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January 8, 2008updated 24 Jan 2022 7:51am

Region round-up

Indias ICICI Bank has launched iMobile, a mobile banking platform that enables customers to use their handsets to transfer funds and pay bills... Lloyds TSB, the UKs fourth-largest bank, has unveiled the first mainstream banking facilities for Muslims in Scotland... The general manager of Visa Europe Turkey, Berna Ulman, said the card association is in talks with the countrys Finance Ministry to prepare incentives to increase debit card use... Total net sales and transaction volumes at ten of the top US e-retailers increased by 29 percent year-on-year during the 2007 year-end holiday shopping season...

By Verdict Staff

• India’s ICICI Bank has launched iMobile, a mobile banking platform that enables customers to use their handsets to transfer funds and pay bills… • Lloyds TSB, the UK’s fourth-largest bank, has unveiled the first mainstream banking facilities for Muslims in Scotland… • The general manager of Visa Europe Turkey, Berna Ulman, said the card association is in talks with the country’s Finance Ministry to prepare incentives to increase debit card use… • Total net sales and transaction volumes at ten of the top US e-retailers increased by 29 percent year-on-year during the 2007 year-end holiday shopping season…

 Asia-Pacific

• Nokia recently announced that it has launched a near-field communication (NFC) mobile payment trial together with China UnionPay, Industrial and Commercial Bank of China, Bank of China, Bank of Communications, Industrial Bank and Shenzhen Development Bank. The trial, involving 800 consumers in Shanghai, allows participants to use a Nokia NFC-enabled phone embedded with payment applications to make payments at point of sale terminals in department stores and supermarkets in the main shopping district. Employing China UnionPay’s new mobile payment solution, the trial enables the integration of cards issued by different banks in one handset.
China Life Insurance has signed an agreement with China UnionPay, which will support the insurer’s premium collection via a co-branded bank card and provide cash management services. The two will also collaborate in payment through the internet, mobile phone and telephone in the near future. Value-added services such as a bonus point programme and discounts on payment will also be launched.
China Minsheng Bank and sister company Minsheng Life Insurance are to partner to cross-sell banking and insurance services to each other’s customer base.
• High net worth customers of China Construction Bank can now withdraw cash from 17,000 Bank of America ATMs outside China. Bank of America will also expand its China card operations through future collaboration arrangements with other partners that are yet to be announced.
• Hong Kong’s Chong Hing Bank recently launched its MSN@Visa platinum credit card in partnership with MSN Hong Kong. The card targets young customers, and issuance volume is expected to exceed 10,000 cards in 2008. Cardholders will receive a cash rebate of 1.5 percent.
• India’s ICICI Bank has launched iMobile, a mobile banking platform that enables customers to use their handsets to transfer funds and pay bills. The bank says the free tool enables customers to transfer funds from ICICI savings, credit card and loan accounts using their mobile phones. Money can be sent to ICICI accounts as well as those held with other institutions. Customers can also use their handsets to pay utility bills and insurance premiums. Last year India topped a survey on mobile banking penetration in the Asia-Pacific region conducted on behalf of Sybase 365. The poll found that 81 percent of respondents were aware that they can check their bank balance on a mobile phone and 49 percent had used the services in the previous three months.
American Express’s sale of its banking business to Standard Chartered is facing regulatory roadblock in India. American Express will retain its card business and plans to operate as a non-bank finance company (NBFC) in India. However, the central bank does not allow an NBFC to issue credit cards without a tie-up with a bank that holds the credit risk. American Express is thus exploring several options, such as selling its card business to Standard Chartered.
Union Bank of India has launched biometric smart cards targeted at small traders. About 2,500 roadside traders and small shop owners received a card.
Korea.net, the official South Korean government website, reports that credit card spending in 2007 grew 15 percent between 2006 and 2007. Amounting to $272.1 billion, card spend for 2007 was the highest since 2003, when the data was first collated.
• Card issuers in South Korea will be required to set aside more provisions against bad loans next month with the adoption of stricter standards in line with the introduction of Basel II. The minimum provisioning ratio for loans classified as normal will rise to 1.5 percent while those classified as precautionary will increase to 15 percent. Under the new regulations, card issuers will also be required to accumulate provisions against cardholders’ entire credit limits as opposed to currently provisioning against unspent amounts in cash of cash advances. Industry observers expect card issuers to reduce credit limits and cancel inactive credit cards.
BC Card has reported that Koreans are shifting their overseas spending from North America and Europe to Asia. The top five countries capturing overseas spending by BC cardholders were in Asia. According to the local credit card issuer, its cardholders charged the most in the Philippines and chartered a nearly 100 percent increase from last year’s spending levels in the country. Spending went up 45 percent in Singapore and China.
Standard Chartered Bank has launched its MoneyHome card programme, targeting remittance flows as low as MYR100 ($30) per transaction from Malaysia to Indonesia through a retailer network. Twenty Giant hypermarkets in major Malaysian cities will pilot the programme, which will be expanded to other retailers if necessary. Customers can go to a Giant outlet, present a passport or identity card and receive a MoneyHome card. The money is wired within 24 hours to PermataBank, Standard Chartered’s sister company in Indonesia, where the beneficiary can open an account and receive a debit card that offers cash withdrawal at PermataBank ATMs and retail partners.
GP Bank and Commonwealth Bank of Australia have joined the Vietnam Bank Card network, which allows the banks’ customers to access 900 ATMs and 1,500 POS terminals.
• Vietnam’s central bank reported that commercial banks had issued around 8.28 million debit and credit cards by late 2007, up from 3.5 million in 2006. Card transactions now account for 6 percent of non-cash payments in the country, with debit cards holding the biggest market share. Local debit cards make up nearly 94 percent of cards issued by banks, international debit cards make up 3.65 percent, international credit cards 2.22 percent and domestic credit cards 0.31 percent. As of 31 December 2007, 32 institutions issued 130 brands of cards with more than half of them domestic brands.
• Japan’s Shinsei Bank and Seven Bank are considering working together to raise customer service levels and operational efficiency by sharing sales channels and jointly developing new products and services. The first step would be the installation of Seven Bank ATMs at Shinsei Bank’s unmanned sub-branches in Tokyo, streamlining and enhancing the efficiency of both banks’ ATM networks. Shinsei Bank views Seven Bank’s ATM network, with more than 12,000 units nationwide, as an important sales channel in its retail strategy (currently, Shinsei customers can withdraw money only from Seven Bank ATMs). Seven Bank aims to explore means of providing service through its ATM network with Shinsei Bank and expanding its business by utilising the bank’s products.

Europe, Middle East, Africa

• Payments processor First Data has signed a contract with Germany’s cadooz AG, a provider of corporate gift and incentive vouchers, to deliver prepaid card-based incentive and reward solutions. cadooz can now offer prepaid card products, and benefit from recent innovations in controlled-loop prepaid card technology, where use of prepaid cards is restricted to specific merchants. First Data will provide processing, card procurement, personalisation and customer service. The German company was established in 2000 and delivers a range of incentive programmes and solutions, including paper-based and online certificates and individually tailored reward programmes.

First Data has also announced the launch of AIB Merchant Services, a joint venture with Allied Irish Banks, after receiving approval from the EU. It will provide card acquiring services in Ireland, the UK and elsewhere in Europe.
Lloyds TSB, the UK’s fourth-largest bank, has unveiled the first mainstream banking facilities for Muslims in Scotland. The products, which are already at 30 branches in England, do not allow customers to pay or receive interest, which is forbidden by Islamic Sharia law. The bank consulted a panel of specialist scholars before launching the products south of the border last year. The Islamic current account offers no credit interest and has no overdraft facility, but it does provide a debit card. Funds held on behalf of customers are invested solely in ethical companies, a further condition of Sharia law. The bank also announced a Sharia-compliant money transfer account.
• The consumer finance unit of Spanish bank BBVA has launched a free credit card that offers 0 percent interest and deferred payments for cash withdrawals for the first three months. The bank claims the product, the Gold 3 card, is the first premium MasterCard in Europe to enable customers to defer payments for that length of time. The card is being launched in conjunction with BBVA consumer finance’s Prática credit offering, with which it shares its credit limit. It also features travel insurance of up to €310,000 ($462,000).
Citi Cards has teamed up with UK airline easyJet to launch a credit card that offers a free flight, as well as discounts on extra flights and related purchases. In the first 90 days, customers can claim a free flight worth up to £40 ($78) if they spend £250 on the card. They also receive a 10 percent discount on all flights they book during the period. The easyJet MasterCard also offers 0 percent interest for the first nine months on all transfers, although they will be subject to a 3 percent fee or minimum of £5. Card companies are increasingly using non-price competition methods to distinguish themselves from competitors as revenues and margins become squeezed by declining interest rates.
• France’s state postal service, La Banque Postale, and French bank Société Générale (SocGen) have agreed on a joint venture to bring together their electronic payment systems. The joint company, which will be headquartered in Paris, with separate teams in Strasbourg and Paris, will aim to reduce costs by mutualising investments, maintenance and operations. It will also centralise current and future IT processing. La Banque Postale and SocGen are big players in electronic payment systems in France with a combined volume of 10 million cards in use, more than 100,000 retailer contracts and 10,000 ATMs.
• The general manager of Visa Europe Turkey, Berna Ulman, said the card association is in talks with the country’s Finance Ministry to prepare incentives to increase debit card use. Ulman, whose comments were reported in Turkey’s English language daily newspaper Zaman, added only 2 percent of consumers were using debit cards as a payment instrument. The country’s government stated it wanted debit card usage to increase as part of a 15-point plan to clamp down on the unregistered economy. Although there are 55 million debit cards in the country as of the end of 2007, most Turks prefer to withdraw cash at ATMs. There are 36 million credit cards in circulation, on which customers spent a total of YTL1.4 billion ($1.17 billion) in 2007.
• UK internet sales jumped 54 percent from 2006 to hit a record high of £46.6 billion in 2007, marking the continuing shift of consumer spending habits. According to figures released by management consultants Capgemini and retail forum Interactive Media in Retail Group (IMRG), internet sales improved £16.4 billion from £30.2 billion in 2006. The statistics showed that online spending continues to increase at the high street’s expense. For every £1 spent on retail goods in 2007, £0.15 was spent online, up from £0.10 in 2006. However, the figures showed consumer demand tailed off towards the end of the year, which was attributed to the impact of the global credit crunch.
MasterCard’s debit scheme, Maestro, has lost its legal battle to claim the maestro.co.uk internet domain name from a UK web developer. Maestro’s appeal, after an initial complaint was turned down in September, was rejected by a dispute resolution service provided by Nominet, a company that registers UK domain names. The appeal was based on MasterCard’s trademark rights to the word Maestro for goods and services in the financial services industry. However, the appeal panel ruled in favour of the current domain name holder because the domain name in question was a generic term.
Commercial Bank of Dubai (CBD) has chosen PIC Solutions to develop application scorecards for their credit card and loan portfolios. CBD, which offers retail and commercial banking services to its clients in Dubai, said the deal will help it improve risk management. During the project, PIC Solutions’ predictive modelling team will provide consulting services to implement the new scorecards. PIC, which is based in South Africa, provides consumer credit solutions, consulting and other related services.
• UK-based mobile banking and payments provider Monitise has launched a platform for near-field communication payments and ticketing. The MoniTrust service allows banks, mobile operators, card schemes and merchants to collaborate within a single environment, potentially bringing mobile contactless payments a step closer. Through a single connection to the MoniTrust platform, participants can enable consumers to manage their bank accounts, card accounts, mobile wallets, transport and ticketing applications. Monitise, which also operates in the US, is working with a range of partners in the financial services and telecommunications sectors to develop the embryonic but potentially huge mobile banking and payments market (see pages 14 and 15).

Latin America • According to Latin American banking federation Felaban, there are only 8.45 bank branches per 100,000 inhabitants in Latin America, compared with 30.6 in developed countries, reports the news service Business News Americas. Felaban also says overall ATM penetration in Latin America is one-third of that in developed nations.

• A survey of 3,400 people in Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and Panama by the Inter-American Development Bank (IDB) found that 56 percent of remittance recipients receive their cash via a bank. However, these recipients are rarely offered an account at the bank where they go to pick up their funds, the IDB says. Over half (53 percent) of recipients are “very interested” in opening bank accounts, it says. Latin American banks need to make more efforts to offer accounts and credit facilities to remittance recipients, the IDB urges.
Asociación de Bancos e Instituciones Financieras de Chile (Association of Chilean banks and financial institutions) says that between November 2006 and August 2007, 3,435 Chilean merchants started accepting credit and debit cards. In October 2006, the association launched a campaign to increase the number of merchants accepting cards in Chile, with the goal of signing up 14,500 new merchants over five years. As part of the campaign, it managed to reduce the number of Chilean towns without ATMs to 86 by August 2007, from 108 before the programme started.
• Foreign remittances to Guatemala totalled $4.13 billion in 1007, Banco de Guatemala says. The central bank says this represents a $518.6 million increase on remittances in 2006.
Appleseed, a US and Mexican civil rights network, has published a guide to help banks and credit unions better serve the remittance market. It says that among Latin American immigrants in the US, 70 percent of remittance senders use cash-to-cash transfer services via money transfer firms such as Western Union. Estimates of remittances sent through banks range from 5 percent to 19 percent, Appleseed says. Around 100 US banks and credit unions currently offer consumer remittance services. Appleseed says this is a fraction of the number that could be providing remittance services to immigrants.
• Brazil’s Banco Itaú has launched an advertising campaign to promote its banking channels. The ads draw consumers’ attention to the bank’s 2,500 branches, 25,000 ATMs, the 24-hour-a-day Bankfone telephone service, the Bankline.com web banking service, and several wireless services including mobile phone top-up and m-banking. The multimedia campaign lasts until 29 February 2008.
• Spain’s Banco Sabadell has signed an agreement to buy rival Spanish bank BBVA’s private banking business in Miami, Florida. Sabadell already operates a branch in Miami providing private and corporate banking services to individuals and companies in the US and Latin America. The acquisition will increase the business volume of Sabadell’s Miami branch to over $3 billion, of which about $2.6 billion are customer funds and $400 million are loans.
• Credit reference company Experian has appointed Francisco Valim, formerly president of Latin American cable TV company Net Serviços de Comunicação, as chief operating officer for Latin America. Valim will have responsibility for Experian’s businesses throughout Latin America. Elcio Anibal de Lucca, previously president of Experian’s Serasa credit bureau subsidiary, has been appointed as president of corporate affairs for Experian Latin America. He has also been elected as vice-chairman of Serasa’s board of directors.
FSV Payment Systems is offering FSV prepaid payroll debit cardholders a card-to-cash international money transfer service provided by MiCash. US-based FSV provides stored-value processing services and prepaid card programmes. MiCash, a US money transfer company, also offers card-to-cash remittances for MiCash-branded prepaid debit cards. The recipient can collect funds in cash at one of Bancomer Transfer Services’ 12,000 locations in Mexico, Latin America and Asia, and can have the money deposited into a bank account in certain destination countries. Bancomer Transfer Services is a US-based subsidiary of Mexico’s BBVA Bancomer.
• Mexico’s IXE Banco plans to launch a bank to target the underbanked mid-to-low retail markets in Mexico. IXE will use customer relationship management, loan origination and core banking transaction software from US-based Open Solutions for the new bank, which will have its own brand name. It will also use the same software for IXE Banco, its existing bank brand. An Open Solutions spokesperson tells CI that the firm’s software will be integrated with IXE Banco’s credit and debit card management systems.
MasterCard has announced the election of José Octavio Reyes Lagunes to its board of directors. Reyes Lagunes, who joins the board as a Class A director, is president of the Latin America Group at Coca-Cola.
• Brazilian MasterCard and Maestro acquirer Redecard processed BRL102.3 billion ($58 billion) in credit and debit card transactions last year. This was up 23.2 percent on 2006, it says. Redecard’s recurring net profits rose by 38.9 percent in 2007 to BRL769.4 million. At the end of 2007, Redecard had 782,000 POS terminals connected to its network, and a total of 1.14 million merchant clients. The number of POS terminals rose by 21.2 percent last year, while total active merchant clients rose by 16.1 percent. The total number of wireless terminals on Redecard’s network rose by 54.2 percent in 2007 to 51,600. In the fourth quarter of 2007, 99.6 percent of Redecard’s POS terminals were EMV-compliant.
Citigroup hopes to raise BRL1.08 billion from the sale of 41.13 million shares in Redecard. According to a prospectus, Citi, Itaú and Unibanco will sell their Redecard shares in a secondary offering on the Brazilian stock exchange Bovespa. The two Brazilian banks did not divulge the number of shares they plan to sell. Citi holds a 24 percent stake in Redecard with 161.2 million shares, while Itaú and Unibanco each have 23.2 percent holdings. Redecard held an initial public offering in July 2007. The secondary offering is still awaiting approval from Brazil’s financial regulators. (See CI 384 p6.)
Western Union has signed a new ten-year partnership agreement with Grupo Vimenca, a Dominican Republic-based financial services group. The deal means that consumers on the Caribbean island will continue to be able to send and receive global money transfers via the Western Union network. Western Union has been present in the Dominican Republic since 1989, when it first signed an agreement with Vimenca.

North America • Canada’s New Democratic Party (NDP) is calling for the Canadian government to regulate and reduce credit card charges. The left-wing opposition party wants credit card interest to be charged only on the amount owing and to start only on the due date of the bill. It also wants interest rates to be capped at 5 percent above prime, which, at current rates, would bring maximum rates down to 10 percent.

• ‘Vishing’ attacks against US financial institutions and consumers are rising at an alarming rate, according to the Federal Bureau of Investigation. Criminals use cheap voice-over-internet protocol technology to make scam calls to customers and to set up fake call centres that purport to belong to banks. These calls are intended to lure customers into divulging their personal identifiable information.
• Thirty percent of the 100 top US online retailers now offer some form of alternative payment method on their website, according to a study by interactive marketing company Brulant. The number of such e-retailers offering alternative payments grew by 25 percent between February 2007 and November 2007. Bill Me Later was offered by 21 percent of top e-retailers in November, PayPal by 19 percent and Google Checkout by 10 percent, while all three payment options were offered by 5 percent of top e-retailers.
• Total net sales and transaction volumes at ten of the top US e-retailers increased by 29 percent year-on-year during the 2007 year-end holiday shopping season, the Chase Paymentech Pulse Index reveals. Chase Paymentech processes payments for these ten e-merchants. The US processor says its index tracked holiday online shopping transactions from 5 November 2007 to 7 January 2008. The index showed a total of $5.48 billion in net sales on 108.4 million transactions. In the 2006 year-end holiday online shopping season, the index showed $4.24 billion sales on 83.9 million transactions.
• Revolving US consumer credit, which includes credit card borrowing, rose by an annual rate of 11.3 percent in November 2007 to $937.5 billion, according to the Federal Reserve’s monthly G.19 report. In October 2007, revolving credit rose by 8.5 percent to $928.7 billion.
Capital One is allowing all its US cardholders to customise their credit cards with their own photos. Cardholders can visit the issuer’s website and upload the photo of their choice, which is then printed onto their cards. Capital One also offers an interactive website, known as the Credit Card Lab, where customers can configure their card features such as annual fees, interest rates and reward options.
• A US company that stores data tapes for GE Money has mislaid a tape containing credit card details and other sensitive data for 650,000 customers of JC Penney and up to 100 other US retailers. The customers hold credit cards that are processed by GE Money. “There’s no evidence to indicate the tape has been stolen, or that information on this tape has been either accessed or misused,” a GE Money spokesperson tells CI. “As a precaution, we’ve offered some individuals whose information is included on the tape a year of free credit monitoring.”
• Germany’s Giesecke & Devrient (G&D) is supplying 100,000 contactless cards to First Hawaiian Bank, the first bank in Hawaii to issue MasterCard PayPass debit cards. G&D says the contactless cards are to be used as Priority Rewards MasterCard PayPass debit cards. First Hawaii, owned ultimately by BNP Paribas, is using MicroPass, a payments platform supplied by France’s Inside Contactless, for its contactless roll-out.
• US debit processor NYCE Payments Network has signed agreements with ten financial institutions to provide mobile financial services to their customers. The services are supplied by m-banking company Monitise Americas over the NYCE debit network. NYCE is owned by Metavante, which is co-owner of Monitise Americas along with the UK’s Monitise. The latest banks and credit unions to sign up for Monitise Americas include California Business Bank, Michigan Schools and Government Credit Union, and Summit Bank. Monitise Americas, which launched in the US in November 2007, now has a total of 14 financial institutions using its system via the NYCE network.

• Airport concessionaire Paradies Shops is to install VivoTech contactless payment terminals at all its 500 US and Canadian locations. The terminals accept magnetic-stripe cards as well as contactless cards and near field communications mobile phone payments.

• Credit union organisation PSCU Financial Services has appointed Tom Gandre to the newly created role of chief debit officer. Gandre, who was previously with First Data, oversees the co-operative body’s debit services unit which serves 200 credit unions and 700 ATMs. St Petersburg, Florida-based PSCU says the unit is seeing strong year-on-year growth in transactions, ATM placements, and participation by new credit unions.

• Payment systems vendor Ingenico North America has appointed Lisa Shipley as senior vice-president of sales and marketing. Shipley is to focus on banking and multi-lane retail opportunities in the US and Canada. She was previously senior vice-president of national sales at rival vendor Hypercom North America.

• In a bow to the rise in popularity of debit cards in the US, MasterCard is featuring both credit and debit payment options in its Priceless advertising campaign. In the latest ads, the MasterCard logo flips to showcase the two payment methods. This marks the first time that debit and credit payment options have appeared together in the decade-long history of the Priceless campaign, MasterCard says.

• Atlanta, Georgia-based payment processor Nova Information Systems and American Express have reached an agreement under which Nova will sign up and service American Express merchants on behalf of Amex. Nova, a wholly owned subsidiary of US Bancorp, will add Amex card acceptance to its card payment processing services.

• US Visa and MasterCard debit and credit cardholders and Diners Card members who paid foreign currency fees between 1 February 1996 and 8 November 2006 are being urged to put in refund claims by 31 May 2008. The refunds are being offered as settlement for a class action lawsuit (http://www.ccfsettlement.com/) called Re Currency Conversion Fee Antitrust Litigation. Berger & Montague and Coughlin Stoia Geller Rudman & Robbins, the law firms that have obtained preliminary approval for a $336 million settlement, are hoping to get final approval from a New York court on 31 March 2008. Most class action members have opted for the fixed $25 refund, rather than try to recover their full foreign currency fees. 

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