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July 31, 2009

News digest

REMITTANCESMoneyGram takes poll position in Saudi ArabiaIn a strategically significant move, MoneyGram has signed an agreement with Saudi Arabian bank National Commercial Bank (NCB) creating a money transfer network more than ten times larger than any other in Saudi Arabia.Under the agreement with NCB, the largest bank in the Middle East, 1,400 ATMs in Saudi Arabias four major cities, Riyadh, Jeddah, Dammam and Khobar, will be linked to the US remittance specialists 180,000 agent locations in 190 countries and territories.Offering ten minute transaction delivery, MoneyGrams remittance service will run on NCBs Quickpay platform and initially be available in send-only form.It is, however, Saudi Arabias remittance send market that represents the major opportunity.With some 6 million expatriates 27 percent of the total population Saudi Arabia has emerged as the worlds second-largest source of remittances after the US.In addition, demand for send remittance services is also being boosted by the growing number of Saudis studying, travelling and working abroad.MoneyGrams regional director for the Middle East, Richard Meredith, commented that NCB and MoneyGram would work closely to rapidly register expatriates.Based on World Bank data for 2006, remittances from Saudi Arabia are of the order of $17 billion annually MOBILE BANKINGFirethorn takes data security to a new levelSecurity concerns feature regularly as a big concern in surveys aimed at assessing consumer attitudes towards mobile banking and payments.Moving to allay concerns Firethorn, the mobile banking and payments unit of US wireless technology developer Qualcomm, has introduced security features that comply with the Payment Card Industry Data Security Standard (PCI DSS).As part of its strategy to meet the many PCI DSS, Firethorn relocated its mobile services operation to a protected data center that provides continuous service support.Methods now used to protect customer data include encryption of account inform

By Verdict Staff

REMITTANCES

MoneyGram takes poll position in Saudi Arabia

In a strategically significant move, MoneyGram has signed an agreement with Saudi Arabian bank National Commercial Bank (NCB) creating a money transfer network more than ten times larger than any other in Saudi Arabia.

Under the agreement with NCB, the largest bank in the Middle East, 1,400 ATMs in Saudi Arabia’s four major cities, Riyadh, Jeddah, Dammam and Khobar, will be linked to the US remittance specialist’s 180,000 agent locations in 190 countries and territories.

Offering ten minute transaction delivery, MoneyGram’s remittance service will run on NCB’s Quickpay platform and initially be available in send-only form.

It is, however, Saudi Arabia’s remittance send market that represents the major opportunity.

With some 6 million expatriates – 27 percent of the total population – Saudi Arabia has emerged as the world’s second-largest source of remittances after the US.

In addition, demand for send remittance services is also being boosted by the growing number of Saudis studying, travelling and working abroad.

MoneyGram’s regional director for the Middle East, Richard Meredith, commented that NCB and MoneyGram would work closely to “rapidly register expatriates.”

Based on World Bank data for 2006, remittances from Saudi Arabia are of the order of $17 billion annually.

 

MOBILE BANKING

Firethorn takes data security to a new level

Security concerns feature regularly as a big concern in surveys aimed at assessing consumer attitudes towards mobile banking and payments.

Moving to allay concerns Firethorn, the mobile banking and payments unit of US wireless technology developer Qualcomm, has introduced security features that comply with the Payment Card Industry Data Security Standard (PCI DSS).

As part of its strategy to meet the many PCI DSS, Firethorn relocated its mobile services operation to a protected data center that provides continuous service support.

Methods now used to protect customer data include encryption of account information at rest and in transit, consistent monitoring for malicious activity and provision of security awareness training for all support staff.

In addition, Firethorn conducts regular security assessments of its mobile services.

“We have worked hard to make sure our solution provides a level of protection that exceeds our partners’ and consumers’ expectations,” commented Firethorn’s president, Tripp Rackley.

 

INDUSTRY TRENDS

Embattled US insurers turn to e-payments

US policymakers are locked in heated debate over reform of the world’s costliest health system, with a key issue the Obama administration’s call for creation of a public health insurance plan.

Private health insurers facing prospects of a public plan with the potential to lure away tens of millions of policyholders are fighting back with numerous strategies, including proposals that would cut industry costs by billions of dollars.

In the forefront of cost-cutting protagonists is UnitedHealth, the largest health insurer in the US, which estimates that use

of technology can yield savings of $332 billion over the next decade.

Of this total, the insurer believes half could come from savings related to the billing and payments process of which elimination of paper cheques and paper remittance advice would alone account for $109 billion.

Other payments-related savings would flow from creation of a national payments clearinghouse ($41 billion saving) and increased use of policyholder identification cards ($18 billion saving).

Introduced by UnitedHealth in 2004, the magnetic stripe cards carry essential policyholder information and enable health care providers to submit claims online and receive a fully adjudicated response in seconds.

UnitedHealth has 70 million policyholders and processes 60 billion transactions valued at a total of $115 billion annually.

 

PAYMENTS PROCESSING

Logica’s clean-sweep in Turkish market

Consolidating its strong position in Turkey’s banking market, UK technology services company Logica has completed the upgrade of the messaging infrastructure of the Banks’ Association of Turkey’s 10 international and 38 domestic members.

With completion of the installation, Turkey’s entire high-value payments environment now runs on infrastructure supplied by Logica – which has been actively involved in the country’s banking market in 1992.

Logica noted that migration to the new financial messaging platform enables the banks to increase straight through processing (STP) rates by automating validation and allowing them to develop their own message validation rules. Logica’s system can handle about 5 million messages a day.

 

CONTACTLESS PAYMENTS

Phoolah, the solution on a mobile phone skin

Whether Phoolah will be the contactless payments killer-ap the world has been waiting for remains to be seen, but whatever the case this brainchild of start-up Mobile Payment Skins (MPS) hits the US market within the next few weeks.

Nothing new, skins are custom-made vinyl covers decorated with graphical artwork and wrapped onto a mobile phone. Specialists such as Unique Skins and Skinit have been making personalised vinyl mobile phone skins for a number of years.

What makes MPS’ product unique is that it comes with an embedded contactless payment chip.

Explaining how the Phoolah concept was born, Doug Yeager, a co-founder of MPS, said: “I thought it would be cool to pay with my phone if I could.

“After not being impressed with solutions in this area, I knew we had to make something that was customer focused because most people don’t care about the technology itself, so we wanted to hide that part. Vinyl wraps are the perfect vehicle.”

Time will no doubt tell.

 

CONTACTLESS PAYMENTS

Citi thinks big in India

Mustering the resources of four partners, US bank Citi’s Indian unit has launched what it hails as one of the world’s largest and most comprehensive contactless payments pilot projects using near field communications-enabled mobile phones yet undertaken.

The credit card-based pilot based on MasterCard’s PayPass contactless payment system is being undertaken in Bengaluru, a city with a population of over 9 million.

For the pilot, US mobile payments specialist ViVOtech has supplied underlying technology, including the NFC wallet, over-the-air card provisioning software, smart posters, mobile coupon application and contactless readers.

The NFC enabled mobile phone being used is the Nokia 6212 while mobile network hosting is being provided by Vodaphone.

Indicative of the scope of the project, merchant categories involved include department stores, food courts at shopping malls and office buildings, restaurants, fast food chains and bookstores.

Transactions will require a PIN validation, notes Citi.

 

MOBILE PAYMENTS

Japan gets mobile remittance service

DOCOMO, Japan’s largest mobile network operator, is to enter the domestic person-to-person remittance market with a service running on its i-mode mobile internet service platform.

Though limited to payments between DOCOMO subscribers, the new service has a potentially substantial user base.

According to DOCOMO, 48 million of its 54 million subscribers are users of its i-mode service, making it the world’s most popular 3G mobile internet service.

To use the remittance service a subscriber inputs the amount to be transferred and the payee’s mobile phone number.

The payee is then notified via an email of the payment and has the choice of depositing the money in a domestic account or having the amount credited to their monthly DOCOMO phone bill.

A single transfer is restricted to a maximum of ¥20,000 ($200) while an individual payee may receive up to ¥200,000 per month.

Charges per payment are ¥105 yen for the payer and ¥65 yen for the payee. The payee is not charged if the money is deposited into a Mizuho Bank account or credited to their DOCOMO phone bill.

DOCOMO is authorised to operate the service as a bank agent on behalf of Mizuho Bank.

 

CONTACTLESS PAYMENTS

HSBC goes contactless in Turkey

Marking another advancement of contactless payments in Turkey, UK banking group HSBC’s Turkish unit is to launch Advantage Hizz, a service that will facilitate contactless payments of up to TRY30 ($20) at 4,000 merchant outlets. Hizz is “fast” in Turkish.

For the project HSBC has appointed Israeli smartcard specialist On Track Innovations (OTI) to supply contactless readers (OTI Saturn 6000) and contactless payments devices in conventional credit card form as well as a key fob and sticker for use on, for example, mobile phones.

HSBC is following the lead of a pioneer of contactless payments in Turkey, Garanti Bank, Turkey’s second-largest private bank, which launched the country’s first contactless payments pilot project in July 2006.

OTI has been Garanti Bank’s primary supplier of contactless solutions including readers, cards, fobs and stickers since the launch of the bank’s Bonus Trink contactless payments programme in mid-2007.

 

MOBILE PAYMENTS

Western Union throws its weight behind Zap

With the formation of an alliance with Western Union, Kuwaiti mobile network operator (MNO) Zain has secured a significant enhancement of the cash-out ability of its mobile banking and payments service Zap.

Zain launched the Zap service in early 2008 in Kenya, Tanzania and Uganda in partnership with UK bank Standard Chartered and US bank Citigroup, and has set a target of rolling out the service in 22 of the 24 countries in the Middle East and Africa in which it operates.

The alliance with Western Union will enable Zap service users to send cash transfers from participating Western Union locations internationally and Zap customers to choose whether they want to receive their money in cash at a Western Union agent location or in accounts tied to their mobile phones. Money-transfer receivers who receive funds in accounts tied to their mobile phones will be able to pay bills, buy airtime or cash out through the Zap service at more than 12,000 Zap agent locations in East Africa.

The world’s third-largest MNO in terms of country footprint, Zain had 64.7 million active customers as at 31 March 2009.

 

SEPA

Swiss-made SEPA solution launched

Competition in the SEPA direct debit outsourced service market continues to increase with another new entrant, Swiss financial market infrastructure provider SIX Group, set to launch its offering in November.

Targeting banks of all sizes in Switzerland and the 30 countries in the Single Euro Payments Area (SEPA), the service was developed by two SIX group units, SIX Interbank Clearing and SIX Paynet, in conjunction with the Swiss Euro Clearing Bank and Swiss financial institutions. SIX Group and the SECB provide the technical requirements for the rule-confirming processing of SEPA direct debits throughout Europe.

SIX Group was formed in early 2008 out of the merger of securities exchange services providers SWX Group, SIS Group and electronic payments services provider Telekurs Group. SIX Group is owned by 160 companies in the banking industry with Swiss banks dominating with a combined equity stake of some 76 percent.

 

CHEQUES

UK cheque guarantee scheme to be scrapped

Heralding another step towards discouraging the use of cheques in the UK the Payments Council has ruled that the guarantee scheme for cheques is to be terminated. The decision by the UK’s payments strategy organisation will bring to an end the use of cards which guarantee cheques for between £30 ($50) and £250.

A key factor in the council’s decision to end the scheme – first introduced in 1965 – is the waning interest in the use of cheque guarantee cards, which has seen the number of guaranteed cheques fall by 70 percent over the past five years.

Of the 1.4 billion cheque transactions in the UK in 2008 only 95 million (7 percent) were supported by a cheque guarantee card.

According to the council, while there are 59.9 million cards with a cheque guarantee feature in issue, only some 4 million consumers still use the cheque guarantee option. Lossess sustained by banks as a result of misuse of the guarantee totalled £43 million in 2008.

Though a date for termination of the guarantee scheme has not been finalised the council anticipates that at the earliest it will be in mid-2011.

 

MOBILE BANKING

Wincor Nixdorf selects mobile banking partner

Wincor Nixdorf has joined the growing number of big-name payments technology vendors to opt for a partnership approach to secure a foothold in the mobile banking and payments market.

As its partner Wincor Nixdorf has selected fellow German company Sevenval, a specialist in mobile internet delivery technology.

Commenting on the partnership Thomas Certa, head of Solution Marketing at Wincor Nixdorf said: “Our co-operation with Sevenval means that we will be able to rely on technology components that have proven themselves on the market.”

According to Sevenval its solution automatically adapts online services for use on all internet-enabled devices and is already in use at several European banks including German banks NetBank and Postbank.

 

SECURITY

US Secret Service teams European counterparts

In a joint initiative by the US Secret Service (USSS), Italian Police and the Italian Postal Service, the war against online crime has been taken to a new level with the formation of Europe’s first electronic crimes task force.

The task force, based on the USSS’s domestic electronic crimes task force, will be based in Rome and provide a forum where US and European law enforcement agencies, the private sector and academia can collaborate to investigate and combat computer-related crimes.

Commenting on the initiative USSS director Mark Sullivan said: “Cybercrime knows no borders. We believe partnerships at the international level are essential in combating the ever-changing landscape of cybercrimes.”

The types of investigations to be handled by the European crimes task force will match those of its US domestic counterpart, and include network intrusions, hacking cases, identity theft and other computer-related crimes affecting financial and other critical infrastructures.

 

MERGERS AND ACQUISITIONS

Clear2Pay bolsters consulting capabilities

Moving to enhance its consulting capabilities Belgian payment processing technology specialist Clear2Pay has acquired Dutch payments consultancy house Ereon for an undisclosed sum.

Clear2Pay noted that Ereon, which is primarily active in the Dutch market, will add expertise in areas such as the Single Euro Payments Area and Payment Service Directive, sourcing issues, market entry models, governance and trade finance.

Ereon also provides training in payments and cash management to banks, corporates and government institutions.

Ereon clients include global and major regional financial institutions such as ING, ABN AMRO, Royal Bank of Scotland, Fortis Bank and Aegon as well as payments scheme managers and banking associations.

 

CONTACTLESS PAYMENTS

Lima picks contactless transit ticketing

It will be contactless payments from the start for commuters in Lima, Peru about to start using the country’s first rapid bus transport (RBT) network, thanks to a decision taken by Protransporte, the city’s transit authority.

Implementation of the contactless ticketing system is being undertaken by US technology and outsourcing services provider Affiliated Computer Services (ACS) which will also operate the RBT system for 14 years. The total value of the contract awarded to ACS by Protransporte is $200 million.

Lima’s RBT system is intended to carry over 700,000 passengers a day on a fleet of 200 busses. The City of Lima intends to build 10 other contactless ticketing solutions similar to that being implemented on the RBT service in the next few years.

 

BANKING SYSTEMS

Indian Bank revamp hailed as industry model

For countless banks, the objective of replacing legacy systems with modern infrastructure remains illusive. Not so for Indian Bank, a 102-year-old veteran of India’s banking industry, which took the bold step of replacing its entire core banking system.

The revamp, implemented by Indian technology company Tata Consultancy Services using its TCS BaNCS banking solution, attracted the attention of research and advisory firm Celent which has bestowed the title of ‘Model Bank’.

The key criterion used by Celent in Model Bank research is to answer the question: What would it look like for a bank to do everything right with today’s technology?

“Indian Bank is a classic example of the leapfrogging that is happening throughout Asia,” said Celent senior vice-president for banking Bart Narter.

He continued: “Because Indian Bank has entirely scrapped their legacy systems, the bank is able to jump to a state-of-the-art infrastructure with increased back office and IT efficiency and a broader product offering.”

Indian Bank has 1,647 branches and a staff of 22,000.

 

PAYMENTS PROCESSING

BancTec extends its reach in Nordic region

US-based business process outsourcing (BPO) specialist BancTec has acquired Privatgirot, a Swedish company providing electronic and paper-based payments processing services. No financial details of the deal concluded with Privatgirot’s owners, Sweden’s seven largest banks, were disclosed.

“Combining Privatgirot with BancTec’s existing Nordic processing centres will provide a market leading portfolio of payment and document services,” said Michael Peplow, BancTech’s president responsible for operations in Europe, the Middle East and Africa.

According to BancTec, Privatgirot processes 110 million paper-based payments and 10 million electronic payments annually and, in 2008, reported total revenues of about $18 million.

In addition to payments, Privatgirot also digitises general correspondence documents and supplier invoices. This service has a capacity of up to 2.5 million documents per day.

Privatgirot CEO Fred Petrini has been appointed as head of BancTec’s Nordic BPO services operation.

 

SECURITY

Mobile phones attract criminal attention

Increasing use of mobile phones for financial services access via the internet is attracting the attention of criminals, warns Kaspersky Lab.

Exacerbating risk, added the Russian security specialist firm, is that mobile phones are the least protected devices in the entire computing arena, leaving them at the mercy of internet criminals.

However, it is not only mobile internet banking users that are at risk but also those relying on the more basic short message service (SMS) access route. This is highlighted by a serious breach of SMS security in South Africa reported by Johannesburg daily newspaper The Citizen which launched its story with the ominous sentence: “SMS banking is not safe.”

According to the report, victims of the SMS scam, all customers of mobile network operator Vodacom and Nedbank, lost a combined ZAR2.4 million ($500,000) before police apprehended the gang responsible.

In essence, the scam is alleged to have involved a Vodacom employee who blocked SMS messages between the bank and its customers and diverted them to his accomplice. The SMS text included account number and balance details.

 

MOBILE PAYMENTS

Luup International goes from strength to strength

In another significant contract-win, Norwegian mobile payments technology developer Luup International has been selected by the National Bank of Abu Dhabi (NBAD), the largest bank in the United Arab Emirates, to establish a mobile money transfer service across the bank’s network spanning nine countries.

The deal with NBAD follows Luup’s recent appointment by Deutsche Bank to implement a payments and money transfer service for its private and corporate customers in Europe, the Middle East and Asia.

Luup’s appointment by NBAD extends an existing relationship in the form of the bank’s Arrow mobile short message-based domestic banking service implemented by Luup and launched in November 2008.

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