• The transaction volume of debit cards for migrant workers in
China has reached $250 million, according to China
UnionPay…
• Bank Mandiri, Indonesia’s largest lender, is
targeting a 30 percent increase in consumer lending in 2007…
Go deeper with GlobalData
• Spanish banking group BBVA increased its
immigrant customer base by 160,000 in 2006 to 552,000, and expects
to attract another 180,000 clients in 2007…
Asia-Pacific
• Australia’s Commonwealth Bank is planning to
expand its contactless cards programme to other regions in 2007. So
far, it has issued 33,000 MasterCard PayPass cards in south Sydney
as part of a six-month trial.
• A survey conducted by China National Radio
predicted that the number of credit cardholders in China will
exceed 60 million by the end of 2007. The survey of 20,000 people
in more than 100 cities also found that Shanghai has the highest
number of credit cardholders with more women cardholders than men.
White-collar professionals aged 26 to 33 accounted for almost 38
percent of cardholders.
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By GlobalData• Chinese banks saw a faster rate of growth in their retail
banking business, but the division’s contribution to overall profit
remains small. The growth in retail banking has been driven by
mortgages and credit cards. For example, Bank of
China saw a 49.1 percent increase in credit card loans in
2006 but retail loans as a percentage of total loans is still at
22.3 percent.
• Draft regulations on the establishment of independent card
issuers in China are expected to be published by the
Chinese government in June 2007. Cards are issued only by
local commercial banks and there are no independent issuers in the
market at the moment. In addition, all cards issued by banks bear
the China UnionPay logo. Industry observers have noted that the
government has yet to open up the card issuing market as required
by the World Trade Organisation agreement.
• The transaction volume of debit cards for migrant workers in
China has reached $250 million, according to China
UnionPay. The cards allow migrant workers to deposit money
in cities where they work and withdraw the money from branches of
rural credit co-operatives near their homes. The central bank has
asked all card issuers to reduce the service charge from 1 percent
to 0.8 percent from February 2007. The ceiling charge for each
transaction has also been lowered from CNY50 ($6.50) to CNY20.
• China Merchants Bank expects to double the
number of credit cards issued to 20 million by August 2008 when the
Beijing Olympics is held. The bank plans to donate CNY1 for each
Olympics card issued to a government foundation for poor students.
The bank is not planning to partner with any foreign institution
and prefers to hire foreign executives instead. The Beijing
government has been encouraging card use among state officials to
track transactions and to reduce corruption.
• Citibank plans to issue cash cards to account
holders through its recently incorporated China subsidiary.
Negotiations with regulators are still ongoing but if the card is
approved the bank will be the first to offer cash cards
independently in China.
• HSBC is planning to independently issue its
own credit cards to premium customers in China if allowed by local
regulators. It has already issued a co-branded credit card through
Shanghai-based Bank of Communications. Foreign banks are not
allowed to issue credit cards but those incorporated locally may do
so with prior approval from the local regulators.
• China Everbright Bank and China
UnionPay will collaborate in efforts directed at greater
brand recognition and upgraded systems in order to improve the card
acceptance environment and expand the market. The two organisations
are in negotiations over linking their customer service hotlines
and will jointly research new payment technology such as the mobile
phone and integrated circuit cards.
• HSBC will set up a data centre in eastern
Kowloon to support the bank’s expansion in Asia-Pacific. The centre
in Hong Kong will be HSBC’s main processing hub for the region,
managing personal and business internet banking, securities
trading, credit card, treasury and global payments. It will begin
operation in the first quarter of 2008.
• Bank Mandiri, Indonesia’s largest lender, is
targeting a 30 percent increase in consumer lending in 2007. The
bank is projecting growth of 40 percent in credit card financing
for the year. Currently, retail loans make up 11 percent of the
bank’s total loans but the bank is looking to expand the
proportion. Non-performing loans for the bank’s retail lending are
at 4.13 percent compared with the 17.08 percent non-performing loan
ratio for the bank as a whole.
• Aeon, Japan’s leading retailer, plans to
introduce its own electronic payment system. It will launch the
service at 100 stores and expects to have 23,000 stores on the
electronic payment system by the end of fiscal 2008. Its programme
includes prepaid cards and the company targets 8 million cards to
be issued in its first year. The retailer has installed card
readers in about 90 stores so far.
• General Electric (GE), the multinational
technology and services conglomerate, plans a tender offer worth
$1.14 billion for Japan’s Sanyo Electric Credit.
GE currently offers credit card, housing loans, consumer finance
and insurance services through its Tokyo-based GE Consumer Finance
and plans to turn the Sanyo acquisition into a subsidiary to expand
its consumer finance and credit card businesses.
• Credit Bureau Singapore reported a sharp
increase in the number of credit card applications from people aged
21 to 29: 20 percent of all new credit card applications came from
that age group in 2006, compared with 14 percent in 2005. The
credit bureau is monitoring the gap between income and expenditure,
though it noted that credit card delinquency fell last year.
• China Construction Bank’s Zhejiang province
branch launched a co-branded credit card with automobile maker
Geely Group. The credit card provides
interest-free credit and health care services to Geely’s staff.
• Malaysia’s Berinda Property has launched a
lifestyle contactless card in collaboration with Visa
International that will allow users to carry out banking
transactions and collect purchasing points. The issuer hopes to
have a cardholder base of 100,000 in the first year.
• The Financial Supervisory Commission of
Taiwan has barred card issuers from tying other bank products to
credit card promotions. This prohibition will affect housing loan
programmes that are offered by card issuers such as First
Commercial Bank, HSBC and Sinopac.
• Citibank Taiwan will continue to issue new
cards on the island as it sees a recovery in the bad loan situation
of the domestic credit card market. It will offer better benefits
to encourage cardholder spending and will not suspend issuance of
new cards – a policy that some banks have adopted to weather the
recent credit crisis.
Europe, Middle East, Africa
• MasterCard has announced that the first
European card-based OneSmart MasterCard PayPass transaction has
taken place at a branch of food chain McDonald’s in Switzerland, in
conjunction with Swiss banking company Aduno Group. The transaction
was performed as part of a pilot project to test PayPass in the
country. Selected merchants in the Swiss cities of Zurich, Lausanne
and Lugano and 1,000 existing Aduno Group
cardholders will take part in the pilot project. Following the
initial pilot phase, the market launch of MasterCard PayPass in
Switzerland is planned for later this year by the Aduno Group.
• The British Bankers Association (BBA) has
reported that credit card borrowing was unchanged in February,
while other loans and overdrafts fell by £200 million ($394
million). New borrowing on credit cards totalled £6.24 billion in
February, 7 percent lower than the year-ago period. After seasonal
adjustment, underlying net lending decreased by £4 million. David
Dooks, BBA director of statistics, said: “Reflecting tighter
conditions for personal disposable income, consumer credit
continues to be weak.”
• Spanish banking group BBVA increased its
immigrant customer base by 160,000 in 2006 to 552,000, and expects
to attract another 180,000 clients in 2007, as part of its Duo and
Dinero Express offering to immigrants. In two years, BBVA has
increased from two to four the average number of products per
client, and in 2006 doubled the number of remittances to 780,000.
The BBVA network, with over 3,300 branches, offers a range of
universal banking products and services for customers which, in
addition to money transfers, includes consumer credit products,
credit cards or mortgages.
• European payment processor Equens has started
two outsourcing projects in the Netherlands in which parts of the
automation are outsourced to Atos Origin, an international IT
services company. For the coming five years Atos
Origin will be responsible for the outsourcing of parts of
Equens’s mainframe services. Atos Origin will also manage the
office automation for all of Equens Netherlands’ workstations.
• Russia’s Severnaya Kazna Bank has been
connected to the Visa payment network, following
its granting of principal member status in the Visa system in 2006.
The bank has set up direct connection channels with the VisaNet
processing centre in London, performed technological configurations
of the processing centre, optimised settlement schemes and carried
out tests and certification procedures. As a result of this work,
the processing centre of Severnaya Kazna Bank was switched to
direct settlement mode with the Visa payment system.
• Privately owned Turkish bank Akbank has
completed implementation of global risk and anti-fraud specialist
Fair Isaac’s Falcon ID solution to provide its
customers with enhanced protection against identity fraud. Akbank
will become the first European lender to deploy Falcon ID,
initially using the solution to protect its credit card portfolios.
Falcon ID is a solution for identity fraud detection that combines
Fair Isaac’s predictive analytics, an authentication interview
process and multiple sources of data for validating identities.
Akbank currently receives approximately 200,000 credit card
applications per month, of which 45 percent are declined.
• Uniastrum Bank of Russia has selected the
SmartVista suite of software products from global e-payment
solution provider BPC Banking Technologies as a
technology foundation for its card business. Uniastrum Bank has
selected SmartVista to support its growing card transaction
volumes, to deliver enhanced product offering at ATMs and
electronic funds transfer terminals, and to prepare its entire card
processing infrastructure for future growth. The SmartVista
implementation includes support for debit and credit card issuing
and acquiring functionality, EMV acquiring facilities, and multiple
interfaces to Visa and MasterCard international payment schemes,
sponsor banks’ processing centres, payment gateways and other
banking systems.
• The European Commission has cleared
Citigroup’s proposed £1.13 billion acquisition of
UK card issuer Egg, part of insurance group
Prudential. The combination of Egg and Citigroup’s UK consumer
banking and finance operations will create a financial services
provider with over 4 million customers, and will more than
quadruple Citigroup’s 800,000 customer credit card base in the UK.
Citigroup will gain 2.9 million UK credit cardholders in the Egg
transaction.
• American Express and Qatar
Airways have launched a joint promotion in Bahrain. From
April until September 2007, American Express cardmembers based in
the Kingdom of Bahrain will receive up a discount of up to 15
percent on Qatar Airways flights departing from Bahrain to any of
the airline’s 70 destinations (except Doha).
• Al Salam Bank Bahrain has announced that it
is set to launch Bahrain’s first EMV-compliant smart ATM card later
this year. The bank was incorporated in January 2006 in Bahrain
with capital of BHD120 million ($318 million), and commenced
commercial operations in April 2006. The bank operates under
Islamic principles in accordance with regulatory requirements for
Islamic banks set by the Central Bank of Bahrain.
• Network International, the United Arab
Emirates-headquartered third party processing company and
personalisation bureau for payment cards, has announced the
acquisition of Egypt’s National Processing Company
(NPC). According to Network, in the next five years more than 10
million new Egypt-based customers will be targeted for cards
payments services, offering significant opportunity to
establishments able to deliver back-end processing solutions. The
growth is expected to be fuelled by a boom in retail banking, and
the public sector’s shift to debit payments for salaried employees.
Strategically, by the end of 2007, NPC is expected to have around
17 bank clients on its roster, representing 17 percent to 20
percent of total card-based transactions in a country of 75 million
people.
• In the United Arab Emirates, Dubai First, the
first integrated consumer finance company from government-owned
Dubai Holding, has been launched as a subsidiary of Dubai Financial
and a company under Dubai Group, the global financial investor of
Dubai Holding. Dubai First has been established with an authorised
capital of AED1 billion ($272 billion) and will initially issue
credit cards to consumers in the United Arab Emirates. It will then
extend its offering to include mortgages and other financial
services. Dubai First said its vision is to be a leading player in
consumer finance across the Middle East and North Africa. Earlier
this year Dubai First acquired Dubai Bank’s credit card portfolio
of 80,000 cards and an asset book of AED180 million.
Latin America
• Five Central American
countries – Guatemala, Honduras, El Salvador, Nicaragua and Panama
– are ripe for banking expansion, says US consultancy
InfoAmericas. Central American disposable income
rose by 7 percent in 2005 but penetration of banking services grew
only 4 percent in the same period. InfoAmericas says there is
untapped potential for more aggressive expansion of consumer
credit, particularly credit cards and mortgages, in the region.
• Use of prepaid cards to make money transfers to Latin America
is still very marginal, says a report from US consultancy
Aite Group. The vast majority of remittances from
the US to Latin America are cash-based, Aite says. “Using prepaid
cards for remittances will take a while to become widespread,” Aite
analyst Gwenn Bezard tells CI. “What will likely help is the fact
that Hispanic consumers in the US are increasingly using prepaid
cards for their own personal spending. Using prepaid cards to
initiate money transfers on the web or the phone is an obvious next
step for them.”
• American Express is to issue a co-branded
credit card in Argentina with domestic issuer Tarjeta
Naranja. Cardholders will have a choice of cards
denominated either in pesos or US dollars. Transactions involving
the cards will be accepted and processed on American Express’s
global network, but the cards will be designed, issued and managed
by Tarjeta Naranja. The Argentine issuer will also make
credit-related decisions and be in charge of billing and customer
service.
• Citigroup has completed its acquisition of
Grupo Financiero Uno (GFU) after receiving
regulatory approval in the US and Central America. The acquisition
agreement was announced on 27 October 2006. “GFU is the main credit
card issuer in Central America,” a Citi spokesperson tells CI. “We
will now integrate GFU’s retail banking operations including its
credit cards with Citi’s Central American operations.” Prior to
buying GFU, Citi did not have a strong presence in credit cards in
Central America, apart from a small credit card business in Panama,
the spokesperson says. At the end of September 2006, GFU had 1.1
million credit card accounts and $1.2 billion in credit card
receivables.
• Citi has named Edgardo del Rincón Gutiérrez
as GFU’s CEO. He had previously been general director of Crédito
Familiar for Citi’s Mexican subsidiary Banamex, and director of
Banamex’s credit card business.
• Citi has improved the rewards available to
its Citibank/AAdvantage credit cardholders in Argentina.
Cardholders can now use their air miles to fly LAN Argentina to the
Argentine cities of Córdoba, Mendoza, Bariloche, Iguazú and Buenos
Aires. Also, cardholders now need only 30,000 miles – 10,000 fewer
than previously required – to fly American Airlines from Buenos
Aires to the US, Canada, Mexico and the Caribbean.
• Chile’s Centro de Compensacion Automatizado
(CCA) has signed an agreement with US payments software vendor
Troy Group to process automated clearing house
(ACH) transactions using Troy’s ACH software. CCA provides ACH and
electronic payment services to the main banks in Chile. Troy’s ACH
processing system works on Hewlett-Packard (HP) hardware. “The CCA
deal is the beginning of an effort that Troy and HP have undertaken
to pursue banks, financial institutions and central clearing houses
in Latin America,” Patrick Dirk, Troy’s chairman and CEO, says in a
statement.
• Continental Airlines has introduced five
self-check-in kiosks at Belize’s international airport which allow
travellers to use credit cards to purchase Continental’s in-flight
currency. The US carrier says it is the first airline to offer
self-check-in kiosks in Belize. Continental’s in-flight currency
can be exchanged for headphones and drinks on board. In addition,
the kiosks allow travellers to use credit cards to print their
boarding passes at the airport. Continental has so far installed
1,000 self-check-in kiosks at 165 airports worldwide.
• At the end of 2006, HSBC Mexico had 1 million
Tu Cuenta packaged accountholders. Tu Cuenta features a credit card
offering 5 percent cashback, along with a current account, debit
card and savings account, HSBC says.
• In the Latin American and Caribbean (LAC) region, 27 percent
of firms plan to increase their use of corporate payment cards in
the next 12-18 months, according to a Visa
corporate cash management survey. In 2006, the number of Visa
commercial cards issued in the LAC region increased by 76 percent
to 3.8 million and POS transaction volume involving Visa commercial
cards rose by 40 percent to $5 billion. “LAC is the fastest growing
of all Visa regions worldwide for commercial cards,” Rafael de la
Vega, first vice-president of commercial solutions at Visa
International LAC, tells CI. “This is because LAC is not as mature
a market as Europe or the US. Banks in LAC have realised that there
is more growth potential in commercial cards than in the highly
competitive consumer credit card market.”
• Brazilian insurer Unibanco AIG Seguros &
Previdência has launched a rewards programme for holders
of its Unibanco AIG credit card. Cardholders will be exempt from
annual fees and will be given 70 days to pay for all card purchases
at Brazilian petrol stations. Also, 2 percent of card spending will
be converted into reward points that can be used to pay for the
purchase of Unibanco insurance premiums. Unibanco AIG is a joint
venture between Brazil’s Unibanco and American
International Group.
• Global payment processor TSYS has signed an
extension to its contract with Visa issuer Spira de
México to continue processing its card portfolio. As part
of the agreement, TSYS will continue to provide risk management,
portfolio management and reporting tools to Spira. A provider of
credit cards to the unbanked, Spira was formed in 2004 as a joint
venture between Grupo Financiero Uno and Mexico’s Invex Grupo
Financiero. It originally signed a processing and risk management
contract with TSYS in 2004.
• US e-commerce technology company Saf-T-Pay
has signed an agreement with Peru’s BBVA Banco
Continental to launch its secure e-payment system in Peru.
Saf-T-Pay enables consumers to make online purchases without using
a credit or debit card, by debiting funds from their bank account.
BBVA Banco Continental’s customers can place an order with a
Peruvian or foreign merchant that accepts Saf-T-Pay and then log on
to the bank’s website to authorise payment from their current
account.
• Experian says it is in preliminary talks with
Brazilian credit bureau Serasa, which may lead to
the acquisition of a controlling stake in the entity. “Talks are at
a very early stage and there can be no certainty that they will
lead to a transaction,” Experian says in a statement. Any deal is
expected to be funded from Experian’s existing resources.
North America
• The US lags behind other
countries such as the Philippines in adopting mobile phone-based
remittance services, says consultancy
InfoAmericas. InfoAmericas consultant Tricia Juhn
tells CI: “Provided regulatory barriers are overcome, US remittance
firms will gradually start offering low-cost services enabling
migrants to use cellphones to make remittances.” Juhn also predicts
a growing convergence of low-cost bank accounts and credit cards
offered to migrants with remittance services.
• Driven by small business purchases, health care cards and
payroll cards, the US commercial cards market will grow by 144
percent between 2004 and 2010, says US consultancy Packaged
Facts. Commercial card transactions will be worth $1.2
trillion by 2010, it says.
• Two-thirds (63 percent) of US companies plan to increase their
use of corporate payment cards in the next 12 to 18 months,
according to a Visa corporate cash management
survey.
• US credit card delinquencies remained stable in the fourth
quarter of 2006, according to the American Bankers
Association’s quarterly survey of consumer loans. The
percentage of credit card payments past due was 4.56 percent in the
fourth quarter, compared to 4.57 percent in the third quarter of
2006.
• The US Federal Trade Commission says in its
annual report on the Fair Debt Collection Practices Act that it
received 69,204 debt-collection related complaints from consumers
in 2006. The act prohibits deceptive, unfair or abusive
debt-collection practices. The FTC says that last year it received
more complaints against debt collectors than against any other
industry sector.
• Citi is to cut at least 10,000 staff from its
global workforce this year, says the New York Times. Its consumer
banking and credit card business will bear the brunt of the
lay-offs, with jobs relocating to low-cost countries such as
India.
• Global credit ratings agency Moody’s says
three of the five metrics tracked by its credit card credit
indices, which follow $410 billion of US bank credit card loans
backing securities, deteriorated in January 2007. The charge-off
rate rose to 4.31 percent in January from 3.21 percent a year
earlier, while the delinquency rate rose to 3.91 percent from 3.40
percent in the same period. In January, cardholders repaid 20.03
percent of their credit card debt on average, unchanged from
January 2006’s payment rate of 20.00 percent. The payment rate fell
in December 2006 after experiencing 42 consecutive months of
year-on-year improvement.
• AT&T Park, home of Major League baseball team The San
Francisco Giants, is being fully equipped to accept contactless
cards. In the 2006 season, 100 contactless
Hypercom terminals were installed by
Visa at the stadium. According to Visa, the
installation led to a 49 percent increase in all types of payment
card transactions at the stadium compared to the 2005 season. Now
Visa is adding contactless readers to every permanent POS terminal
at the stadium, taking the total number of installed contactless
readers to 200. The contactless readers accept Amex, Visa and
MasterCard cards.
• JPMorgan Chase’s Chase Card Services unit is
making a special offer to US taxpayers to encourage them to pay
taxes by credit card. United Mileage Plus Visa cardholders will
earn double miles for every dollar when they use their card to pay
their state, property and personal federal income tax. Beyond the
tax season, cardholders can earn extra miles by using their card to
pay automatically for monthly bills such as insurance and
utilities, or by opting for paperless statements.
• The roll-out of contactless cards in the US continues to grow.
Braum’s Ice Cream and Dairy Stores has started
taking Visa Contactless payments at its 276
outlets in Arkansas, Kansas, Missouri, Oklahoma and Texas.
Restaurant chain Taco Bell is to launch a trial of
Visa Contactless cards in the fourth quarter of 2007, with a view
to installing contactless card readers at all US restaurants next
year. In New York, Clearview Cinemas is accepting
Visa Contactless at its 52 movie theatres. Last month, supermarket
co-operative Shoprite said it would accept Visa
Contactless, Amex ExpressPay and MasterCard PayPass at all 4,000
terminals in its 200 stores (see CI 377 p7).
• Chase Card Services has launched its first
proprietary card in Canada. The issuer entered Canada in 2005 when
it acquired retailer Sears Canada’s credit card
portfolio. The new Gold MasterCard is Chase’s third Canadian
offering, following its co-branded Marriott Rewards Platinum Visa
card in Canada last December. Chase says it will introduce “many
other credit card-related products and services” in Canada
soon.
• California-based processor Electronic Clearing
House (Echo) has called off a $142 million merger with
Intuit. The merger agreement signed by the two
companies in December 2006 was cancelled after Echo was called as a
witness for a federal investigation into online gambling. The US
government is investigating several e-wallet providers whose
customers used their online accounts for gambling. Echo has agreed
to give up an estimated $2.3 million in profit from processing
transactions for these e-wallet providers, and no longer provides
services to them, it says.
• Tim Hortons, the US and Canadian donut and
coffee chain, is to start accepting credit cards in the second half
of 2007. A spokesperson did not specify when the chain will accept
debit cards, saying: “We plan to offer Tim Hortons gift cards by
the end of 2007.” Currently, Tim Hortons accepts only cash.
• Retailer TJX says that information from at
least 45.7 million credit and debit cards was stolen by fraudsters
who broke into its data system. The US-based retailer first
disclosed the security breach in January (see CI 376 p7 and CI 374
p7).
• Virgin Mobile USA has withdrawn Stash, a
prepaid Visa debit card that it launched last year. The card was
targeted at the youth market and offered reward points that could
be redeemed against Virgin mobile phone airtime. Virgin Mobile says
that existing cardholders can continue to use their cards until
September 2007, but it is not accepting any new applications for
Stash cards.
• Visa has launched What’s My Score, an
initiative to help students and young adults understand their FICO
credit score (a measure of credit risk developed by anti-fraud
specialist Fair Isaac). It has also set up a website, http://www.whatsmyscore.org/,
which explains credit scores and personal financial management
strategies such as budgeting. Visa says it will give away 5,000
free FICO credit scores to visitors to the site. It also released a
survey showing that only 17 percent of credit and debit cardholders
surveyed knew their FICO score by the time they were 21 years
old.
