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January 31, 2010

Region round-up 31.01.10

US payment network and issuer Discover Financial Services has announced an agreement with BC Card, the South Korean payment network, which will allow BC Card cardholders to utilise the Discover, Diners Club International and Pulse networks for international purchases and cash access outside of Korea.

By Verdict Staff

Asia-Pacific

Strategy and trends

Discover and BC Card form alliance

US payment network and issuer Discover Financial Services has announced an agreement with BC Card, the South Korean payment network, which will allow BC Card cardholders to utilise the Discover, Diners Club International and Pulse networks for international purchases and cash access outside of Korea.

Korean cardholders spent $12.6 billion in 2008 on international expenditure, according to the Korea Tourism Organisation. Founded in 1982, BC Card is the largest domestic payments network in Korea with over 32 percent market share in one of the world’s top credit card markets. BC Card has over 52 million cards in Korea today, issued by 11 financial institutions.

System interoperability is expected to be active later this year, when BC Card members will start issuing cards under this agreement. In the past few years, Discover also has entered into strategic alliances with China UnionPay and JCB.

Technology

HSBC appoints Gemalto to facilitate EMV migration in A-P

Gemalto, the European digital security expert, has been appointed by the HSBC Group, one of the world’s largest banking and financial organisations, to supply a comprehensive end-to-end EMV migration service across 19 markets in the Asia-Pacific region.

Gemalto’s services cover three main areas: provisioning of EMV credit cards, secure personalisation services, and business recovery planning services. Gemalto’s presence in the Asia-Pacific region is facilitated by its multiple sales offices, production and personalisation sites. Fraud has been the key driver of the ongoing migration exercise for credit cards in the Asia-Pacific region. By replacing the traditional magnetic stripe with an EMV version, sensitive customer data can be kept more securely.

Product launch

BoC launches credit card with Taobao, Alipay

Chinese internet shopping website Taobao.com has announced that it has co-operated with its sister online payment company Alipay and Bank of China (BoC) in the launch of a joint-brand credit card.

Taobao.com and Alipay, the two subsidiaries of China’s B2B e-commerce group Alibaba, will issue the joint card so that users can pay directly with their credit cards by providing a password when they want to complete an internet payment via Alipay.

Another feature of the card enables holders to make internet payments over the current CNY500 ($73) limit. The triple financial guarantee mechanism established by Taobao.com, Alipay, and BoC will also ensure the smooth transaction of large sums of money.

According to the performance report published by Taobao.com, by the first half of 2009, the company had gained 145 million registered members, accounting for 43 percent of the total Chinese citizens who use the internet regularly. The launch of the BoC-Taobao credit card is expected to promote and guarantee the development of internet payment and to stimulate the healthy growth of the general e-commerce environment in China.

Technology

mophie announces FeliCa iPhone card payment solution

mophie, a mobile phones accessory provider, has announced a collaboration with Flight System Consulting and Focal Point Computer to develop a mobile payment solution for FeliCa technology. Available in early 2010 in Japan, marketplace FeliCa will allow users to instantly read and write electronic money card information using only the iPhone device and the marketplace FeliCa application.

FeliCa is a contactless IC card technology developed by Sony Corporation that is prevalent in Asian countries, used in approximately 100 million mobile phones and around 120 million transportation and electronic money cards in Japan. mophie’s marketplace FeliCa capitalises on the widespread use of FeliCa technology and delivers solutions for consumer, general business and retail business users who want to process any type of electronic payment in a mobile environment.

The marketplace FeliCa, which includes mophie’s intelligent case hardware and FeliCa transaction processing application, will read and write FeliCa card information to the iPhone device, allowing users to perform multiple mobile payment transactions immediately and on-the go.

Leveraging the RFID technology of the FeliCa cards, users can launch the marketplace app and place any FeliCa card within one inch of the iPhone, and all information is transmitted instantly to the device.

Technology

PayPal goes mobile

Online payment provider PayPal has announced that its new mobile application is now available to mobile users in the Asia-Pacific region. iPhone and Android phone users can download the PayPal application for free via the respective app stores while users of other mobile handsets can access it via their WAP browser.

The PayPal mobile application allows users to quickly and securely send money for personal payments such as paying back money owed to a friend or splitting the cost of a dinner bill. PayPal members can also check their account balances and view their past transaction history while on the go. To ensure mobile payments remain secure, each transaction is confirmed by a password.

Rahul Shinghal, regional mobile manager for PayPal Asia-Pacific, said consumers want fast, secure and convenient methods of conducting their online financial transactions.

“It is clearly evident that the mobile phone is becoming an essential part of daily life. Pay-Pal’s availability on the mobile is a natural development for us as we strive to provide our users here with the most convenient and secure online transaction experience available,” he said.

Strategy and trends

MoneyGram and Bank of China announce alliance

MoneyGram International, the global money transfer company, and Bank of China (BoC), China’s fourth-largest bank by assets, have announced an agreement that will bring MoneyGram money transfer services to BoC’s 10,000 domestic branches on the mainland in the coming years.

The agreement, which more than triples MoneyGram’s presence in this growing remittance market, follows the completion of a six-month pilot that ran in 240 BoC branch locations in Beijing.

MoneyGram will begin rolling out its money transfer services in BoC branches in key provinces across the southern and eastern coast in China, beginning in January, and will continue expanding throughout the bank’s extensive network in the country in 2010 and 2011.

MoneyGram has been providing services in China since 1994 through agents including Industrial & Commercial Bank of China, Bank of Communications, CITIC Bank, China Industrial Bank, Shengjing Bank (former Shengyang Commercial Bank); Shenzhen Ping An Bank and Anshan Bank.

Europe, Middle East, Africa

Technology

MasterCard inControl now available from Barclaycard

UK card issuer Barclaycard and global payment network MasterCard have announced that Barclaycard is to offer the option of MasterCard inControl functionality.

The new functionality provided by MasterCard inControl enables Barclaycard to provide a service which allows them to give customers more control when using their Barclaycard.

Customers can go online and set personalised controls and spend budgets, with SMS alerts or e-mails instantly sent to tell the customer when they have reached a budget or control set on their credit card.

Controls can be set to trigger an alert or a block on transactions made online or abroad.

“Personal security and the ability to keep a tab on your spending is top of mind for our customers,” said Chris Wood, managing director of Barclaycard UK foundation and partnerships.

“With inControl, we are able to utilise MasterCard’s advanced network technology and capabilities to fulfil the demand from cardholders for ever more convenient ways to pay and manage their spending, with added security that you expect from Barclaycard.”

Strategy and trends

Net1 completes enrolment of 1m cardholders in Iraq

Alternative low-payment banking specialist Net1 has announced that its wholly owned subsidiary, Net1 Universal Electronic Technological Solutions (NUETS), which focuses on Africa and the Middle East, has enrolled its one millionth beneficiary in Iraq.

Net1’s Universal Electronic Payment System (UEPS) was implemented in Iraq in August of 2008 and is currently used for the distribution and payment of government grants to war victims, government pension payments to beneficiaries, salary and wage distribution and payments to employees of the two state banks.

In addition, NUETS has received additional orders for 800,000 UEPS-enabled smart cards and 1,500 POS devices for deployment in Iraq.

Net1 expects to deliver the newly-ordered cards over the remainder of fiscal year 2010.

Dr Serge Belamant, chairman and CEO of Net1, said: “The growth in the number of cards issued should proportionally increase the recurring revenues we receive from Iraq.

“We are in the early stages of creating a broad-based electronic transaction processing platform that would allow the citizens of Iraq to not only receive benefits in a secure, cost-efficient manner, but would also create broader access to additional formal financial services.”

Technology

Major smart card market players join forces

European smart card manufacturers Giesecke & Devrient, Oberthur Technologies, chip suppliers Infineon Technologies and INSIDE Contactless have announced they have launched an industry initiative to provide a new security solution for next-generation smart card-based public transport applications.

The solution will build on an open standard now being implemented by the four partner companies, which will eventually be governed by an independent body.

Companies active in the smart card arena – providers of chips, smart cards, application-specific operating software, reader devices and transportation systems – are invited to join the initiative for the advancement of more secure public transportation applications.

The new standard promises to bring a number of key benefits to both public transport agencies and smart card industry players, including higher performance and advanced system security for public transport applications, as well as the availability of multiple sources for chip products.

Through independent testing, the open standard will also provide optimised interoperability to enable simple and fast integration into public transport schemes.

The first emulation chips and transportation smart cards using this standard are scheduled to be available by the end of 2010.

Fraud and security

Gemalto provides secure corrective procedure in Germany

Following its statement of 6 January 2010 related to a Y2K coding error on German payment cards that rendered millions of German payment cards unable to process the 2010 date-change, smart card manufacturer Gemalto has provided a secure procedure to its customers in Germany to address the situation.

Olivier Piou, Gemalto CEO, said: “This is a regrettable incident, and we are doing everything in our power to support our banking customers in resuming full normal operations.

“We worked with them hand-in-hand to create a strong secure software solution that enables our customers to resolve the problem of the concerned cards without reissuing these cards.

“All along we kept at heart to consistently maintain a high level of security for our customers and the German cardholders.”

Gemalto will book a special provision to cover the potential consequences related to this event.

This exceptional charge, of an amount estimated in the range of €6 million ($8 million) to €10 million, will be booked as part of 2009 results, modifying accordingly Gemalto’s expectation of around €180 million.

Strategy and trends

National Bank of Kuwait extends agreement with First Data

First Data, the global technology and payments processor, has announced the conversion of National Bank of Kuwait’s credit card portfolio to First Data’s global issuing and consumer finance processing solution FirstVision.

The conversion follows the renewal of First Data’s processing contract with the bank for an additional five years.

Under the new agreement, First Data will continue to provide a range of processing solutions and fraud management services to the bank for its credit card portfolios.

National Bank of Kuwait has been a First Data client since 2001 and conversion to FirstVision has enabled the bank to expand further beyond its domestic market and offer credit cards in other Gulf Cooperation Council (GCC) countries.

National Bank of Kuwait is one of the largest banks in Kuwait and the Middle East and is the highest-rated regional bank in the Middle East. It has banking operations in almost all GCC countries in addition to major international cities.

First Data has also signed a four-year processing agreement with International Bank of Qatar (IBQ). Under the terms of the agreement, First Data will host IBQ’s entire credit card portfolio on its FirstVision processing solution. The agreement extends First Data’s market reach into Qatar and its support of the electronic payments landscape in the Middle East region.

Latin America

Technology

RegaloCard expands m-payments service in El Salvador, Guatemala

Mobile payment company RegaloCard has announced that its services are now available in Guatemala and El Salvador.

Guatemala’s $4 billion in annual money transfers represents 12 percent of the country’s GDP, and in the coming weeks RegaloCard will announce the retailers in Guatemala who have joined its mobile payments platform.

Meanwhile, in El Salvador, franchise restaurant chain Chili’s has also joined the RegaloCard mobile payments platform. El Salvador’s money transfer market is worth $3.8 billion annually.

RegaloCard is a prepaid gift card that immigrants can buy in the US. The RegaloCard redemption PIN is then delivered instantly via mobile payment technology to selected recipients in Latin America, who can then make purchases at participating retailers.

RegaloCard chairman and CEO Gregory Keough said: “With RegaloCard’s entrance into Guatemala and our current operations in El Salvador, in these markets alone consumers are sending $8 billion per year in money transfers and paying hundreds of millions of dollars in costly money transfer fees which can now be totally avoided.

“While the RegaloCard service is free, it is also available instantly, and for the first time the sender can send as little as $10 and control how that money is spent.”

Technology

Oberthur moves into Colombia for EMV migration

European smart card solution provider Oberthur has acquired a service centre in Bogota, Colombia, in order to position itself as a provider for Colombia’s EMV migration programme.

Oberthur formed a partnership with local technology vendor Dyetron in June 2009 to establish a service centre that could assist with Colombia’s migration to EMV, which was scheduled to start during early 2010.

Colombia’s financial supervisory body Superintendencia Financiera had imposed a 1 January 2010 deadline for issuers and merchants to migrate to EMV payment.

After this deadline, the liability over fraudulent transaction rests solely on the party that hasn’t upgraded to EMV, whether it be the issuer or the merchant.

Strategy and trends

Wells Fargo expands remittance service in Latin America

US banking giant Wells Fargo has expanded its ExpressSend remittance services to Honduras, Nicaragua, the Dominican Republic, Colombia, Ecuador, Peru, Bolivia, and Argentina.

The move is an attempt to tap into the large Hispanic consumer segment in the US who regularly remit funds to their home countries.

Additionally, Wells Fargo has added Telecomunicaciones de Mexico (Telecomm Telegrafos) – one of the largest telecommunications companies in Mexico – as a new paying agent.

Customers can now remit to an additional 1,560 new payout locations in Mexico, bringing the total payout locations in Mexico to more than 5,500 locations.

Mergers and acquisitions

Bradesco enters Mexico with Ibi acquisition

Banco Bradesco, Brazil’s second-largest private-sector bank, is to buy Mexican bank Ibi Mexico for an undisclosed sum, marking its first international foray in retail banking as it seeks to take advantage of rising credit demand in the country.

Bradesco has signed a memorandum of understanding with Cofra Holding, Ibi’s parent company, and the transaction is expected to be completed by the end of March.

The acquisition of Ibi Mexico is an extension of an agreement between Bradesco and Cofra signed in 2009, under which Bradesco bought Ibi’s operations in Brazil for BRL1.4 billion ($766.7 million).

Ibi operates mainly inside retail chain C&A’s stores, offering consumers credit card and consumer finance services. Ibi Mexico has a loan book totalling MXP1.3 billion ($100 million) and more than one million credit card customers.

Strategy and trends

Banco Galicia to invest in IT and branch networks

Argentina’s Banco Galicia is to invest AXP200 million ($53 million) in its IT systems and upgrading its existing branch and ATM networks. Banco Galicia operates 327 branches and 670 ATMs. The move is part of the bank’s plan to grow both private sector lending and deposits between 20 and 25 percent during 2010.

Banco Galicia also wants to create further synergies with consumer finance company Compañía Financiera Argentina, which it acquired in June 2009 in order to complement its existing credit card business, Tarjetas Regionales.

Strategy and trends

Santander to launch Brazilian card venture

Banco Santander’s Brazilian unit is to launch a venture to process credit card transactions, in a bid to take on the duopoly of VisaNet (now known as Cielo) and MasterCard-affiliated Redecard, which have a combined market share of 90 percent.

Along with Brazilian technology vendor GetNet, Santander plans to offer clearing and processing of debit and credit card transactions, Santander Brasil said in a regulatory filing. Details of the venture as well as a business plan will be unveiled during the first quarter, the filing said.

The move comes as regulators and government agencies in Brazil move to increase competition in the $190 billion credit card industry. Brazilian antitrust authorities and the central bank are recommending a series of measures aimed at increasing competition and transparency in the country’s credit card industry.

Strategy and trends

HSBC Mexico unit predicts lending growth

HSBC’s Mexican unit intends to grow its loan portfolio over the next three years as the country’s economy comes out of recession, although the bank’s small business and commercial loan portfolios show the most promise currently.

Mexico’s GDP is expected to grow by 3.5 percent in 2010 after contracting an estimated 7 percent in 2009.

Parent company HSBC injected around $700 million of capital into its Mexican subsidiary in December 2009 to fund its growth, including investments in its branch and ATM networks.

The bank has remodelled or relocated about 345 of its 1,200 branches and plans to do the same with the remaining 855 branches by the end of 2012, investing about $220 million.

It also plans additional investments to replace older machines in its network of 6,300 ATMs.

North America

Product launch

Visa Canada launches Olympic-themed cards

Visa Canada has launched Olympic Games-themed Visa prepaid cards, to be issued by Canadian prepaid card specialists Peoples Trust and subsidiary InComm.

Available in two denominations, C$50 ($47) and C$100, the cards can be used worldwide at any merchant that accepts Visa.

Visa prepaid cards issued by Peoples Trust and InComm are currently available at around 3,500 retail locations across Canada, including Shoppers Drug Mart and Money Mart.

A worldwide sponsor of the Games, Visa is the only card accepted at official Olympic and Paralympic venues.

“Visa is continuously looking for new opportunities to provide our customers with innovative payment solutions,” said Brian Triplett, head of global prepaid products at Visa Inc.

“Canadians can shop securely and conveniently using Peoples Trust and InComm Visa prepaid cards at retailers – in person, online or travelling outside of Canada.”

Product launch

JitterBook selects Parago to provide Visa prepaid cards to students

US online retailer JitterBook has announced a deal with reward programme specialist Parago in which students can now trade in books and get paid on Parago’s Visa prepaid cards.

Parago supports a range of sales, channel, employee and consumer incentives for companies such as Staples, Ace Hardware, General Electric, McAfee and Hitachi.

“JitterBook is based on the foundation of simplifying the way students buy and sell textbooks,” stated Eric Henze, CEO of JitterBook.

“Every point of interaction is designed around the students: easy online, year-round trade-ins, free shipping – and now students can receive their funds directly onto a Visa prepaid card.

“This is a tremendous convenience for students, enabling them to immediately access funds, as many of them do not have easy access to banking facilities on campus.”

Strategy and trends

TSYS and US Bank expand relationship

Outsourced payment service provider TSYS has signed a new long-term agreement with US Bank.

As part of the agreement, TSYS will continue to support the bank’s commercial card payment services, as well as becoming its exclusive partner in providing card processing services for the bank’s consumer-directed health care (CDH) benefit cards, issued by its Healthcare Payment Solutions business line.

The CDH agreement will allow US Bank cardholders to eventually access multiple spending accounts, cash and lines of credit from a single card. Terms of the multi-year agreement were not released.

“Now, more than ever, consumers need to control and manage how their health care dollars are spent. We are confident that TSYS is the right choice for our business, as we continue to expand our suite of innovative, card-based healthcare payment options to those consumers,” said Ralph Bernstein, senior vice-president of US Bank Healthcare Payment Solutions.

Technology

Dynamic Card Solutions’ instant issue technology selected by Glacier

Dynamic Card Solutions (DCS), a US provider of instant issuance and PIN selection solutions for banks, credit unions and retailers, has announced it is to work with US bank Glacier Bancorp.

DCS is working with Glacier Bancorp, a holding company of 11 banks and 94 branches in Montana, Idaho, Wyoming, Colorado, Utah and Washington states, to implement a card programme that instantly issues unembossed Visa debit cards at the branch level.

Glacier Bancorp plans to begin rolling out DCS’ CardWizard software and FCP 20/20 unembossed card printers to two of its banks, Mountain West Bank, which has 24 branches, and Glacier Bank, with 15 branches.

Mountain West Bank and Glacier Bank will now be able to offer customers an instantly-issued unembossed debit card in their branches which can then be used immediately.

Strategy and trends

SunTrust selects MasterCard for debit card programmes

US banking group SunTrust Banks and global payment network MasterCard have announced that SunTrust will convert the company’s debit card programmes to MasterCard.

After the conversion to MasterCard-branded debit cards, which is expected to begin late this year, SunTrust will issue approximately five million MasterCard debit cards that can be used everywhere MasterCard debit cards are accepted, including ATMs.

In addition to MasterCard debit cards, SunTrust will expand its current commercial card offering in the future to include MasterCard-branded commercial credit cards.

SunTrust will continue to offer Visa branded cards as an option for various consumer and commercial credit products.

SunTrust Banks, headquar-tered in Atlanta, is one of the largest banking organisations in the US, serving consumer, commercial, corporate and institutional clients.

As of 30 September 2009, SunTrust had total assets of $172.7 billion and total deposits of $119.3 billion.

Its primary businesses include deposit, credit, trust and investment services.

Product launch

American Express and Lowe’s launch small business credit card

American Express Open (Amex), the US issuer of payment card products for small business owners, and Lowe’s Companies, the world’s second-largest home improvement retailer, have announced the launch of a new credit card for business owners.

The Lowe’s Business Rewards card from Amex is a business credit card that enables business owners to earn points on virtually all card purchases.

This is the first rewards programme offered to Lowe’s small business credit customers.

The new card provides a tiered structure for earning rewards points.

Cardmembers earn one reward point for every eligible dollar spent on the card, double rewards points on every eligible dollar spent at Lowe’s, and triple rewards points on every eligible dollar spent on restaurant purchases, office supplies and wireless bills.

Cardmembers can redeem points for a variety of valuable business credit card rewards, including Lowe’s or Amex gift cards.

There is no cap on the amount of business rewards a cardmember can earn, and there is no expiration date to redeem the points.

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