Sharia-compliant moves from
Lloyds TSB..
Wireless payments from
Ingenico and Wavecom…
Cards boost vending
machine revenue…
Indian bank goes mobile in
grand style…

INTERNATIONAL PAYMENTS
Sharia-compliant moves from Lloyds TSB

UK bank Lloyds TSB has introduced what it claims is the first
account to be offered by a mainstream Western bank that allows
money to be moved internationally on behalf of individual and
business clients in keeping with Islamic Sharia law.

Named the Islamic Nostro Account (INA), it has
been launched in response to rising demand from Muslim businesses
and personal customers for Islamic banking across borders,
explained Diana Brightmore-Armour, Lloyds TSB‘s corporate banking
CEO and co-head of corporate markets.
The INA adheres to the principles of Sharia law
because it does not pay interest on money banks hold in the
account, does not provide an overdraft facility and does not allow
any of the funds held to be invested in industries prohibited under
Sharia law such as alcohol and gambling.
“We’ve designed this account to help the
growing number of Islamic banks across the world [an estimated
250], which deal with our customers’ transactions,” said
Brightmore-Armour. “We’re providing the missing link in the chain,
so now any person or business receiving payments from abroad into
their own Islamic account knows the money will be dealt with
according to Islamic law, from start to finish.”

CARD PROCESSING
Standard Life praises The Logic Group

UK transaction processing company The Logic Group (TLG) has won
high praise from one of the UK’s largest financial services
suppliers, Standard Life, for its implementation of a managed card
payment solution. “The Logic Group Managed Service has enabled us
to reduce our card processing costs by 60 percent,” said Standard
Life’s senior project manager, Bob Cunningham.

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By GlobalData
Standard Life will migrate from its own payment
card acceptance infrastructure to a managed service provided by
TLG. Services include authorisation, validation and settlement
services of credit and debit card payments accepted by Standard
Life’s contact centre operatives taking payments from their
customers.
Standard Life adds another key customer to
TLG’s impressive list that includes nine out of the UK’s top ten
retailers. According to TLG, it processes over 200 million card
transactions annually, taking transactions from 23 countries across
four continents. In addition, TLG loyalty card schemes are managed
for over 25 million subscribers, with over 5 million subscriber
communications annually.

SEPA
Danish payments linked to SEPA

The Danish payments system has been linked to the Single Euro
Payments Area (SEPA) following the launch of a direct debit service
by 117 Danish banks and savings banks. The service is operating on
Danish payments service provider Payment Business Services’ (PBS)
platform.

PBS CEO Flemming L Jensen said: “This contract
represents PBS’s initial SEPA effort. We are looking forward to
continuing and expanding our co-operation with this large group of
banks. PBS is sending a clear message: we want to provide SEPA
services to banks and their customers, in Denmark and
abroad.”
Though a member of the European Union, Denmark
opted not to adopt the euro as the country’s currency following a
referendum held in 2000. “Although Denmark currently is not a euro
country, we are fully aware where the future market lays,” said
Anders Dam, CEO of Jyske Bank, one of the Danish banks
participating in the SEPA service.
PBS is owned by most of Denmark’s banks and the
country’s central banks. In 2006 PBS processed almost 3 billion
electronic payments transactions.

WIRELESS TERMINALS
Wireless payments from Ingenico and Wavecom

Two French companies, electronic payment terminal vendor Ingenico
and wireless technology developer Wavecom, have joined forces to
develop what they term “a platform for a next-generation wireless
electronic payment system architecture”.

Expanding on the rationale for the co-operation
agreement, Ingenico’s marketing vice-president, Christophe Dolique,
said: “Mobility is becoming a major trend in the payment terminal
market. We anticipate that wireless terminals will become dominant
in the coming years and believe Wavecom is the best-positioned
partner to get us there.”
Wavecom group vice-president Frank Souguir
said: “Together with Ingenico we believe that we can optimise the
architecture for payment systems, bringing the total system cost
down significantly.” He added that Wavecom would also assist
Ingenico to achieve greater efficiency in the manufacture of
wireless payment systems and help to launch “a wide array of new
products”.

COMPANIES
Monitise gets cold shoulder from investors

Investors gave UK mobile payments technology developer Monitise’s
results for the six months to 31 December 2007 a cold reception,
sending its share price diving 15 percent following their release
to 12.75 pence, less than half the peak of 26 pence attained in
October 2007. Clearly, Monitise’s comment that “consumer uptake of
mobile banking and payments services has been somewhat slower than
we initially anticipated” did not go down well.

Slow uptake was reflected in Monitise’s
revenue, which at £392,000 ($760,000) is a modest 8 percent up on
the £363,000 in the corresponding period in 2006, though a big
improvement on revenue of £109,000 in the six months to June 2007.
In the six months to December 2007, Monitise reported an operating
loss of £7.57 million, including a non-cash charge of £1.1 million.
Monitise stressed that it “remains in an investment phase” and that
“interim results are consistent with the board’s
expectations”.
Talking up prospects, Monitise CEO Alastair
Lukies said: “We are building a new banking and payments channel
and, four years into this journey, we are pleased with progress to
date and remain confident of our future prospects.”
According to Monitise, which operates in the UK
and the US, over 110,000 consumers have registered for its
services.

CREDIT CARDS
Barclays lands Goldfish

UK bank Barclays has relieved US credit card issuer and ATM network
operator Discover Financial of an unwanted burden – its UK credit
card unit, Goldfish. Under the agreement, Barclays will pay £35
million for Goldfish’s card portfolio, consisting of 1.7 million
Goldfish and affinity card accounts with £2 billion of
receivables.

Commenting on the sale, Discover CEO David
Nelms said: “While we have begun to see important progress in our
UK business, the funding and operating environment there continues
to be a challenge.” In the fourth quarter of 2007, Discover
reported that it had incurred a $391 million non-cash impairment
charge related to its Goldfish unit.
Goldfish was acquired by Discover’s former
parent company, investment bank Morgan Stanley, in December 2005
from UK bank Lloyds TSB in a deal worth £1 billion.

SECURITY
Biometric standards from the ISO

Recognising that biometrics is increasingly considered as a
reliable means of identification, the International Organization
for Standardization, better known as the ISO, has introduced the
Financial Services Biometrics Security Framework (ISO 19092:2008)
that sets out requirements for the implementation and management of
biometric identification technology in the financial industry. The
ISO, a non-governmental organisation, represents national standards
institutes of 157 countries.

“ISO 19092 offers a valuable international
consensus-based tool to the financial industry that will encourage
the secure implementation of biometrics as an authentication method
within this sector,” said Mark Lundin, chair of the ISO
subcommittee that developed the standard. “This standard is one
step ahead, paving the way for the next generation of safer and
more reliable financial transactions, increasingly important in
today’s electronic era.”
The complete version of the ISO 19092:2008
framework document is available from ISO national member institutes
at a cost of CHF176 ($160).

CONTACTLESS PAYMENTS
BART goes contactless

In a first of its kind pilot project in the US, 230 users of San
Francisco’s Bay Area Rapid [rail] Transport system (BART) have
begun using Samsung mobile phones equipped with near field
communications (NFC) contactless payments technology to pay at
entry gates.

The four-month trial is a combined effort
between numerous players including transactions processor First
Data, mobile phone service supplier Sprint Nextel and consultancy
Booz Allen Hamilton, which facilitated strategy development.
Among features of the trial service,
participants will initially have a stored value of $48 worth of
BART rides loaded onto their mobile phone. Once the stored value
drops below $10, another $48 worth of rides is automatically
downloaded.
Semiconductor chips for the mobile phones used
in the trial were developed by Netherlands technology company NXP
Semiconductors. NFC payments and over-the-air provisioning software
was developed by US contactless payments specialist VivoTech.

CARD PAYMENTS
Cards boost vending machine revenue

Though still a relatively new feature in the vast US vending
machine market, machines equipped to accept credit and debit card
payments are proving their worth. According to vending machine
payments specialist USA Technologies, vending machines equipped
with its ePort card reader have achieved annual increases in sales
revenue of between 20 percent and 30 percent. In limited instances,
the increase has been as high as 50 percent.

Vending machines with the added feature of
accepting contactless payments have also produced solid revenue
benefits. USA Technologies, which has focused on the MasterCard
PayPass contactless system, reports that surveys of its customers
reveal that on average consumers’ card purchases are 30 percent
higher than cash purchases when payment is made using a
PayPass-equipped card.

SECURITY
Easing the PCI compliance burden

Complying with stringent customer payment information security
criteria being enforced by all major players in the payment card
industry (PCI) is proving a major task for merchants. Now a
US-based specialist in internet payment solutions, NetworkMerchants
(NM), claims that in its new product, Customer Vault, it has the
answer that addresses concerns of merchants of all sizes. “The
product eliminates the burden of dealing with PCI compliancy,” said
NM’s vice-president of product development, Nick Starai.

In essence, Customer Vault allows merchants to
securely transmit a customer’s payment information for remote
storage in its data facility, which is certified to the highest
level of PCI security compliance. Once a customer’s record has been
transmitted, the merchant can initiate transactions without having
to access credit card or electronic cheque information directly and
without storing the customer’s payment information in their local
database or payment application.

INTERNET BANKING
eBank gets US go-ahead

The US Federal Reserve Board (Fed) has given Japanese internet-only
bank eBank permission to establish a representative office in the
US. In its application to the Fed, eBank stated that the
representative office is part of its strategy to explore business
opportunities and research technology related to internet banking
in the US.

Founded in 2000 by its current president,
Taiichi Matsuo, eBank has total assets of $6.1 billion and about
2.2 million customers. The bank’s largest shareholder, government
entity the Development Bank of Japan, owns 14.91 percent, followed
by Matsuo (6.47 percent) and Japanese financial services company
NTT Finance (6.16 percent). US financial services company Citigroup
has an indirect 5.33 percent stake.

MOBILE PAYMENTS
Pilot for Philippine mobile transfer service

Money transfer specialist Western Union and Philippines wireless
service provider Smart Communications have joined forces to pilot a
mobile phone-based money transfer service. Focus will be on
facilitating low-principal, high-frequency cross-border remittances
by more than 8 million Filipinos working abroad.

According to data cited by Western Union, the
Philippines is the fourth-largest receiver of remittances in the
world and received an estimated $17 billion in 2007.
“More than 44 percent of households in the
Philippines have a relative or family member working abroad and the
mobile phone plays a tremendous role in keeping families
connected,” said Western Union Mobile’s general manager, Matt Dill.
“We believe there is a real opportunity to extend the reach of
Western Union’s brand and service proposition to a new and more
mobile consumer base.”
The agreement with Smart Communications is part
of the pilot programme of Western Union and the GSM Association, a
global trade association representing over 700 mobile phone
operators, to facilitate the development of cross-border mobile
money transfer services.

CONTACTLESS PAYMENTS
Gemalto claims world-first contactless
product

Netherlands digital security specialist Gemalto is to supply
Taiwanese communications company Taiwan Mobile with what it claims
is the world’s first commercial mobile phone SIM-based NFC
contactless management solution.

Gemalto explained that the solution remotely
manages the life cycle of any type of contactless service within a
mobile phone environment, especially payment applications requiring
high security levels.
Features of Gemalto’s solution include enabling
Taiwan Mobile to register, issue, manage and terminate mobile NFC
services over-the-air. Taiwan Mobile intends deploying the solution
nationwide during 2008 and will offer it to banks, transport
companies and other payment service providers.
Mobile phone-based contactless payments have
proved popular in Taiwan. A trial run by MasterCard, Taiwan Mobile
and Taiwanese bank Taipei Fubon Bank in 2007 revealed that 75
percent of participants preferred using MasterCard’s contactless
PayPass technology incorporated in mobile phones rather than
conventional contactless cards.

REMITTANCES
Global remittance competition heats up

The Bank of New York Mellon’s (BoNY Mellon) has begun offering its
client US retail banks a white-label global remittance product,
which it calls Remit Worldwide. The bank believes it will greatly
enhance their ability to offer what it termed a banking service
with significant growth potential.

“Remit Worldwide unlocks the global remittance
door, allowing client banks in the US to capture a bigger share of
this growing market without incurring undue technology risk or
development expense,” said BoNY Mellon’s Treasury Services group’s
managing director and head of product management and business
strategy, Al Briand.
“Largely because of technology and
infrastructure constraints, US retail banks currently handle only a
small percentage of global remittances,” explained Briand.
Remit Worldwide will enable customers of BoNY
Mellon’s client US banks to remit funds directly to beneficiaries
overseas. BoNY Mellon first entered the remittance market several
years ago with an offering that enabled non-US client banks to
receive remittances from customers who had moved to the US and
wanted to remit funds back home.
The launch of Remit Worldwide came the same
week as rival US bank Citi launched a similar white-label
remittance product for banks, QuikRemit. The service was previously
offered by money transfer specialist PayQuik, acquired by Citi in
January 2008.

CONTACTLESS PAYMENTS
Breaking down POS contactless barrier

The potential for contactless payments to enter the US retail
industry mainstream may well be improved by an alliance formed
between VivoTech, a contactless payments specialist, and Direct
Source, a IT systems integrator.

The focus of the alliance is the provision of
cost-effective upgrades of tier one retailer’s POS systems to
enable them to accept contactless payments from customers. Visa
defines tier one retailers as those that process 6 million or more
Visa transactions annually.
“The high cost of implementing all new
[contactless] equipment has been a barrier up until now,” said
Direct Source’s president, Brad Fick. “Through our partnership with
Vivo
Tech, retailers will now have a one-stop shop
for cost-effective contactless technology hardware, integration,
deployment and future applications.”
Referring to a survey conducted by research
company Aberdeen Group, VivoTech president Mohammad Khan said 32
percent of the 110 tier one and tier two retailers surveyed
reported that they had already implemented or were implementing a
contactless payment solution.

PAYMENT CARDS
Debit cards remain in the ascent in the UK

Debit cards continued to gain ground at the expense of credit cards
in the UK during the December 2007 shopping season, according to
payment industry body APACS.

Of £32.2 billion ($63 billion) spent on retail
purchases using payment cards during the month, debit cards
accounted for £20.9 billion of total retail sales, an increase of
6.8 percent compared with December 2006. Losing ground for the
second year, credit card retail sales declined by 2.8 percent to
£11.3 billion, or 22.5 percent of total retail spending.
In the online shopping space growth was robust,
with sales of £5.4 billion up 50 percent compared with online sales
in December 2006.
Overall, APACS reported that payment cards
improved their position in the total retail spending picture,
accounting for 64 percent of total retail sales of about £50
billion in December 2007 compared with 63 percent in December
2006.
At the end of November 2007 there were 73.2
million debit cards in issue, up 7.2 percent from the 68.3 million
at the end of 2006. Between December 2006 and December 2007, APACS
estimated, the number of credit cards in issue increased by 3.3
percent, from 69.5 million to 71.8 million.

COMPANIES
Diebold prepares for tough times ahead

US bank self-service hardware manufacturer Diebold has painted a
grim picture of the outlook for equipment demand in 2008. Against a
background of what he termed the deteriorating condition of the
credit markets within the US bank industry, Diebold’s president and
CEO, Thomas W Swidarski, warned: “We currently expect that
financial self-service and security revenue in the US market will
be flat to down 5 percent in 2008.“

Bracing itself for tough conditions, Diebold is
to extend an ongoing programme aimed at reducing annual costs by
$100 million. Additional measures to be taken include reducing
staff numbers by 800, or about 5 percent of its work force. Staff
cutbacks will be made in North America, Brazil and Western
Europe.
In addition, Diebold noted that its is
“evaluating further global manufacturing realignment”.

CONTACTLESS PAYMENTS
ING and MasterCard join forces

The lure of mobile phones equipped to facilitate contactless
payments has attracted another follower, Netherlands banking and
insurance group ING. The proposed service, which will include
over-the-air (OTA) reload functionality, is to be developed in
conjunction with MasterCard.

The development project will be undertaken in
close co-operation with four other companies. They are UK IT
consulting and systems integrator Logica.
CMG, Netherlands smart card electronic
transaction systems developer Collis, Taiwanese near field
communications (NFC) technology developer Toro, and Venyon, a
Finnish company.
One of Venyon’s particular strengths is OTA
reload and service management technology. Among recent projects,
Venyon announced in January 2008 that it had been selected to
provide OTA technology for a pilot project in the US state of
Washington involving the deployment of Nokia mobile phones equipped
with MasterCard PayPass NFC contactless payments technology.
ING noted that it is exploring possible
locations to test its mobile NFC service.

MOBILE BANKING
Indian bank goes mobile in grand style

ICICI Bank, India’s second-largest bank, has launched iMobile, a
platform that enables virtually all internet banking transactions
to be executed via mobile phones. The service, claims ICICI Bank,
represents the first complete mobile banking service available in
India and is a “breakthrough improvement in banking
services”.

A comprehensive service, iMobile enables
customers to transfer funds to both ICICI Bank accounts and
non-ICICI Bank accounts. Accounts covered by the application
encompass savings, demat (investment trading account), credit card
and loan accounts. Customers can also pay their utility bills and
insurance premiums via iMobile.
iMobile, which is offered free to ICICI Bank
customers, can be downloaded directly onto phones with data
transmission capabilities or via a desktop computer. Access to the
mobile platform requires customers to enter a four-digit PIN.
According to ICICI Bank, India has 200 million
mobile phone users, ten times the number of internet
connections.