• Bank of China (BoC) will maintain its strategic partnership with the Royal Bank of Scotland… • The number of Vietnamese consumers using debit and credit cards has grown… • Poland’s Citi Handlowy is launching a service allowing location of partners… • Stanbic Bank of Uganda has extended UGX30 million ($18,292) to 2,000 credit cardholders… • Qatar National Bank (QNB) of Doha has launched the QNB Private Banking credit card…
• Bank of China (BoC) will maintain its strategic partnership with the Royal Bank of Scotland (RBS) following RBS’s part-nationalisation by the UK government amid the continuing global financial crisis. A BoC spokesman said that the bank would continue strategic cooperative relations with RBS and jointly push forward planned developments, including debit and credit cards. RBS paid $3 billion for an 8.25 percent stake in BoC in 2005.
• Separately, Bank of China and Chinese domestic card scheme China UnionPay (CUP) have jointly launched the BoC Great Wall CUP platinum card in Singapore as part of a global partnership agreement. The card is the first Singapore dollar-denominated CUP credit card to be launched in Singapore, and is aimed at Singaporeans who travel frequently to China. In addition, cardholders will enjoy exclusive privileges at more than 17,000 merchants in the Chinese mainland, Hong Kong and Macau when they dine, shop, entertain and travel.
• Citibank has launched a debit and ATM card offering in Malaysia, offering customers global access to cash free of charge at 13,500 Citibank ATMs in over 100 countries, and purchases at more than 29 million Visa merchant outlets worldwide. Citi is aiming to issue 100,000 new cards over the next 12 months. In Malaysia, there has been significant growth experienced in debit card usage, as debit cards registered an exponential growth of 114 percent and 81 percent in terms of volume and value respectively in 2007. Citi is also offering cardholders reward points on every purchase they make.
• According to press reports in Japan, thousands of Japanese police officers have been guarding ATMs around the country in a bid to stop elderly people falling victim to fraudsters as they withdraw cash from pension payments to their accounts. Around 56,000 police have been deployed to guard about 80 percent of the country’s 98,000 ATMs. Police say conmen have tricked people into transferring more than $211 million to their accounts via ATMs so far this year and there have been 346 related arrests.
• The number of Vietnamese consumers using debit and credit cards has grown to 900,000, or 1 percent of the country’s population, according to Visa. Payment card usage has soared in popularity over the past 10 years, partly due to the country’s economic growth rate averaging 7 percent each year, with a record 8.44 percent growth in 2007. There are 22 banks participating in the Visa network in Vietnam, with 10,000 point of sale terminals at shops nationwide.
• Australian airline Qantas and Westpac Bank have announced the introduction of a new Earth Platinum credit card that offers cardholders the benefits of two cards linked to one account. Qantas says the card is the first of several new cards to be unveiled ahead of changes to its Frequent Flyer programme from April 2009. Qantas cardholders can earn points on everyday purchases and build points in their Frequent Flyer account, whilst also having the opportunity to earn points twice from one transaction – once on their card and once with other programme partners. Some other credit and charge card reward programmes will no longer offer Qantas Frequent Flyer points as a reward option from 1 April 2009.
• According to figures from the Reserve Bank of Australia (RBA), Australians spent A$17.8 billion ($11.8 billion) on their credit and charge cards in August, down from $19.03 billion the previous month, a fall of 6.5 percent. Total credit and charge card balances outstanding rose 0.33 percent to A$44.6 billion in August, from A$44.45 billion in July, but credit card repayments fell by 6.2 percent to A$18.16 billion in August, from A$19.35 billion in July. The number of credit and charge accounts increased by 0.2 percent, while the number of purchases using credit cards fell by 8.6 percent. Credit card purchase value decreased by 6.4 percent to A$16.78 billion in August from A$17.92 billion in July.
• Commonwealth Bank of Australia (CBA) says BankWest, which it is acquiring from HBOS of the UK, will be included in its overhaul of core banking operations. CBA agreed to acquire the BankWest unit from HBOS for A$2.1 billion. The acquisition will add 366 ATMs to CBA’s network of 275 in Western Australia, as well as 100 branches and 28 business banking centres.
• The results of the Reserve Bank of Australia’s review of payment systems have concluded that regulations according to which merchants have the right to surcharges for credit card transactions have encouraged competition in the payments system. As a result, the Reserve Bank has announced that such reforms concerning the credit card service fees paid by merchants could be removed within a year with one condition: if card companies take into account the Reserve Bank recommendations and if industry participants take the necessary measures to prevent the possibility for interchange fees in the credit card system to grow in the absence of regulation.
• Australian consumer advocacy groups say the country’s banks are ripping off their customers by not passing on recent interest rate cuts. There are 14 million credit cards in circulation in Australia, with almost every Australian adult owning at least one. But there has been little sign that any of the major banks or other credit institutions will pass on the latest Reserve Bank rate cut of 1 percent point to credit card consumers. Federal Finance Minister Lindsay Tanner has urged consumers to put pressure on their banks to cut interest rates on credit cards.
• Global electronic payment and risk management services provider Apax Global Payment and Technologies has launched its business operations in the Asia-Pacific market, with a special focus on Vietnam and China. Apax has opened an office in Hanoi, Vietnam to deal with the demand for credit card and electronic payment products across the region. Apax Global Payment and Technologies supports processing for over 100,000 cardholders and their merchants from worldwide industries.
• South Korea’s Ministry of Strategy and Finance has launched a new tax payment programme which allows citizens to pay a number of taxes using credit cards. The programme, effective from 1 October, aims to expand the range of tax payments available to credit cardholders in a bid to cut administration costs and prevent tax evasion. Credit card-based tax payments have been available to citizens since 1997, but restrictions were in place which only allowed local taxes to be paid via such transactions. The new programme enables citizens to pay income taxes, value-added taxes, property taxes as well as education taxes and tariffs via credit cards.
Europe, Middle East, Africa
• A contactless version of the Lufthansa Miles & More credit card has been launched in Germany, incorporating MasterCard’s contactless PayPass technology. The new card, which is the first credit card in the country to incorporate contactless payment technology, features a SmartMX security EMV chip from NXP Semiconductors, and is issued by Deutsche Kreditbank in conjunction with Lufthansa. PayPass terminals have been installed in Frankfurt and Munich airports, with plans to install more in participating retailers in Germany. The Lufthansa Miles & More card is already accepted at more than 27 million locations globally.
• Smart card solution provider On Track Innovations (OTI) has secured a contract from Kenyan health care technology solution provider Smart Applications International for an additional 100,000 MediSmart cards, which will be issued by medical scheme managers in Kenya. Smart has already issued approximately 100,000 cards and deployed 340 contactless smart card readers and other device points of service at hospitals, pharmacies and general practitioner sites across Kenya, enabling patient authentication, verification of benefits and claims processing electronically.
• Poland’s Citi Handlowy is launching a service allowing location of partners of the ‘Discount’ loyalty programme for Citibank credit cardholders via SMS messaging. Customers of Citi Handlowy can check the addresses of the nearest points of sale offering discounts on purchases made with the Citibank credit card by sending a SMS text message. The Citibank Discount programme offers customers rebates of up to 50 percent on purchases in more than 3,100 points of sale across Poland.
• Online payment provider PayPal and BNP Paribas Personal Finance have entered into a strategic European partnership for financing online purchases. PayPal has incorporated the Aurore Cetelem card into its range of payment methods in France, Spain and Italy. Furthermore, the two main players have initiated negotiations that may lead, at some point in 2009, to the launch of an online financing offer under the PayPal brand name, enabling PayPal users to pay in several instalments and to benefit from a cash reserve for making purchases over the internet and at points of sale.
• Stanbic Bank of Uganda has extended UGX30 million ($18,292) to 2,000 credit cardholders since it launched its first credit card product six months ago. Currently, 40,000 customers qualify for the facility. The bank is aiming to extend credit to qualifying customers in phases within a timeline of six months. According to the bank, holders of a silver card can withdraw up to UGX50,000 per month, while gold cardholders can withdraw between UGX2 million and UGX8 million.
• Payment processor TSYS has signed a multi-year agreement to service the closed-loop, private-label store cards of UK retailers Argos and Homebase; brands that are part of Home Retail Group. Argos and Homebase have offered their customers the ability to apply for store credit through in-store, phone and internet options since 2001, and currently have an active cardholder base of over 1 million accounts. Terms of the agreement have not been disclosed but include customer account management, payment processing and customer care, with the conversion of existing accounts scheduled for 2009.
• Software solution provider Postilion, a division of S1 Corporation, has announced that Mashreq, the largest privately held bank in the United Arab Emirates (UAE), has replaced its existing payment switch infrastructure with Postilion solutions. The new solutions from Postilion are being used to drive the bank’s ATM network, point of sale terminals and to introduce new integrated POS services for retail merchants.
Mashreq will use Postilion to support its operations across the Middle East region, including the UAE, Bahrain, Qatar, and Egypt. The bank currently has over 200 ATMs and 12,000 POS terminals installed, and the majority of these devices have already been successfully migrated to the Postilion platform.
• UK peer-to-peer loan lender Zopa is reporting increasing interest from both borrowers and lenders due to the credit crunch forcing banks to tighten their lending criteria. Zopa says that between July and September 2008, an average of 3,700 borrowers joined per month, compared to 2,500 a month in the previous quarter.
The number of lenders joining during the quarter also rose, up from 300 a month between April and June, to 500 a month. Zopa says these lenders have also been getting average returns in excess of 10 percent over the last couple of months, compared to 8.9 percent between April and June. Zopa passed the 200,000 member milestone in July, with lending topping the £23 million ($40 million) mark during the month.
• ZAO Citibank of Russia, ZAO Express Card and MasterCard have announced the launch of a joint credit card, incorporating contactless payment technology for travel in Moscow’s underground rail system. The partner companies releasing the card now plan to add the function of paying for travel on all forms of public transportation in Moscow. The potential market for the new credit card is estimated to be more than one million customers.
• JCB and JCB International, ORIX Corporation and Majid Al Futtaim Group have established a joint venture credit card company, Majid Al Futtaim JCB Finance, in Dubai in the United Arab Emirates (UAE). MAF JCB will issue JCB credit cards and promote license partners throughout the Middle East and North Africa. MAF JCB is accepting applications for the first JCB international brand card in the UAE, the Najm JCB credit card at Carrefour and other MAF Group-operated retail facilities.
• Qatar National Bank (QNB) of Doha has launched the QNB Private Banking credit card for high-end customers. The card features a black design fringed with a metallic gold border and encrusted with a real diamond, and comes pre-approved with no pre-set spending limit. The card offers exclusive premium services, including global concierge services and travel assistance.
• Stamp duty for combined ATM/debit cards in Ireland is set to be cut in order to encourage more electronic payments amid estimates the continued use of cheques and cash costs the Irish economy as much as €1.4 billion ($1.9 billion) a year. Finance Minister Brian Lenihan said that duty on such cards will fall from €10 a year to €5, with the measure funded by an increase in duty on cheques from €0.30 to €0.50 each. The Irish Payment Services Organisation (IPSO) welcomed the latest measure, saying Ireland is one of the last few significant users of cheques. Ireland’s cheque usage per capita is double the European Union average, IPSO said.
• US consultancy First Annapolis says that Brazil’s VisaNet and Redecard came respectively 8th and 11th in its global ranking of the world’s largest bankcard acquirers. First Data came top, followed by Bank of America. The ranking, published in the September 2008 edition of the First Annapolis Navigator bulletin, is based on credit and debit card purchase transactions in 2007. In Latin America, First Data provides acquiring services in Mexico and Argentina.
• Brazil’s central bank Banco Central do Brasil says internet and PC banking transactions rose by 21 percent year-on-year in 2007. These transactions included bill payments, balance enquiries and fund transfers between accounts. Between 2006 and 2007, the volume of non-cash withdrawal transactions such as account transfers and balance enquiries at Brazilian ATMs fell by 3 percent.
• French contactless microprocessor vendor Inside Contactless has entered the Brazilian market through an alliance with American Banknote Brazil (ABnote). The two firms are developing a MasterCard type-approved contactless payment card which uses Inside’s MicroPass 4003 contactless chip. MicroPass 4003 is designed for MasterCard PayPass applications. ABnote Brazil and Inside worked together to obtain type approval for the new card and to install in-house pre-personalisation capabilities. ABnote Brazil produces hundreds of millions of bankcards a year for Brazilian banks such as Banco Bradesco, Banco Itaú, Unibanco and Banco do Brasil.
• In its second quarter to 30 June, 2008, smart cards accounted for 18 percent of American Banknote Brazil’s BRL61.4 million ($32.4 million) in net revenues from its cards manufacturing division. In volume terms, smart cards only accounted for 2 percent of total card output in the second quarter of 2008. ABnote Brazil makes three types of smart card: chip-based bankcards; GSM cellphone SIM (subscriber identity module) cards; and contactless cards with built-in chips and antenna for applications such as transit and access control. In the second quarter, ABnote Brazil doubled its smart card production volume from the first quarter, mainly because it started to supply smart cards to Banco Itaú and Banco do Brasil.
• In the first half of 2008, the turnover of Banco do Brasil’s (BB) debit and credit cards business rose by 28.3 percent to BRL28.9 billion ($13.68 billion) from the first half of 2007. The revenues included BRL1 billion from the 1.6 million co-branded cards issued with 24 firms. BB’s total credit card receivables rose to BRL4.95 billion in the first half of 2008 from BRL1.88 billion in the first half of 2007. At 30 June 2008 BB had 23.7 million credit cards in issue and 51.2 million debit cards.
• Puerto Rico-based Banco Popular has launched an online card design service, U-Design, for holders of its Visa and MasterCard credit cards. The service, which is available at www.popular.com/udesign, uses card customisation software from UK-based Serverside Group. Cardholders are able to add their own image, or select an image from an online gallery of pre-set images, paying $4.99 per customised card.
• Gemalto says its advanced card personalisation centre in Barueri, São Paulo, Brazil has been awarded the ISO (International Standards Organisation) 9001 quality management certification. The centre, which opened in August 2007, already has certifications from Visa and MasterCard.
• US-based POS terminal vendor Hypercom has named Samia Christine Bounaira as managing director, Mexico. She replaces Jaime Arroyo who is now responsible for Hypercom’s Caribbean, Central America and Andean region. Bounaira was previously Oberthur Technologies’ sales director, Mexico and Central America. Hypercom has also named Lloyd Baylard as vice-president/general manager, multilane products, responsible for multilane sales in the Americas. Rod Hometh is now senior vice-president and general manager of the modular payments business unit, responsible for sales to the unattended payments market in the Americas.
• HSBC Argentina is using US-based Vasco Data Security International’s Digipass online authentication system to protect its retail and corporate web banking customers. So far, HSBC Argentina has distributed 200,000 Digipass Go 3 two-factor authentication devices to its clients. Go 3 calculates a one-time passcode which is used to authenticate online transactions. In Chile, Banco de Chile uses Vasco’s Digipass technology to protect its web banking customers.
• PayPal is being adopted by merchants in Latin America and other regions such as Asia where its parent eBay does not have a strong presence, eBay president and CEO John Donahoe told investors in a conference call. He said offering PayPal helps to open up a global market for these merchants and also increases their sales.
• Banco Deuno, a new bank targeting Mexican middle-income consumers, plans to offer credit cards with fixed interest rates. The bank was launched with 12 initial branches on 1 October by its parent, Ixe Grupo Financiero.
• US-based processor TSYS says in the third quarter to 30 September, 2008, it signed a multi-year deal with Banco Wal-Mart de México Adelante to launch a consumer credit card for the bank. The deal includes fraud detection and analytic services. In the same quarter, TSYS also signed a deal with Mexico’s Metrofinanciera for the launch of a new credit card programme in Mexico.
In June 2008, TSYS signed a payments processing agreement for Mexican credit card issuer Globalcard’s consumer card portfolio (see CI 403).
• Visa has launched a near-field communications (NFC) cellphone payment trial in the Guatemalan capital Guatemala City. Visa cardholders can use their NFC phones to pay for meals in four Guatemala City malls at selected fast food restaurants and movie theatres that accept Visa payWave contactless cards. Visa says the six-month trial, which involves Compañía de Procesamiento de Medios de Pago de Guatemala (Visanet Guatemala), Banco Industrial, and Banco Uno, is the first NFC payWave pilot in Latin American and the Caribbean. Over 200 Visa cardholders have migrated their credit card data onto their NFC phone for the trial, which is expected to pave the way for future pilots offering applications such as account management, alerts, and mobile couponing.
• Visa has launched a series of free online seminars for Latin American small and mid-sized firms, which are intended to help them manage their business more effectively. The seminars, which are available at the visa.com/seminariosempresarial website, include information on how to start a business, create a sales/marketing strategy, and manage company finances.
• The August 2008 US credit card charge-off rate rose to 6.82 percent from 6.36 percent in July 2008 and 4.61 percent in August 2007, says Moody’s Investor Services. The delinquency rate rose to 4.6 percent in August from 3.83 percent a year ago. In August 2008, cardholders paid back, on average, 17.4 percent of their credit card debts, down from the August 2007 rate of 20.07 percent. Income yield fell to 17.63 percent from 19.81 percent in August 2007.
The one-month excess spread, which is the yield less the expenses of the related credit card asset-backed transactions such as coupon, servicing fee and charge-offs, dropped to 6.12 percent in August from its year-prior level of 8.17 percent. Revolving US consumer credit, which includes credit card loans, fell by a seasonally adjusted annual rate of 0.8 percent in August 2008 to $969 billion, the Federal Reserve’s monthly G.19 report says. In July 2008, revolving credit rose by 5 percent to $969.6 billion.
• Hitachi Consulting/BAI’s 2008 Study of Consumer Payment Preferences says that 63 percent of all US consumer payments are now electronic, and that electronic payments account for the majority of transactions across all three major venues: bill payments, in-store purchases, and web shopping.
“This year, for the first time, the balance in bill payments tipped from cheques to electronic payments,” Hitachi Consulting analyst Melissa Fox says. “Only 38 percent of US bills are paid by cheque now, down from 55 percent in 2005.”
Fox says many US biller-owned websites do not offer an online card payment option due to reluctance to pay merchant fees, but the number of biller sites offering card payments is growing. Cash accounts for 29 percent of US in-store purchases, cheques 8 percent, and debit cards 37 percent. Some 98 percent of US web shopping payments are electronic, with credit and debit cards jointly accounting for 74 percent of transactions.
“E-payment services like PayPal and Amazon Payments are often card-based at the back-end,” Fox says. “We found a low consumer enrolment in online security schemes Verified by Visa and MasterCard SecureCode.”
• Affluent Americans represent a growth opportunity for debit card usage, a MasterCard Advisors study says. The study, which examined four US income segments (sub-$25,000; $25,000-$50,000; $50,000-$75,000; plus-$75,000), found debit card usage is highest in households with annual incomes of $50,000-$75,000. However, 31 percent of affluent debit cardholders with household incomes above $75,000 do not regularly use their debit cards for purchases, while 19 percent in the $50,000-$75,000 segment do not regularly use debit for purchases. Total debit spend by value among people in the plus-$75,000 segment is 87 percent of total debit spend by people in the $50,000-$75,000 segment.
“Younger consumers tend to use debit more, as they have less access to credit cards than more affluent consumers, who often have rewards-based credit cards,” MasterCard Advisors’ Greg Howes said. “Younger consumers will more likely be in the lower-income segments.”
The study also found rewards programmes have a positive influence on debit card usage.
• American Express Canada’s point of sale network will be ready for EMV contactless cards in the first quarter of 2009.
“We already have the capability to accept contactless mag-stripe cards, but have not been advertising this fact,” Amex Canada spokeswoman Jolene Price said. “If Amex US card members want to use Amex contactless mag-stripe cards in Canada, they can do so.”
Price says Amex Canada will be issuing EMV contactless cards by the end of 2009.
• Consumer electronics retailer Best Buy Canada and Chase Card Services Canada have launched the Best Buy Reward Zone Visa card. Customers receive one reward point for every C$1 ($0.77) spent on their card and two points for every C$1 spent on purchases at Best Buy stores in Canada or at http://www.bestbuy.ca/. Points are redeemable for reward certificates that can be spent in-store. The card has no annual fee.
• Coca-Cola Bottling Company is to add MasterCard PayPass contactless readers to 5,000 vending machines across Canada by 2010. So far, 400 units located in major Canadian cities have been equipped with PayPass readers.
“This deal is important as it expands card acceptance to locations that traditionally only took cash,” Will Giles, MasterCard Canada vice-president, acceptance, said. “Vending machines with contactless readers will not lose the sales of people without coins wanting to make purchases.”
• US electronics group United Technologies has withdrawn an unsolicited takeover offer for ATM vendor Diebold. The $2.64 billion offer, rejected by Diebold management, was originally made in February 2008.
• First Data is expanding the range of payment options it can process for e-merchants via a deal with CardinalCommerce, a US alternative payments provider. CardinalCommerce’s Centinel system processes a range of alternative payments including PayPal, eBillme, Bill Me Later, Google Checkout, MyECheck, NACHA Secure Vault Payments, Amazon Payments, and RevolutionCard. In October 2008, PayPal’s owner eBay announced a deal to buy Bill Me Later, which offers consumers a deferred payment alternative to using credit cards online.
• MasterCard has launched a merchant-funded discount programme for debit and prepaid cards. The MasterCard Savings platform will be available to all US issuers of MasterCard debit and prepaid cards. Cardholders enrol for the programme online and elect which merchants they wish to receive promotional offers from. MasterCard is offering the programme in partnership with rewards and loyalty provider Next Jump. Thousands of merchants are already participating in the scheme, MasterCard says.
• US payments technology firm Metavante is to provide the processing platform for Community Bank Products (CBP), a supplier of network-branded prepaid card products to 1,000 US reseller community banks. Metavante will provide CBP with prepaid card processing, as well as card production, delivery and account management. It will also supply CBP with fraud prevention, a call centre and automated voice response services.
• Montreal-based Optimal Group has sold its Optimal Payments card-not-present (CNP) processing business to Toronto-based Card One Plus for $7 million plus the assumption of liabilities. Optimal Payments has CNP operations in Canada, Ireland, the UK and US. According to an August 2008 SEC filing, Optimal Group expects to divest its Optimal Payments US card-present processing business within the next year.
The August filing said Sterling Payment Solutions had agreed to pay $2 million plus the assumption of liabilities for the Optimal Payments Canada card-present processing business.