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March 7, 2008updated 24 Jan 2022 7:54am

Region round-up

China UnionPay announced that merchants in 26 countries and regions were able to use CUP as their payment system by end-2007. Japanese issuer Sumitomo Mitsui Card and supermarket operator Aeon will collaborate to develop terminals capable of reading Aeons electronic-money card. Dutch banking giant ING is working with MasterCard to develop a near field communications (NFC)-based mobile payments system that will allow customers to use their handsets to pay for low-value purchases. In the fourth quarter of 2007, MasterCard posted a post-tax gain of $185 million from the sale of shares in Brazilian acquirer Redecard.

By Verdict Staff

• China UnionPay announced that merchants in 26 countries and regions were able to use CUP as their payment system by end-2007 • Japanese issuer Sumitomo Mitsui Card and supermarket operator Aeon will collaborate to develop terminals capable of reading Aeon’s electronic-money card • Dutch banking giant ING is working with MasterCard to develop a near field communications (NFC)-based mobile payments system that will allow customers to use their handsets to pay for low-value purchases • In the fourth quarter of 2007, MasterCard posted a post-tax gain of $185 million from the sale of shares in Brazilian acquirer Redecard.

 
Asia-Pacific

China UnionPay aims to penetrate second- and third-tier cities in China such as Xinjiang, Ningxia, Gansu and Qinghai. The country’s largest electronic payment network is targeting debit card use to constitute 10 percent of retail sales in second-tier cities by end-2008.

China UnionPay announced that merchants in 26 countries and regions were able to use CUP as their payment system by end-2007. Its merchant network nearly doubled to 125,000 merchants from 2006 to 2007, ATMs increased 23 percent, and POS terminals increased from 85,000 to 174,000 over the same period. The network is competing with Visa and MasterCard for wallet share of the affluent Chinese traveller.
Industrial and Commercial Bank of China, the mainland’s biggest bank, aims to increase its credit cards in circulation by 30 percent in 2008. The bank currently has 23 million credit cards in circulation and aims to increase the number to 30 million. Credit cards are the bank’s second-most important credit product after mortgages and make up 22 percent of its consumer lending profits. According to official data sources, there is an estimated 70 million credit cards in circulation in 2007, an increase of 140 percent from the previous year.
• China’s central bank, People’s Bank of China, said that there are 1.47 billion bank cards in circulation as of 2007 – a 30 percent increase year-on-year. Bank cards accounted for 21 percent of the total value of retail sales with 13.5 billion transactions in 2007.
State Bank of India, the country’s largest lender, has asked borrowers to manage their credit card debt and get rid of high-interest liabilities. As part of the educational campaign, the bank urged customers to save and invest by establishing emergency funds and opening retirement accounts
Cardtrend International, a loyalty and rewards company, launched a Bonus Point loyalty card in Guangzhou, China with 250 merchants and 5,000 cardholders. The company is targeting 1,000 merchants and 100,000 cardholders by end-2008 in the city that boasts one of the highest incomes per capita in China.
• Beijing-based China Minsheng Bank plans to establish a 100 percent-owned credit card company, although there has been no indication whether it has received approval from the local authorities. The card company will have RMB1.6 billion ($222 million) in registered capital and strategic stakes will be available. The bank already has a credit card centre which has issued 3.5 million credit cards so far. It has also previously received regulatory approval to establish a leasing company with a registered capital of RMB3.2 billion
Visa has launched its contactless payWave card in Hong Kong for small-value transactions with a maximum limit of HK$500 ($64) in a bid to give incumbent Octopus Card a run for its money. Octopus dominates the contactless small-value transaction market and is used in public transport, cinemas, supermarkets, vending machines and parking metres throughout the territory. MasterCard also plans to launch its contactless PayPass card in the third quarter of 2008 with a maximum spending limit of HK$200
• Japanese issuer Sumitomo Mitsui Card and supermarket operator Aeon will collaborate to develop terminals capable of reading Aeon’s electronic-money card. The terminals will also be able to read telco NTT DoCoMo’s mobile phone-based payment service. The service, known as iD, will enable credit cardholders to make payments via a DoCoMo phone linked to their card. Sumitomo Mitsui is already partnering with DoCoMo to introduce the service
• Korea’s Woori Bank will expand its China operations and plans to open 53 branches within three years. The first one will be located in Tianjin and 11 will be opened in 2008. The bank expects its application for the renmimbi-denominated retail business to be approved in the first half of 2008, after which it will introduce renmimbi-denominated debit cards. Woori plans to issue the cards independently, but partner with local banks to enable customers to withdraw cash from the already extensive local bank branch network. Although the bank does not plan to make any acquisitions in 2008, its future expansion is likely to be inorganic
Petronas, Malaysia’s local petroleum corporation, has partnered with two large local banks, Maybank and CIMB Bank, to launch co-branded credit cards – the Petronas CIMB MasterCard and Petronas Maybankard Visa. According to Petronas, 25 percent of transactions at its domestic retail arm are card-based. The two cards will be free for life with no minimum spending requirement. Maybank plans to issue 100,000 cards within 12 months; CIMB is aiming to acquire 150,000 cardholders in the first 36 months
LandBank of the Philippines has launched the OFW Cash Card targeting overseas Filipino workers looking to remit money home without incurring high remittance charges. The card is an electronic debit card linked to a Smart mobile phone, thus enabling mobile phone-based remittances. Smart is a local mobile telecommunications provider. Cardholders can load cash to their card through a Smart mobile phone to transfer funds to a OFW cash card in the Philippines. When the transaction is completed, a confirmation will be transmitted to the mobile phone
• Singapore’s United Overseas Bank (UOB) has recently signed an agreement with card issuer JCB International which will see the bank issue JCB cards exclusively and offer acceptance facilities to new and existing merchants in Singapore. The bank says that about 600,000 Japanese tourists visit Singapore each year and UOB-JCB cardholders will receive exclusive Japanese dining and retail privileges both locally and in Japan
Visa and Singapore Post plan to offer a new Visa Money Transfer remittance service from 51 designated post office branches in Singapore to Visa cardholders in Australia, China, India, Indonesia, Malaysia, Philippines, Sri Lanka, Thailand and the UK. Customers will need to register for a CashHome card that will allow cardholders to remit funds using a 16-digit Visa card number. A maximum of S$3,500 ($2,500) can be remitted per day and a fee of S$9 is charged for every transaction
Cosmos Bank of Taiwan plans to reissue new cashcards in the second quarter of 2008. The bank targets white-collar workers with monthly salaries of $2,121 to $3,636. The bank is not ruling out the possibility of offering credit and loans to these cashcard holders. There are currently very few banks issuing new cashcards in Taiwan and leading cash-card issuers such as Taishin International Bank and Ta Chong Bank are still deciding whether to return to the market or not. 

Europe, Middle East, Africa

APACS, the UK payments association, has issued December 2007 spending figures showing that spending on plastic in the UK over the Christmas period reached £32.2 billion ($62.8 billion), with £5.4 billion spent online, up 4 percent from 2006 figures. This is the slowest year-on-year increase over the same period for four years. The increase was due to the rise in spending on debit cards, which grew by 6.8 percent to £20.9 billion – although this was less than half of the increase between 2005 and 2006 (15.3 percent). Credit card spending at Christmas fell for the second year running – £11.3 billion in December 2007 compared to £11.4 billion for the same period in 2006. There was a decrease of 2.8 percent in the volume of credit card transactions, which was down from 197 million transactions for December 2006 to 192 million transactions in 2007

• The Pan-Nordic Card Association (PNC), the organisation for banks working with payment cards in Sweden, Norway, Denmark, Finland, Iceland, Latvia, Estonia and Lithuania, has confirmed its active participation in the work of the Berlin Group, a forum of 23 major card players in ten different eurozone countries. The Berlin Group was initiated by major national card payment systems in 2004 and works to promote card payments in SEPA. PNC’s objectives are to promote the borderless card market and its role as a forum for co-ordination of and co-operation over card infrastructure.
MasterCard Worldwide has announced the European launch of the MasterCard Optimiser for Travel & Entertainment and Purchasing. This interactive online tool enables companies of all sizes, including multinational and public sector organisations, to improve their travel and entertainment and purchasing programmes and to identify savings opportunities by benchmarking and analysing them against best-in-class industry practices. The European launch follows the roll-out of the MasterCard Optimiser in North America and the Asia-Pacific/Middle East region.
• UK-based Nationwide Building Society has joined forces with French vendor Xiring for the provision of authentication devices which it will begin rolling out to its online retail banking customers this spring. Xiring says it has supplied Nationwide with over 1 million of its pocket-sized portable Xi-Sign 4000 Apacs readers. Several high street banks have also recently gone down this route. Barclays is issuing handheld chip and PIN readers provided by Gemalto to half a million customers who use online banking to transfer funds to new third-party accounts, while Royal Bank of Scotland is planning to distribute the Xiring Xi-Sign 4000 devices to its online retail banking customers.
• The value of mortgage loans in Poland rose by 50 percent to PLN117 billion ($47.4 billion) in 2007 as a booming economy spurred many Poles to buy their first homes, state news agency PAP has reported, citing data from Poland’s central bank. Poles also added PLN3.09 billion in credit card debt, which rose to a total of PLN8.91 billion in 2007.
HSBC has launched purchase cards as an addition to its suite of commercial cards in Qatar. The purchase card from HSBC helps companies streamline the entire requisition process and manage payments for all business expenses by controlling and tracking company spending whilst also reducing administrative costs. The HSBC purchase card can be issued in the names of selected staff or of one of their departments to enable them to buy directly from suppliers or to use it for Qatar e-government transactions
Allied Irish Bank (AIB) has announced that it will be launching a new credit card. The new Click credit card, which has an 8.5 percent interest rate on purchases, can be applied for online and is managed solely through AIB’s internet banking service. The move by AIB to introduce the new card dislodges National Irish Bank from the top of the best buys list with its 9.4 percent rate on its Gold card. However, unlike other cards with some of the lower rates in the market, there is no introductory offer.
• Digital distributor and software developer UC Hub announced that it has launched its Africards Prepaid Visa Classic Card programme in West Africa through its subsidiary eSafe. UC Hub estimates that it will sell at least 100,000 cards in its first year. “Many people in West Africa have never had an alternative to cash. Now, the Africards Prepaid Visa Card gives consumers and employers a modern, safe and convenient way to pay,” said Mohamed Elbelamachi, Visa’s relationship manager for West and Central Africa.
• Dublin-based payments solution provider Payzone will be calling an extraordinary general meeting (EGM) to approve the removal of CEO John Nagle and CFO John Williamson from the company at the request of 60 percent of its shareholders. Payzone also announced that a separate shareholder group has called for the removal of its chairman, Bob Thian. The EGM is expected to take place in early March.
• Dutch banking giant ING is working with MasterCard to develop a near field communications (NFC)-based mobile payments system that will allow customers to use their handsets to pay for low-value purchases. The system will enable customers to pay for purchases by tapping their mobile phone at terminals equipped with MasterCard’s PayPass technology. The purchase will be deducted from a ‘mobile account’ that can be topped up with funds. ING and MasterCard are currently working with payments technology vendors Collis and LogicaCMG to develop the system. Finnish company Venyon, which operates a service platform for over-the-air NFC payments, is also working on the project, along with Taiwan-based NFC company Toro.
• European payments solution provider Payzone has entered into a strategic partnership with US gift card giant Blackhawk to capitalise on the growing gift card market in Europe. The joint venture will enable Payzone gift products to be sold to consumers through Blackhawk Network’s retail distribution channels, while Blackhawk Network’s gift cards will be available through Payzone’s branded convenience shops. Payzone currently has operations in 21 countries across Europe, processing over 630 million transactions annually. Research conducted at the behest of MasterCard suggests that the size of the prepaid market in Europe will reach €100 billion ($146 billion) by 2010, of which gift cards will account for around 20 percent.
• Processing firm FundsTech has announced that an unnamed Central African financial institution has signed a letter of intent for the company to plan or provide a complete debit and credit card processing solution. This will include debit and credit card processing, money transfer, payroll and micro lending. 

Latin America

American Express Mexico is offering Gold American Express Aeroméxico cardmembers special prices on select consumer electronics items bought with their card at RadioShack Mexico. The items include electric guitars and portable LCD displays.

• Bolivia’s Banco Mercantil Santa Cruz has launched an insurance policy for its debit cardholders. The policy, which is backed by Alliance Seguros Generales, costs BOB19 ($1.30) a month. It covers cardholders against fraudulent misuse of their debit cards as a result of theft, loss or cloning of the card. Policyholders are covered up to US$10,000 per card.
Banco do Brasil (BB) has launched a low-interest-rate card aimed at Brazilian social security and state pension recipients. The BB Previdência Social (social security) card can be used either as a credit or debit card. It has a monthly rate of 2.9 percent. Monthly balances including interest payments must be no more than 10 percent of the cardholder’s income. No additional cardholders are allowed. Customers can apply for the card at BB’s ATMs or branches. To qualify, applicants must have their welfare or pension money paid via BB, but they don’t need an account with the bank. BB expects to issue 350,000 BB Previdência Social cards this year. Around 6 million people receive social security or state pension benefits via BB, of whom only 2.5 million are BB current account-holders.
Banco do Brasil has signed a deal with Brazilian petrol station operator BR Distribuidora to issue the co-branded Petrobras Visa credit card. Petrobras is a part state-owned Brazilian oil company. The new card, which comes with a rewards programme, will be marketed at 4,000 BR petrol stations as well as on the web and other electronic channels.
Unicred Porto Alegre, a Brazilian credit union, has launched a low-interest-rate credit card in partnership with Banco do Brasil. The Ourocard Visa charges 2.5 percent a month, and comes in three versions: a domestic-only card, an international card and a Gold card.
• Argentina’s Banco de Córdoba is installing 100 self-service terminals from Argentine banking automation vendor Mediterránea Tecnologica. The terminals’ main function is to accept coin and banknote deposits. Ricardo Sosa, the bank’s president, says the bank also plans to double its ATM estate.
• Latin American price comparison website group BuscaPe has bought Pagamento Digital, an online payments services provider. BuscaPe paid an undisclosed price for 85 percent of the Brazilian company. Pagamento Digital provides an online payment gateway for credit cards and electronic fund transfers, as well as a chargeback facility and risk analysis services. It currently has 500 merchant clients, with BRL20 million ($11 million) in revenues forecast for 2008.
• Brazil’s Caixa Econômica Federal (CEF), a government-owned bank, is using US-based Informatica’s software as the basis for a data integration project to gain a single view of its clients. CEF is installing Informatica’s PowerCenter platform for the project, which will integrate employee, bank account holder and mortgage customer data currently stored in three different systems. The goal of the project is to generate decision support information for CEF’s business management, risk management and fraud prevention systems.
• Latin American retailer and financial services firm Grupo Elektra has launched its Banco Azteca del Peru banking operation in Peru, with the opening of 120 branches in 33 cities. The new bank offers money transfers, payment services, savings accounts, loans and insurance products. It targets Peru’s low-income and very-low-income households. Grupo Elektra has similar banking operations in Mexico, Honduras, El Salvador, Guatemala and Panama.
• In the fourth quarter of 2007, MasterCard posted a post-tax gain of $185 million from the sale of shares in Brazilian acquirer Redecard. Robert Selander, MasterCard’s president and CEO, told investors that Latin America is a high-growth region for MasterCard. In the fourth quarter of 2007, MasterCard’s Latin American/Caribbean (LAC) payment card programmes, covering all card types, had a gross dollar value (GDV) of $47 billion. This was up 28 percent on the fourth quarter of 2006 in US dollar terms. For 2007 as a whole, LAC gross dollar volume (GDV) was up 25.4 percent year-on-year to $158 billion. MasterCard’s fourth quarter 2007 LAC GDV comprised $25 billion purchase volume and in $23 billion in cash volume, which includes ATM withdrawals and cashback in stores.
Scotiabank is expanding its operations in Guatemala and the Dominican Republic through a deal with Chile’s Grupo Altas Cumbres (GAC). Financial terms were not disclosed. Scotiabank says all regulatory approvals have been received. The Canadian bank will buy GAC’s Banco de Antigua in Guatemala and select assets of Banco de Ahorro y Crédito Altas Cumbres in the Dominican Republic. The agreement also includes an option to buy GAC’s bank in Peru, Banco del Trabajo. Banco de Antigua has 47 branches and 98 special service Rapidito kiosks. Banco de Ahorro y Credito Altas Cumbres has 6 branches and 35 additional points of sale. Scotiabank currently has 380 branches and 860 ATMs across the Caribbean and Central America.
• Credit information firm Equifax’s Latin American revenues rose by 19 percent in US dollars to $182.5 million in 2007 compared to 2006. In the fourth quarter of 2007, Latin American revenues rose 30 percent in US dollar terms to $51.6 million year-on-year.
Scotiabank Peru has teamed up with prepaid card issuer and money transfer firm N-Via USA to launch a mobile payment service. Senders can use their mobile phones to remit funds via SMS text messaging, and recipients can pick up cash transmitted via mobile phone at Scotiabank Peru’s 400 branches as well as its ATMs. Recipients can also transfer funds remitted from a sender to a prepaid debit card.
• The September 2007 New York trial of a gang of alleged money-launderers who were accused of using ATMs to move funds to Colombia signals an alarming new trend, warns Actimize. Eugene Yoo, director of anti-money laundering (AML) at the US payments security software firm, says criminals are exploiting loopholes in banks’ AML compliance systems. “They realise transactions such as $500 ATM cash withdrawals are well beneath the threshold for AML systems,” he says. “Criminals break up the money, to be sent back to Colombia, into $500 portions. They open fraudulent bank accounts in the US and send the associated ATM cards to Colombia.” Couriers then deposit amounts such as $500 at a US ATM, and an associate in Colombia withdraws this amount at a local ATM. “It’s very hard for banks to detect this type of money-laundering transaction,” Yoo says. 

North America

CyberSource says Miami is the riskiest city for e-commerce in the US. The internet payment processor surveyed North American e-merchants in the autumn of 2007 to ask which major US or Canadian city presented the highest risk of online fraud. Miami got 10 percent of the votes cast, up from 7 percent in the 2006 survey, while New York City had 8 percent, down from 9 percent. Los Angeles came third with 3 percent, down from 6 percent. In the “Riskiest Country” category, Nigeria retained its position as number one, with the UK in second place, and Ghana in third.

• A US online consumer survey in January 2008 by payment strategy firm Edgar, Dunn & Company (EDC) found that 29 percent of respondents used an alternative form of payment online instead of debit or credit cards during the 2007 holiday shopping season. PayPal came first, with 24.4 percent of online shoppers using the eBay-owned service. BillMeLater came second with 4.7 percent, while 2.6 percent used Google Checkout. EDC says 82 percent of all the respondents who used an alternative form of payment reported it was very likely that they would use it again.
Royal Bank of Canada’s CASH (Consumer Attitudes and Spending by Household) Index fell to 56.3 points in January 2008. The index, which measures US consumer confidence, stood at 65.9 in December 2007. “The decline in the Index, to its lowest level since data collection began in 2002, highlights the impact that rising food and fuel costs and declining housing values are having on consumer confidence,” T.J. Marta, RBC Capital Markets’ economic and fixed income strategist, says.
Amex Bank of Canada and the Air Miles reward programme have launched the American Express Air Miles Platinum credit card. The card pays one Air Miles reward mile for every C$10 ($10.05) in purchases charged to the card at Air Miles-paying retailers such as Safeway. Also, cardmembers earn one reward mile for every C$15 in purchases charged to the card at non-Air Miles retailers. The card’s annual fee is C$50. New cardmembers receive 250 bonus reward miles the first time they use the card.
• San Francisco’s Bay Area Rapid Transit (BART) has launched an m-payments pilot with US telco Sprint and payment processor First Data. The 230 participants are able to walk up to any BART fare gate with an NFC (near-field communication)-based Sprint mobile phone and pay for their ride by tagging the phone on a reader located on top of the gate.

• US retailer Safeway has signed a multi-year deal with Cardtronics, under which the independent ATM operator will supply ATM services in 650 Safeway US locations. Starting in the first quarter of 2008, Cardtronics will provide ATM cash management, maintenance, customer service, monitoring and processing services to Safeway.

Cardtronics is to supply ATMs to properties owned by Gaylord Entertainment under a five-year deal. Gaylord owns the entertainment venues Grand Ole Opry and Wildhorse Saloon, both in Nashville, Tennessee, as well as the Gaylord Hotels network. The deal covers 12 ATM installations at existing Gaylord Entertainment properties plus multiple installations in the new Gaylord National Resort due to open in Washington, DC this spring.

Chase Card Services has teamed up with Office Depot to launch the Office Depot Worklife Rewards Visa Signature card. The contactless card offers 5 percent back in rebates on all Office Depot purchases. Rebates are credited to cardholders’ accounts each month, provided an Office Depot purchase is made that month. If no Office Depot purchase is made, the rebate accrues until the next Office Depot purchase is made. The card gives 1 percent cashback on all purchases outside Office Depot.

• US-based IBC Bank has signed a five-year deal with Visa that will result in IBC converting its entire debit portfolio to Visa-branded cards. IBC Bank currently has 450,000 debit cards in issue in the US.

MasterCard, US Bank and Nokia have launched an m-payments pilot in Spokane, Washington. Participants have been given a new Nokia 6131 NFC-based mobile phone equipped with MasterCard PayPass technology, which allows them to pay for purchases with a tap of their phone. Spokane merchants accepting PayPass include McDonald’s and 7-Eleven.

Massachusetts Bay Transportation Authority (MBTA) has awarded the new contract for its CharlieCard programme to Germany’s Giesecke & Devrient (G&D). The contract calls for G&D to deliver 5 million contactless smart cards to MBTA in the next three years. CharlieCard is a contactless smart card for electronic ticketing, used in MBTA’s Automatic Fare Collection (AFC) system. Transit passengers tap their CharlieCard against the reader at the turnstile or bus fare box. MBTA introduced CharlieCard in December 2006, and 2 million cards were distributed in the first year. G&D has already delivered 500,000 smart cards to MBTA as part of the contract.

Nova Information Systems, a subsidiary of US Bancorp, has signed a definitive agreement to buy Southern DataComm, a payment services provider based in Largo, Florida. The deal is expected to close in early February. Southern DataComm specialises in the hospitality and multi-lane retail markets, serving 50,000 merchants.

TD Canada Trust is to add Visa payWave contactless payment technology to TD Visa chip cards issued in Kitchener-Waterloo as part of Canada’s EMV market trial. Select TD Visa cardholders in Kitchener-Waterloo will receive their new ‘dual-interface’ chip and Visa payWave-enabled card this April. Also, TD Merchant Services has begun installing Visa payWave readers at merchant locations in the Kitchener-Waterloo area. Over 300 additional Visa payWave readers will be installed at TD’s merchant locations across the trial area in the next few months.

Visa says that, as at the end of 2007, 77 percent of the largest US merchants and 62 percent of medium-sized merchants had validated their compliance with the Payment Card Industry Data Security Standard (PCI DSS). Merchants in these two categories account for two-thirds of Visa’s US transaction volume. Large merchants are defined as processing 6 million or more Visa transactions annually, while medium-sized merchants handle 1 million to 6 million Visa transactions annually. Visa recently began levying monthly fines of $25,000 on US acquirers for each of their large merchants that had not validated PCI DSS compliance by the deadline. As of January 2008, Visa is levying monthly fines of $5,000 on US acquirers for non-compliant medium-sized merchants.

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