratings says. This represented a
lower growth rate than in 2005 or 2006, due to tough pricing
competition and reduced ability to cross-sell in highly penetrated
banking markets. But Chilean banks increased their sales of
fee-intensive products such as credit and debit cards in 2007,
according to Fitch.
• Latin America has seen a 400 percent growth
in MasterCard-branded EMV chip cards and an almost
100 percent rise in POS acceptance of EMV over the last two years.
The growth is due to the significant number of MasterCard member
banks which have begun issuing EMV cards in countries such as
Brazil and Mexico, MasterCard says. “Banks in other countries such
as Colombia, Venezuela, Costa Rica, Ecuador, Panama and the
Caribbean are in various stages of chip technology migration,” it
says. The trend to use EMV chips for additional applications such
as contactless payments and secure card-not-present authentication
is growing in importance in LAC, MasterCard adds.
Aconite, a UK chip card
software firm, has teamed up with Brazilian card processing
software vendor Gênia Tecnologia. The two firms
will market Aconite’s FastTrack EMV software and Smart PrePaid card
system to Brazilian issuers. FastTrack enables issuers to process
EMV card transactions and to control their cardholders’ credit risk
via real-time, post-issuance scripting. Smart PrePaid enables banks
to issue low-value contactless EMV prepaid cards for applications
such as transit. In December 2007, Aconite signed an agreement with
Mexican card management systems firm Tecnica Comercial Vilsa to
market EMV software to Mexican issuers.
American Express Mexico has
launched a facility on its tax payment website (www.americanexpress.com.mx/impuestos)
which enables cardholders living in Mexico City to pay their
Predial (property) taxes using their Amex card. Amex is offering
cardholders the option to pay their property taxes in six monthly
instalments interest-free. After paying, cardholders can print out
Mexican government-issued receipts. The site also offers the
facility to pay car licences in the states of Nuevo León, Puebla
and Mexico state as well as in Mexico City.
• On 13 March 2008, Citigroup
sold 40.7 million shares in Redecard for BRL1.06
billion ($618.6 billion) as part of a secondary share offer in the
Brazilian MasterCard processor (CI 394, Region round-up). Redecard
held an IPO in July 2007 (CI 384, Region round-up). Citi has the
option of selling an additional 6.13 million shares in Redecard.
Following the share offer, including the sale of the extra shares,
Citi’s stake in Redecard will fall from 24 percent to 17 percent.
Brazil’s Itaú and Unibanco both hold 23.2 percent stakes in
Redecard.
• Brazil’s CSU
CardSystem returned to profit in the fourth
quarter of 2007, with a net income of BRL 400,000 ($233,440). Its
EBITDA (earnings before interest, tax, depreciation and
amortisation) rose by 121 percent year-on-year to BRL11.3 million
in the fourth quarter of 2007. CSU provides outsourced credit card
issuing and management services (CI 396, Region round-up). Gross
revenues rose by 5.8 percent year-on-year to BRL86.2 million in the
fourth quarter. CSU’s average card base grew by 35.5 percent
between the fourth quarter of 2006 and the same period in
2007.
• HSBC’s Mexican subsidiary Grupo
Financiero HSBC
says its credit card lending rose by 85.1
percent year-on-year to MXN27.3 billion ($2.53 billion) in the 12
months to 31 December 2007. In 2007, HSBC installed 304 new ATMs in
Mexico. HSBC Mexico’s credit card base rose to 619,000 cards in
2007, which drove the bank’s share of the Mexican credit card
market up by 3.5 percent compared to 2006. Loan impairment charges
reached MXN9.5 billion in 2007, partly driven by higher impairment
charges on credit cards.
• Brazil’s Unik plans to
launch a credit card targeted at people receiving pensions from the
Brazilian government’s INSS (National Institute of Social
Security). The firm provides financial services to unbanked and
underbanked consumers in Brazil. Its pensioner credit card will
offer loans of up twice the cardholder’s income, with their INSS
benefit being used to make repayments. Unik will issue the card in
partnership with an unnamed Brazilian bank, and expects to sign up
500,000 cardholders. It currently has around 700,000 cardholders in
total, including payroll cards. In November 2007, the
Inter-American Investment Corp. approved an equity investment of up
to BRL2 million ($1.16 million) and a convertible loan of up to
BRL3 million in Unik.
• In the first quarter to 31 January 2008,
Canada’s Scotiabank saw a 30 percent growth
year-on-year in credit card lending in its international banking
division. The unit includes operations in Mexico, Guatemala, the
Dominican Republic, Chile, Peru and Jamaica.
• Scotiabank’s Mexican subsidiary Grupo
Scotiabank
says its credit card lending rose by MXN1
billion ($93 million), or 23 percent, year-on-year in the 12 months
to 31 December 2007. The bank was forced to increase its loan loss
provisions in 2007 compared to 2006 due to higher delinquencies in
credit cards and mortgages. Scotiabank’s performing loan portfolio
of credit card and other unsecured lending rose to MXN19.37 billion
in 2007 from MXN189.36 billion in 2006. Credit card commissions
totalled MXN741.9 million in full-year 2007 compared to MXN639.2
million in 2006.
VisaNet Brasil is planning
an IPO in the first half of 2008, Reuters says. The acquirer is
controlled by Visa Inc., Bradesco, Banco do Brasil and ABN AMRO’s
Brazilian unit. The IPO will take place shortly after Visa Inc.’s
IPO (CI 391 p1), Aldo Mendes, Banco do Brasil’s CFO, told Reuters.
Visa Inc. raised $17.9 billion in New York on 18 March 2008.
Visa Brazil has launched the
Visa CTA Hotel credit card, which enables large companies to manage
their employees’ hotel spending. The card provides automatic
reconciliation between transactions and management accounting
systems. All transaction information including tax charges is
automatically entered into the corporation’s accounting systems,
Visa says.


NORTH AMERICA

• The Federal Deposit Insurance Corporation (FDIC)
says in its Quarterly Banking Report that credit card charge-offs
by FDIC-insured institutions rose by $1 billion (33 percent)
year-on-year in the fourth quarter of 2007. Non-current credit card
loans – those that are 90 days past due – rose by $1.9 billion (26
percent) year-on-year in the fourth quarter.

• Canadians are increasingly paying their bills
on time, according to data from Equifax Canada. A
strong economy and low unemployment have enabled more consumers to
make their payments on time, despite rising personal debt levels,
says the credit rating agency. The average national delinquency
rate declined by 21 percent between June 2005 and December 2007,
says Equifax, with improvements coming largely from increased
payments on credit cards, term loans, and personal lines of
credit.
• The Bank of Canada has
launched an anti-fraud training kit for retailers called Fighting
Fraud on the Front Lines. The kit was developed in collaboration
with the Royal Canadian Mounted Police, payment card schemes,
Canada Post, and other law-enforcement agencies and industry
associations. It provides retailers with advice on protecting
themselves against four types of payment fraud; counterfeit bank
notes; payment card crime; cheque and money order fraud; and ID
theft.
Barclaycard US has named
Scott Young as general manager, partnerships. Young joins
Barclaycard from GE Consumer Finance, where he was president and
chief executive officer of personal finance. Barclaycard says the
growth of its US credit card business has been fuelled by its
co-branded and partnership programmes. Tom Karinshak has also
joined the executive committee of Barclaycard US as managing
director of customer care and bank operations. He was previously
senior vice president of customer management as AOL Time
Warner.
Chase Card Services has
acquired patient financing company Unicorn Financial
Services
. The combined company has launched its expanded
set of products as ChaseHealthAdvance Financing Options. Chase says
it wants to apply to healthcare the knowledge it has acquired from
consumer credit cards. As well as providing for medical expenses,
ChaseHealthAdvance will target elective procedures ranging from
dental, vision correction and cosmetic procedures to veterinary
care.
• Chase is expanding its ATM network in the New
York region via a multi-year branding agreement with non-bank ATM
operator Cardtronics. The agreement will see 107 Cardtronics ATMs
at branches of Hess Express convenience stores branded with the
Chase logo. The deal increases the number of Chase’s ATMs in the
states of New York, Connecticut and New Jersey to 2,450 and its
national total to 9,300. Chase customers do not pay a fee to get
cash or to check balances at its ATMs.
• Thirty-two Cardtronics ATMs
in Walgreens stores in the Hampton Roads area of Virginia are being
branded by Old Point National Bank. The ATM
operator says the bank’s brand will be prominently displayed on ATM
signage and transaction screens and the bank’s customers will be
able to use the ATMs surcharge-free. Cardtronics’ ATM branding
programmes allow banks to expand their ATM footprint without
incurring the cost of purchasing, installing and operating the ATM
network, the firm says.
• US card transaction processor
Heartland Payment Systems is entering the Canadian
market via the acquisition of a majority stake in merchant services
provider CollectivePOS. Based in Woodbridge,
Ontario, CollectivePOS has 5,000 customers in Canada and processes
US$1 billion transactions annually. Heartland says the deal will
allow it to expand in Canada and to serve merchants which have
locations in both the US and Canada.
HSBC, followed respectively
by Bank of America/MBNA and Washington Mutual/Providian, tops the
list of the US banks with the highest incidents of ID theft. Chris
Hoofnagle of the University of California’s Berkeley Centre for Law
and Technology compiled a list of top US banks for estimated annual
incidents of ID theft per billion in deposits. The list was based
on complaint data submitted by victims to the US Federal Trade
Commission in 2006 and obtained under the Freedom of Information
Act.
Union Bank of California,
which operates in California, Washington State and Oregon, is to
replace all its 1 million MasterCard debit cards with MasterCard
PayPass-enabled debit cards. Adding PayPass functionality to
magnetic-stripe debit cards will help differentiate Union Bank of
California cards from competitors and make them the preferred card
in customer wallets, MasterCard says. The rollout was due to begin
17 March with the issue of 100,000 debit cards in Los
Angeles.
Monitise Americas, a US
mobile banking and payments service provider, has named Jeff
McLaughlin as Executive Vice President of Mobile Strategy. He will
focus on expanding m-banking adoption in Canada, Mexico and the US.
Monitise Americas is a joint venture between Metavante and Monitise
UK (CI 394, Region round-up).
RBC Royal Bank has launched
Canada’s first Visa Infinite card for private banking clients.
Benefits offered by the invitation-only card include personalised
servicing, customised rewards, travel assistance, concierge
service, airport lounge access, premium insurance, and access to
exclusive events and experiences. RBC is also launching a Visa
Infinite edition of its Platinum Avion Visa card. The Avion Visa
Infinite card offers enhanced travel rewards to cardholders.
• Canadian bank TD Canada
Trust
has launched the TD First Class Travel Visa Infinite
Card. It says the card allows cardholders to redeem their reward
points by booking travel any way they want. There is no requirement
to book through a travel rewards programme provider with
limitations on points tiers or seat availability, TD says.
• Foreign exchange provider
Travelex has teamed up with MasterCard and West
Suburban Bank to launch a prepaid foreign currency card aimed at US
customers travelling to Europe. The company says its Cash Passport
is the first prepaid foreign currency card to be available in North
America. The card is available in euros and UK sterling, with the
exchange rate locked in at the time the card is loaded.
• Global payments processor First
Data
has signed a multi-year contract extension with
Wells Fargo to provide debit processing services
to Wells Fargo for its 19.6 million debit cards. It also provides
the bank with consumer credit and small business card processing
services, statement production and mailing, plastic card
personalisation and fraud detection services.