JCB and Merchant Solutions sign acquiring agreement
Merchant Solutions, the acquiring joint venture between global payment processor First Data and Standard Chartered Bank, has signed an agreement to initiate merchant acquiring for Japanese payment card network and issuer JCB.
The agreement covers eight markets in the Asia-Pacific region and will enable JCB card members to use their cards at thousands of purchase points in Hong Kong, Macau, China, Singapore, Malaysia, Brunei, Bangladesh and Sri Lanka.
According to the Japan National Tourist Organisation (JNTO), in 2007 overseas visitors to other parts of Asia exceeded 13 million. More than half of that number travelled to countries covered by the new arrangement between Merchant Solutions and JCB International, a wholly-owned subsidiary of JCB.
According to the JNTO, 1.3 million Japanese visitors travelled to Hong Kong during 2008, spending more than HK$3.5 billion ($450 million).
Coinstar ties with CCB for money transfers
US money transfer specialist Coinstar has linked up with China Construction Bank (CCB) to enable Coinstar’s money transfer service to be implemented at 1,500 CCB branches across 24 Chinese provinces. The service will be expanded later this year to an additional 1,000 CCB branches.
Coinstar offers both a cash pay-out service through CCB branches and a direct bank deposit service to all banks in China within the Coinstar money transfer system.
According to Coinstar, the Asia-Pacific region is one of the fastest-growing markets for money transfers in the world, citing figures from the World Bank which show that in 2007 China was the second-largest remittance receiving country in the world with $25.7 billion.
“With Coinstar money transfer, CCB can now provide a quality but affordable remittance service that enables all the travellers, students, workers or even customers without bank accounts to send or receive immediate cash from overseas,” said Wang Yi, assistant general manager at CCB.
“The service will be of great help to both Chinese and expatriates here.”
Barclays cardholders in India can operate account via SMS
Barclays Bank in India is to provide mobile banking facilities to its credit card customers, enabling them to access their accounts via SMS and check credit card outstanding balances, payment due dates and other related transactions.
The new facility will be available to existing and new customers of the bank free of charge.
Recently, the bank announced the launch of a 10 percent cashback promotion for its debit card customers.
Sino Payments and Wincor-Nixdorf MoU
Asia-Pacific payment processor Sino Payments has signed a memorandum of understanding (MoU) with ATM manufacturer Wincor-Nixdorf for the provision of Sino Payments’ internet protocol (IP) card processing system to retail clients in the Hong Kong market.
Matthew Mecke, chairman and CEO of Sino Payments, said: “As one of the world’s largest and most important payment processing retail store hardware and ATM providers, Sino Payments is extremely pleased to work with Wincor-Nixdorf in Hong Kong to provide Sino Payments IP credit and debit card processing to Wincor-Nixdorf’s large regional client base.
“We hope to work closely as quickly as possible to identify potential customers in Hong Kong and Macau to provide our card processing services.”
Prepaid forum launches chapter in India
Global prepaid industry trade association, the Prepaid International Forum (PIF), is to launch a new chapter in India in August.
According to PIF, with a population of 1.2 billion individuals, an increasing number of young adults and with only around 20 percent of adults having a payment card of any kind, India represents an attractive market for providers of prepaid solutions such as payroll, gift and travel currency cards.
The India chapter will be launched under the patronage of global payment processor TSYS and it is anticipated there will be attendees from key acquirers, card issuers, banks, other commercial associations and regulators.
Sachin Khandelwal, senior general manager of ICICI Bank, has been appointed as chairman of PIF India.
Established in 2007 in the UK, PIF has expanded across Europe and globally and includes developing prepaid markets such as Australia and New Zealand and Brazil. Members include key issuers, vendors and programme managers actively involved in the prepaid industry.
Chinese card growth may not lead to defaults
Credit card growth in China is expected to continue at double-digit rates over the next decade but this may not necessarily lead to a rise in defaults, according to global business consultancy KPMG.
Current growth trends in China indicate that the number of cards could surpass the number of cards in Japan in the next 10 to 15 years, according to Egidio Zarrella, a partner at KPMG.
Zarrella stated that he expected the default rate on credit cards to increase but remain largely in line with the increase measured in the number of credit cards in issue.
According to Zarrella, the situation in the Chinese market is different to that of the US due to the strong savings culture in China and the fact that Chinese cardholders seldom spend more than they save.
Card Spending Trends
New Zealand card spending falls
Consumer spending on debit, credit and store cards in New Zealand for the month of June has fallen for the first time in five months, according to Statistics New Zealand.
The value of transactions on payment cards fell 1 percent from May when it increased 0.7 percent. Excluding spending at fuel outlets and car workshops, transactions fell 1.2 percent.
The proportion of spending attributed to credit cards fell for a ninth month to 45 percent of total spending.
Despite the New Zealand government cutting income taxes in April, the drop in spending indicates that New Zealand’s recession, which began in the first quarter of 2008, is likely to be prolonged until late this year.
The jobless rate, which rose to a six-year high of 5 percent in the first quarter, may reach 7.8 percent next year, the New Zealand Institute of Economic Research said.
EUROPE, MIDDLE EAST, AFRICA
O2 and NatWest launch fee-free prepaid cards
UK mobile telecom operator O2 has teamed up with bank and card issuer NatWest to launch two prepaid cards under O2’s new financial services business O2 Money. The O2 Cash Manager and Load & Go cards are fee-free Visa-branded cards being offered exclusively to O2 customers in the UK.
The Load & Go card is aimed at O2 pay-monthly and pay-as-you-go customers aged 13 and over and allows ATM withdrawals and online purchases, except at restricted merchants such as gambling websites. Parents can load money onto the card over the internet and real-time text alerts will be sent to the cardholder’s mobile phone. Funds can also be loaded onto the card at over 20,000 locations across the UK including all O2 stores and PayPoint and e-pay locations. The Cash Manager card is aimed at adults and incorporates budgeting and spending monitoring tools.
O2 says both cards are completely free of all fees and charges when used within the UK.
SIA-SSB and Volksbank sign processing deal
Italian payment processor SIA-SSB has signed a five-year framework agreement with Austria’s Volksbank International (VBI) to provide issuing and acquiring services for the complete management of credit and debit programmes in nine Central and Eastern European countries (Slovakia, Czech Republic, Hungary, Slovenia, Croatia, Romania, Bosnia-Herzegovina, Serbia and Ukraine) through a single centralised platform.
The 600 outlets in the VBI network will now be able to use SIA-SSB’s technology infrastructure to manage operations relating to payments carried out with credit and debit cards. SIA-SSB will be able to manage the entire authorisation process for all types of cards issued, clearing and settlement services, anti-fraud monitoring, ATM and POS terminals and other value-added services for Volksbank International’s credit institutions, subscribing merchants and national and international networks.
Michel Ivanovsky, member of the managing board and COO of VBI, said: “We will make a big step forward with this new infrastructure.”
Iraqi telco and bank consortium partner on m-banking
Iraqi telecom operator telco Asiacell has signed a deal with AMWAL, a consortium of Iraqi private sector banks, to foster the use of mobile phones to access a range of financial services.
Under the deal, Asiacell subscribers and the consortium’s customers will be able to use their handsets to make interbank transfers, settle bills, make purchases on Visa and MasterCard cards, check account balances and transfer funds. Asiacell’s customers will also be able to use the service to purchase credit for their mobile phones.
Diar Ahmed, CEO of Asiacell, said: “We understand the significance of creating greater integration between all economic sectors in Iraq, and look forward to seeing greater engagement from the Iraqi people in regulated financial services that allow them to settle all of their banking needs by utilising this modern technology.”
Doha Bank launches platinum card in Qatar
Payment network Visa has signed a long-term strategic partnership agreement with Qatar’s Doha Bank, aimed at growing the bank’s debit card business in the country.
As part of the strategic alliance, Doha Bank has launched a platinum Visa debit card, the first such card to be issued in Qatar. The card comes with free travel insurance, extended purchase warranties and other high-end offerings. Doha Bank is Qatar’s largest issuer of Visa debit cards.
Tony Gougassian, Visa’s area manager for Levant and Qatar, said: “Our signing with Doha Bank on our debit alliance represents a milestone for Visa in growing the debit card capabilities in Qatar.”
Alinma Bank launches invitation-only Visa debit card in Saudi Arabia
Saudi Arabia’s Alinma Bank has also launched a Visa debit card product, the ‘Alinma Infinite’ card which is being offered to customers of the bank by invitation only. Alinma Infinite comes with multilingual 24/7 support in nine languages, concierge service, multi-trip travel coverage, emergency cash advances, and a range of other services tailored to high-end and VIP customers.
The bank is also planning to launch a Visa Infinite credit card in Saudi Arabia, also available by invitation only.
Fraud and Security
French payment card fraud rose in 2008
Payment card fraud in France increased slightly in 2008, according to the Bank of France, with the fraud rate standing at 0.069 percent, up from 0.062 percent in 2007. Although frauds on domestic transactions remained stable last year, fraud on international transactions climbed to 0.427 percent from 0.368 percent.
South Africa expands credit card acceptance
Motorists in South Africa will now be able pay for fuel with their credit cards, following changes to rules made by the country’s Department of Energy, which is aiming to promote payment cards as a safer alternative to cash, and to make life more convenient for tourists in the country. According to the Department of Energy, all credit, debit, cheque, garage, fleet and petrol cards can now be used to pay for fuel.
The Payment Association of South Africa (PASA) has welcomed the new rules as providing greater choice for consumers, and as being especially beneficial given that South Africa will see an influx of tourists in 2010 as the host country of the World Cup football tournament.
“The change in regulations will help ensure that South African payment choices at fuel forecourts are normalised, and that some of the benefits of greater efficiency, security, convenience and choice to consumers and retailers are unlocked as the usage of electronic and card payments is broadened,” the PASA said in a statement.
Mi-Pay expands services in Africa
Mobile money service company Mi-Pay has secured three new contracts which will see it expand its presence in North, East and West Africa. Mi-Pay offers international and domestic remittance services using agents, person-to-person transfers and mobile phone-based transfers.
Norman Frankel, CEO of Mi-Pay, said: “With mobile penetration at over 270 million, there is now a viable springboard to service Africa’s unbanked, which currently stands at around 75 percent of the population. The demand and infrastructure is here and, with the growing presence of companies like Mi-Pay, the expertise to implement change is now here too.”
Bank of Mexico issues mobile payment rules
The Bank of Mexico has issued rules governing mobile payment services in an effort to make financial services accessible to more of the population. The Bank of Mexico said banks can use third parties, including mobile phone companies and telecom operators, to open mobile banking accounts for their clients.
Consumers can deposit the equivalent of up to 2,000 inflation-indexed UDIs (an investment unit), or about MXP8,500 ($617) a month in their mobile accounts, and use a mobile phone to make financial transactions, the central bank said.
Other such banking agents include retailers contracted by a bank to conduct transactions on behalf of their clients. Mexican authorities have attempted to increase financial services and product availability by encouraging banks to offer low-cost current accounts and promoting the use of banking agents as alternative distribution channels to those provided by traditional banks.
HSBC Mexico says credit card defaults under control
Despite its credit ratings being placed under review by Moody’s Investor Service, HSBC Mexico says that defaults in credit card lending are under control and that the bank is taking steps to help customers by restructuring their monthly repayments. HSBC Mexico also has loan loss reserves that exceed the requirements of the country’s regulators, the bank stated.
In early July, Moody’s Investor Service placed the ratings of HSBC’s Mexican unit under review, warning that its credit card portfolio could lead to higher-than-expected losses. Around half a million Mexicans have lost their jobs this year, leading to a rise in consumer delinquencies. Non-performing loans (NPLs) accounted for almost 17 percent of HSBC Mexico’s total credit card debt as of May 2009.
Latin America prepaid market to soar
According to Latin American prepaid solution provider NovoPayment, the region’s general-purpose reloadable, mobile and utilities prepaid market could be worth around $160 billion a year by 2015.
Latin America’s huge unbanked population can benefit from linking prepaid reloadable cards to mobile and utility services, offering low- and middle-income consumers the ability to buy airtime and pay bills via text messaging, internet, phone or scheduled debit without an underlying bank account, says NovoPayment.
It claims that the overwhelming majority of mobile customers in Latin America – between 80 percent and 90 percent – are already on prepaid plans, representing a huge business opportunity for service providers.
US Bank partners with TACA Airlines for credit card roll-out
US Bank has entered an alliance with TACA (Transportes Aéreos del Continente Americano or Air Transports of the American Continent) Airlines, an international airline headquartered in El Salvador, to provide Distancia Visa and Distancia Visa Signature credit cards.
Distancia is the frequent flyer loyalty programme of TACA Airlines. Distancia Visa Signature cardholders have access to the Visa Signature concierge services, travel and emergency assistance services, as well as offers from hotels, resorts, retail and travel providers. TACA flies to 40 destinations in 23 countries in North, Central, and South America and the Caribbean.
Brazilian politicians to propose increased credit card regulation
Brazilian politicians are presenting proposals for credit card regulation in order to increase competition in the marketplace. In early July the country’s Senate approved a bill aimed at reducing interchange fees.
According to Senator Adelmir Santa, such fees are around 70 percent higher than what is charged in Europe and the US. The approved bill would enable merchants to offer discounts for cash payments which would put pressure on payment networks to lower fees.
Another proposal is aimed at ending the market dominance of payment networks Redecard and VisaNet, which have a combined market share of more than 90 percent. Some politicians are suggesting that existing payment networks be forced to share their networks with new competitors, and are also working on a regulatory framework to attract new players to the marketplace.
ACS to provide contactless ticketing system in Peru
US IT services company Affiliated Computer Services (ACS) has been contracted by the transportation authority of Lima, Peru, to provide a contactless ticketing system for the city’s Bus Rapid Transit (BRT).
ACS will be in charge of operating the system for a 14-year period, and the contract is worth an estimated $200 million. ACS is to supply and operate an integrated fleet management and ticketing scheme for the BRT system in Lima, which is expected to carry over 700,000 passengers every day.
The City of Lima has announced plans to build ten other ticketing solutions on other lines over the coming years.
The ticketing solution will be based on smart contactless cards designed to be controlled at each station by gates. The cards will be sold via automatic ticket vending machines and manned POS terminals. The 220 buses will be monitored and regulated via a fleet management system designed to minimise waiting time at each station.
Fraud and Security
CardSwitch partners with OpenCard on fraud
CardSwitch Technology and OpenCard have signed a partnership agreement which will allow OpenCard to market CardSwitch payment security solutions. CardSwitch’s technology enables cardholders to put an electronic lock and key on their card accounts, making it difficult for hackers and fraudsters to skim cards.
Parameters can be set by sending an SMS command with a mobile phone, calling an automated voice response system, or via the internet. Cardholders can lock or unlock their card accounts 24 hours a day, seven days a week.
OpenCard currently has customers in Colombia, Costa Rica, Puerto Rico, Venezuela, Panama and the US. OpenCard claims its solutions are the dominant solutions in the financial industry in Colombia, encompassing 58 percent of the total active cards in this market.
“We are excited to bring CardSwitch Technology solutions to our customers in the Latin American market to enhance the security of their card offering,” stated Alvaro Ortega Mejia, sales and marketing manager for OpenCard.
BMO scraps annual fee for new credit card
Canada’s Bank of Montreal (BMO) is launching the BMO Air Miles MasterCard credit card, which will not charge an annual fee. The card incorporates double reward air miles and is being positioned as a way for BMO to take a greater market share of the air miles loyalty market in Canada.
The bank also announced that it will simplify and enhance its entire suite of credit cards, aimed at lowering costs and providing more consumer-friendly products.
On 3 August, BMO is eliminating its bronze and silver Air Miles categories, blending them into the no-fee BMO Air Miles MasterCard that awards 1 Air Miles reward mile for every C$20 ($18) spent on the card.
This will effectively double the reward miles for more than 1.2 million existing customers and remove the $35 annual fee for another 400,000 customers. The bank will also enhance its BMO Gold Air Miles MasterCard by boosting the exclusive discount on the number of reward miles required to redeem for any Air Miles flight from 20 percent to 25 percent. Additionally, highly valued travel protection benefits have been added to the card including car rental collision damage coverage.
BMO will also introduce a lower interest rate credit card for those who don’t have an interest in reward programmes. The BMO Preferred Rate MasterCard will offer a 17.5 percent annual interest rate and comes with no annual fee.
Urban Trust Bank and Visa sign prepaid card agreement in US
Urban Trust Bank, a minority-controlled federally-chartered US thrift, and Visa have signed a multi-year agreement to offer the Urban Trust Success prepaid debit card.
Under the terms of the agreement, Urban Trust Bank will offer Visa-branded prepaid products to its existing customer base in 24 branches throughout central Florida and Maryland, as well as online and through other channels with the expectation of becoming a nationally recognised leader in the prepaid market.
Urban Trust Bank will offer an optional ‘Elastic’ line of credit to this product offering. Elastic allows customers to use small lines of credit for emergency cash or to increase their buying power.
Additionally, cardholders will be able to add funds to their Urban Trust Success cards through Visa ReadyLink, Visa’s prepaid load network, at nearly 50,000 participating merchant locations nationwide.
Robert Johnson, chairman of Urban Trust Holdings, said: “Our offering of an optional Elastic line of credit will enable consumers with a regular source of income – banked or unbanked – to have responsible access to a line of credit, help build their credit histories, and to participate in the financial mainstream.”
ATM and Debit Networks
US Bank and PULSE extend debit network agreement
PULSE, the US ATM and debit network, has extended its relationship with US Bank in a long-term agreement that provides US Bank customers with PIN debit POS and ATM services. PULSE, owned by Discover Financial Services, currently serves more than 4,500 banks, credit unions and savings institutions across the US, linking more than 289,000 ATMs.
“PULSE has a proven record of providing reliable and high-quality PIN POS and ATM services, which was vital in renewing our long-standing relationship,” said Lynn Heitman, senior vice-president in US Bank’s retail payment solutions division. “PULSE has been a strong partner for many years, and we look forward to continuing to provide our cardholders with convenient and accessible debit and ATM services through an industry leader like PULSE.”
Interac and Inside Contactless join forces
Canadian debit and ATM network Interac has teamed up with European contactless chip technology company Inside Contactless to develop chips containing the specifications for Interac’s contactless payment service.
Under the partnership, Interac and its members will gain the ability to provide a contactless retail payments service to their debit card users.
“The small-ticket purchase segment in Canada, which is still dominated by cash and coin, represents green field territory for card payments, and although this market has been targeted time and again, it has been difficult to penetrate due to the lack of the right technology solution delivered at the right cost” said Shyam Krishnan, industry analyst at technology research specialist Frost & Sullivan.
“The partnership between Interac and Inside Contactless goes a long way towards creating a viable solution, providing the technology and value proposition necessary to break the barriers to this market.”
Citi outsources US lockbox services to processor First Data
Citi has agreed an outsourcing agreement with global payment processor First Data which will see Citi handing over the core processing elements of its US lockbox operations.
Under the deal, First Data will provide lockbox, image capture, posting and reporting of receivables for corporate billers. The firm says it will offer jobs to the 500-odd existing Citi staff in the unit and sub-lease the bank’s lockbox processing facilities. Citi says it remains committed to clients and will continue to be their direct point of contact for sales and service.
Amol Gupte, head of treasury and trade solutions for North America at Citi, said: “For Citi, this will result in a more competitive position in the market while providing a scalable platform and the long-term infrastructure to enable us to meet the growing geographic scope and sophistication of our clients’ needs.”
Five US credit unions sign platform agreements with Fiserv
US-based financial services technology services provider Fiserv has signed five credit unions to new account processing contracts for its Portico, CubicsPlus and Galaxy credit union platforms.
Under the terms of the agreements, the credit unions have also selected a series of value-added Fiserv solutions, such as card services, virtual branch internet banking, accounting tools, and interactive voice response to enhance efficiencies across the enterprise.
Fiserv’s new credit union clients include Seasons Federal Credit Union, United Police Federal Credit Union and Ashtabula County School Employees Credit Union, which are set to implement the Portico credit union pla