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October 6, 2007updated 24 Jan 2022 7:41am

Region round-up

The new legislation requires foreign banks to establish bankcard data centres, which will be used to submit data to the PBOC, before they can issue cards independently, but most banks currently do not have a centre on the mainland. Chinas Shenzhen Ping An Bank has launched its first credit card, tapping into the sales network of its parent company, Ping An Insurance

By Verdict Staff

Asia-Pacific

• Foreign banks with locally incorporated subsidiaries in China may not be able to issue renminbi-denominated bankcards as soon as planned, due to new regulations from the People’s Bank of China (PBOC), China’s central bank. The new legislation requires foreign banks to establish bankcard data centres, which will be used to submit data to the PBOC, before they can issue cards independently, but most banks currently do not have a centre on the mainland.

• China’s Shenzhen Ping An Bank has launched its first credit card, tapping into the sales network of its parent company, Ping An Insurance. The latter’s 40 million life insurance customers and 2 million corporate clients will be a key target market. The card is bundled with family property insurance and aviation accident insurance. In the future, other financial services such as securities, trust and assets management will be offered through the card. The bank has also partnered with Lakala Billing Service, China’s largest electronic billing services company, to give access to the Lakala’s payment terminals in more than 5,000 convenience stores in Shanghai.

• A report by global consultancy McKinsey expects revenues from credit cards for Chinese banks to increase to more than $5 billion by 2010 from $500 million in 2006. The number of credit cards issued in China has increased 13 times to 40 million in the last two years, according to McKinsey.

• China’s Guangdong Development Bank announced that it has issued more than 5 million credit cards, up from 4 million in February this year. The bank was the first in China to issue credit cards.

• The Bank of East Asia has launched a prepaid travel card together with Visa International. The BEA Traveller’s Card is Hong Kong’s first foreign currency Visa travel prepaid card. It can be preloaded with US dollars and a variety of other currencies.

• India’s Kingfisher Airlines has introduced a corporate card targeted at SMEs. Launched in partnership with American Express, the card will offer India-based companies an 8 percent rebate on the airline’s flights. It will also offer cardholders a membership upgrade within the Kingfisher Airlines frequent flyer programme.

Panin Bank, Indonesia’s fifth-largest private bank, has launched its first credit card in collaboration with Visa International. The Platinum Visa Card is expected to attract at least 20,000 cardholders. The bank claims that it signed up 2,000 cardholders within two weeks of launch and is confident that its target will be achieved.

• Bank card network China UnionPay’s cards will be accepted by Malaysia’s Maybank for a year. The peninsula’s largest bank will open up its merchant network – 1,000 merchants at destinations and locations where Chinese nationals are likely to visit will accept the card. China UnionPay cardholders will also be able to withdraw cash from the bank’s ATMs. The bank’s senior management expect about 600,000 Chinese tourists to visit Malaysia this year and spend $400 million in the country.

Visa International and software specialist Welcome Real-Time have signed a two-year partnership that will allow retailers to deliver targeted promotions and rewards to holders of Visa payWave-enabled cards in the Asia-Pacific based on amount and frequency of spend. There are more than 3.2 million Visa contactless cards in Malaysia, Singapore, Korea and Taiwan. Visa will have exclusive rights to use Welcome Real-Time’s promotional marketing platform for all card- or mobile-based Visa payWave transactions conducted in the region.

Maybank Singapore is offering balance transfer rates of 0 percent per annum for up to 12 months and 12 percent per annum thereafter to customers who transfer a minimum of S$10,000 ($6,763). Customers will pay a processing fee of 3.75 percent in order to receive the 0 percent rate for 12 months and 2.5 percent for 12 months. Maybank aims to double the total amount of funds transferred, to S$20 million, with the new promotion, which runs until 28 February 2008.

Lakala Billing Service, China’s largest electronic billing services company, has installed China UnionPay payment terminals in 395 chain convenience stores in Shanghai. The terminal allows cardholders to pay their bills in the stores.

• Singaporeans with net personal assets exceeding S$2 million may soon receive a higher spending limit on their credit cards. The Monetary Authority of Singapore is proposing to exempt high net worth individuals from the current credit limit of twice monthly salary as part of its process to update credit card rules. The central bank believes people in this category do not require the same level of protection under the government’s social policy rules on credit.

• In Taiwan, Chinatrust Commercial Bank has announced that it will roll out credit chips in mobile phones in collaboration with telecoms operator Chunghwa Telecom. There will be a credit ceiling limit of NT$3,000 ($92) for each transaction. Stores offering credit phone shopping in Taiwan include convenience store chains such as 7-Eleven and Watsons and hypermarkets such as Carrefour. Other banks in Taiwan such as Taishin, Union and Fubon are also in the midst of running pilot programmes of this payment method.

• Taiwan’s Chinatrust Financial Holding, the parent company of Chinatrust Commercial Bank, will jointly establish a credit card company in Thailand with Government Savings Bank. The company, possibly to be named Sawasdy Card Company, will be operational by next year. There are reportedly 11 million credit cards in Thailand, one-third of the total 33 million credit cards in Taiwan. Through its newly established card company, Chinatrust aims to have a market share of 6 percent in five years and foresees that card numbers in Thailand will triple to 30 million within ten years.

Mitsubishi UFJ Financial Group (MUFG) will be strengthening the group’s credit card business through an alliance involving credit card company Mitsubishi UFJ Nicos, consumer credit company Jaccs and the Bank of Tokyo-Mitsubishi UFJ. Mitsubishi UFJ Nicos will transfer its car loan, shopping credit and other instalment sales businesses to Jaccs and retain its credit card business. Mitsubishi UFJ Nicos will eventually be wholly owned by MUFG in an attempt to tap into economies of scale in restructuring efforts of the cards business.

• European smart card and solution provider Innova Card has opened an office in Hong Kong in order to increase its presence in the rapidly growing security markets across Asia.

 

Europe, Middle East, Africa

• French telecom operator Orange and BNP Paribas subsidiary Cetelem have joined forces to launch a range of co-branded credit cards. Both companies will market the first product of their agreement, a co-branded Visa card designed for teenagers, in early 2008. The agreement will also lead to the first multi-service card for daily use in telecommunications. Card issuing and customer contract management will be handled by a joint company, Orange – BNP Paribas Services, which is currently being created, subject to approval from authorities. This venture may also potentially spill over into other areas of development, as BNP Paribas and Orange are both participants in the working groups on mobile contactless payment.

• Kazakhstan’s Kazkommertsbank has launched the American Express Gold Card and Platinum Card in Kazakhstan. The new cards are available in Kazakh tenge or US dollar denominations. Kazkommertsbank is the exclusive issuer of American Express cards in the country and is responsible for signing new merchants in Kazakhstan to accept American Express cards. Established in 1990, Kazkommertsbank is the largest private, full-service bank in Kazakhstan, measured by total assets, lending portfolio, net profit and total deposits. As at 31 December 2005, the bank had 615,000 cards in issue.

Saudi Hollandi Bank (SHB) has launched a new smart card billed as the first lifelong credit card for its customers. The card’s package includes a free MP3 player for the cardholder, who automatically enters a draw for a round-trip two-night stay in Dubai with flights aboard Emirates Airlines. Statistics released by the Saudi Arabian Monetary Agency show that credit card debt rose to $2.1 billion in the first quarter of 2007 from $1.25 billion during the same period last year, while credit card lending surged by around 160 percent from 2003 to September 2006.

• Global payment processor First Data has signed a contract to provide card processing services to Russia’s Moskommertsbank in support of its MasterCard card portfolio. Moskommertsbank is a subsidiary of Kazkommertsbank, the largest bank by capital in Kazakhstan.

• UK card issuer Halifax has announced the launch of the Purchase Card, featuring a 0 percent introductory offer on purchases for 15 months. The card will be available in all Halifax and Bank of Scotland branches from October 2007. It features a 0 percent deal on balance transfers for six months, although a 3 percent transfer fee applies, as well as a typical APR of 14.9 percent. It has 59 days interest-free credit, but this does not apply to cash advances or cheques.

Electronic Document Centre (EDC), a subsidiary of Emirates Post, has been certified to produce new smart cards that will soon replace magnetic stripe cards for major bank credit cards, meeting the deadline set by Visa and MasterCard for phasing out old technology. The EDC launched its card centre in 2005, which has been hailed as one of the biggest and most technologically advanced in the Middle East region. Located in Dubai, the company already produces health, insurance, identity and loyalty cards.

Standard Chartered Bank has launched a new smart credit card in Botswana, complete with additional features and benefits such as a travel privileges programme, free funeral cover and lost card replacement cover. Privileges include dining and shopping discounts, as well as cash and mobile phone vouchers. Up to three free supplementary credit cards are available for the cardholder’s immediate family, with no extra joining fee.

Swift Global, a Kenyan internet service provider, has teamed up with global technology company Business Phone to launch a mobile phone that enables debit and credit cardholders to transfer money. As well as providing regular mobile phone functions, the Biashara phone offers users the security and functionality of a POS terminal. The phone will be targeted at both corporate businesses and small or independent traders who need to conduct financial transactions quickly and securely. “Although traditionally Kenya has a cash culture, we are now following the global trend of moving from cash towards a card-based society. After South Africa, Kenya is the fastest-growing credit card market in Africa,” said Mohamed Jeneby, the managing director of Swift Global.

• Following the resolution of the Visa International Central Europe, Middle East and Africa (CEMEA) board of directors, Azerbaijan’s Unibank has been licensed as a Visa International acquirer, the first private bank and only the third bank in Azerbaijan to achieve this status. Following completion of the certification, Unibank can enter into POS terminal location agreements independently with mercantile businesses. Unibank started co-operation with Visa International and became an associate member in 2003 and a principal member in 2006. The bank issued 23,355 Visa International and MasterCard cards in the first half of 2007.

• London newspaper The Evening Standard has unveiled a prepaid contactless card that can be topped up on the internet. The Eros Card can be used as a substitute for cash when purchasing the paper by tapping the card on electronic pads at newsstands. The new system, which requires readers to register on the paper’s website, will also be used for advertising and marketing information, providing in-depth knowledge of how many people are buying the paper and when, as well as customer rewards, according to Andrew Mullins, managing director of the newspaper.

Capital One is offering its customers a new rewards package in the UK through its Cashback with World MasterCard credit card. The card offers 4 percent cashback on all purchases for the first three months and 1 percent cashback on all purchases thereafter. It has a 15.9 percent typical APR variable. In addition to the cashback rate, customers can take advantage of a variety of World MasterCard travel benefits including free travel insurance and travel assistance.

Oesterreichische Nationalbank (OeNB), the central bank of Austria, and Inform Lykos have signed an agreement for the sale to Inform Lykos of a majority shareholding in Austria Card, which is a wholly owned subsidiary of OeNB. Inform Lykos will acquire 85 percent of the share capital of Austria Card, while OeNB will retain a 15 percent ownership. Oesterreichische Nationalbank is aiming to become the largest payment card service provider for the emerging Central and Eastern Europe region. The company produces more than 75 million cards per year.

 

• UK payments association APACS has announced that American Express and European merchant acquirer Elavon Merchant Services are to become members of its Card Payments Group. Membership of the group now consists of the 17 largest card issuers and acquirers in the UK, alongside a representative of the community of smaller banks and building societies that issue cards.

 

Latin America

• Wireless POS terminals are a big driver of payment solutions provider VeriFone’s sales in Latin America, Fernando Lopez, VeriFone’s vice-president/general manager, Latin America and Caribbean (LAC), tells CI. In its third quarter to 31 July 2007, VeriFone’s Latin American revenues rose 78 percent year-on-year to $42.7 million. “There’s a demand for portable pay-at-table units in [LAC] restaurants, due to fears about card-skimming,” Lopez says. VeriFone has 20,000 portable pay-at-table terminals deployed in Mexico alone.

• The popularity of payroll cards has forced Latin American banks to roll out POS terminals to small merchants in suburban areas, Fernando Lopez, VeriFone’s vice-president/general manager, Latin America and Caribbean, tells CI. “Increasingly, employers are issuing prepaid payroll cards instead of paying staff with cash,” he says. “Some Latin American governments insist that employers pay via payroll cards.” Banks have realised that payroll cardholders are typically unbanked people who are not used to making card payments, Lopez says. To encourage them to use payroll cards at the POS, rather than just get cash from ATMs, banks have been putting terminals in convenience stores. In Mexico, the number of POS terminals has doubled from 350,000 two years ago, due to a government programme to encourage firms to issue payroll cards.

• Payments software vendor ACI Worldwide says its revenues in the Americas, excluding the US, in its third quarter to 30 June 2007 rose to $19.6 million from $17.7 million in the third quarter of 2006. US revenues rose to $33 million from $29.3 million in that quarter. During the third quarter of 2007, ACI signed a contract with an unnamed Brazilian bank for its ACI Proactive Risk Manager and ACI Automated Case Management risk and payment management software.

• Argentina’s Banco Galicia has spent ARS18 million ($5.7 million) on 380 new ATMs from US vendor NCR. The bank is also deploying NCR’s ATM incident detection and prevention technology. Banco Galicia currently has 600 ATMs and 549 self-service deposit terminals.

CSF International (CSFi), a Florida-based payments software vendor, is to supply a debit and ATM card management system to RBTT Financial Group. The Antigua-based bank will install the CSFi system at its operations centre in Trinidad and Tobago. The system will enable 11 RBTT-owned banks across the southern Caribbean to maintain their debit and ATM cardholder files. CSFi says it expects RBTT will also install the CSFi card management system at its RBTT Bank Jamaica subsidiary to support several other RBTT-owned banks in the northern Caribbean.

Banco Galicia says its net income from services in the second quarter to 30 June 2007 was boosted by credit and debit card fees, due to a significant rise in card transactions. Total net income from services rose by 41.9 percent to ARS223.1 million, including ARS157.4 million in card-related fees, from ARS157.2 million in the second quarter of 2006. Card-related fees in that quarter totalled ARS110.6 million.

Banamex, Citigroup’s Mexican subsidiary, is to install US-based Transoft International’s OptiCash ATM and branch cash management software. Transoft says Banamex will also use OptiCash to support other Citigroup-owned Latin American banks’ ATM and branch cash requirements. OptiCash enables banks to automate their cash ordering, monitoring and forecasting.

Banco de Mexico, the country’s central bank, estimates that electronic transfers accounted for 93 percent of total money remittances from the US to Mexico in 2006, up from 53 percent in 1996 and 85.8 percent in 2003. Mexicans living in the US sent $23.1 billion back home in 2006.

• A Banco Itaú study says overall Brazilian credit card transactions totalled BRL15 billion ($8.18 billion) in September 2007, down from BRL15.4 billion in August 2007 but up 19.8 percent from BRL12.5 billion a year earlier. Total Brazilian credit card transactions in the first nine months of 2007 were BRL128.5 billion. In September 2007, there were 199 million credit card transactions, with an average value of BRL76, Itaú says.

Banco Itaú says that in 2007, instalment plan purchases by credit card in Brazil will overtake one-off credit card purchases for the first time. Instalment plan purchases by credit card will account for 51.9 percent of all credit card purchases in Brazil this year, Itaú credit card marketing director Fernando Chacon said.

• Bermuda-based e-commerce processor First Atlantic Commerce has been certified for Puerto Rico-based Evertec’s internet payment processing platform. First Atlantic says the certification means that it can settle transactions to all merchant-acquiring banks that use Evertec’s platform. The deal is expected to help First Atlantic to win new contacts from Latin American and Caribbean acquirers. Evertec is the transaction processing subsidiary of Popular, the parent company of Puerto Rico’s Banco Popular.

Banco do Brasil says its credit card outstandings rose by 26.3 percent year-on-year to BRL22.4 billion ($12.2 billion) in the first half of 2007. The bank currently has 15.7 million credit cards in issue.

• US-based processor Global Payments says its US money transfer business, which solely handles remittances to Latin America, had revenues of $29.6 million in its first quarter to 31 August 2007. In the year-ago quarter, revenues were $29.3 million.

Global Technologies Investment, a US-based m-payments software developer, has set up a new company, Payment By Cell. It will market Global Technologies’ mobile banking and mobile POS technology primarily in Latin America. Payment By Cell is looking for partnerships with Latin American banks, credit card companies and mobile operators. Global Technologies’ software enables merchants whose business is too small to justify installing a POS system to receive card payments via mobile phones.

Visa held a seminar in Mexico City on 20 September on how prepaid cards can help public sector bodies save costs. According to a Visa survey of Mexican government departments, there is a high level of ignorance in the public sector about how government-issued prepaid cards can be used to replace cheque payments. Speaking at the seminar, Van Elder Espinal Martínez, director general of the Dominican Republic’s Social Subsidies Administration, said his organisation issued 216,000 Visa Solidaridad prepaid cards in 2004. The success of the programme has prompted the government to start issuing Solidaridad cards to people on other welfare programmes, Martínez said. By the end of 2007, 300,000 Solidaridad cards will be in issue. 

 

North America

• The US Justice Department is investigating interchange fees that MasterCard, Visa and their member banks charge retailers for processing transactions, news service Bloomberg quotes Thomas Barnett, head of the department’s antitrust division, as telling Congress on 25 September. Barnett revealed the enquiry when asked at a Congressional hearing if the department is investigating merchants’ complaints that alleged collusion by MasterCard and Visa and their member banks forces retailers to pay higher prices for transactions.

• US credit card loan delinquencies fell slightly in the second quarter of 2007, the American Bankers Association (ABA) says. Late payments on credit cards affected 4.39 percent of all accounts in the second quarter of 2007, compared to 4.41 percent in the first quarter of 2007, on a seasonally adjusted basis. The ABA report defines late payments as 30 days or more overdue.

• US revolving consumer credit rose by an annual rate of 6.6 percent in July 2007, following a 6.4 percent rise in June 2007, the Federal Reserve’s monthly consumer credit survey says. Revolving credit including credit card debt totalled $907.4 billion in July 2007, compared to $902.4 billion in June 2007.

• The average US ATM surcharge has risen to $1.78 from $1.64 a year ago, Bankrate.com says. The financial services comparison company estimates that Americans will pay $4.4 billion in ATM fees in 2007. In September 2007, Bank of America said it had increased surcharges at most of its ATMs to $3 from $2. Surcharges are fees charged by an ATM owner to customers of other banks.

• North Carolina-based CommunityOne Bank has sold its credit card portfolio to Elan Financial Services, a division of US Bancorp. Elan provides outsourced services to other financial institutions.

Barclays’ US subsidiary has teamed up with satellite TV broadcaster DirecTV to launch the DirecTV Rewards Visa credit card. The card offers so-called ‘once-in-a-lifetime experience’ rewards such as all-inclusive trip for two to the Sundance Film Festival. Cardholders can also redeem points in exchange for DirecTV programming content.

Capital One Canada has launched a No Hassles MasterCard Rewards credit card. The no-annual-fee card offers either cashback or rewards points that never expire. To use points for travel, customers book their tickets via the sales channel of their choice using their Capital One card. They then tell Capital One they wish to use points to pay for their travel and get the cost of their ticket refunded to their card account on their next statement.

Citigroup and travel website Expedia.com have launched the co-branded Citi PremierPass/Expedia.com credit card. Cardholders earn points for everyday purchases made with the card, additional points for eligible travel booked on Expedia.com, and points for the miles they fly on any airline.

Discover Financial Services posted a pre-tax income of $387 million in the US for the third quarter to 31 August 2007, unchanged from the 2006 period. Its US credit card delinquency rate of 3.16 percent was 15 basis points lower than last year and 19 basis points higher than in the second quarter of 2007. Discover’s managed US credit card net charge-off rate of 3.70 percent was up 15 basis points from the third quarter of 2006, but down 30 basis points from the second quarter of 2007.

• Brokerage firm Fidelity Investments has launched its first checking account in the US. MySmartCash comes with a debit card that offers free ATM withdrawals and a credit card that has no annual fee.

GoUrban, an e-commerce website for African-Americans, has launched a prepaid MasterCard card. The reloadable card is issued by US-based MetaBank and payment technology is provided by ESafe Cards. The GoUrban.net cards can be loaded with up to $2,500 and accept payroll direct deposit. Details of each transaction are sent to the cardholder’s mobile phone.

• The Office of Thrift Supervision has closed Alpharetta, Georgia-based NetBank as a result of mortgage-related losses the online bank sustained in 2006 and 2007. NetBank was taken into receivership on 28 September by the Federal Deposit Insurance Corp. ING has agreed to acquire $1.5 billion of NetBank’s $2.3 billion deposits as well as $724 million of NetBank’s assets.

RBC Royal Bank is to deploy Visa payWave contactless technology on its chip and PIN credit cards. The bank’s customers will begin receiving chip and PIN credit cards with the Visa payWave feature in October. Cardholders will be able to use the cards in the six-month chip and PIN market trial, which will start in Kitchener-Waterloo, Ontario this autumn.

GE Money is to issue a private-label credit card for upscale north-eastern US department store chain Lord & Taylor. The card will be issued to the retailer’s existing 1.5 million store cardholders and will also be marketed to new customers.

• US retailer Target says it is considering selling its $7 billion credit card portfolio, which includes a Visa card and a private-label card. It has hired Goldman Sachs to help it evaluate options for its credit card business. (See ”Eyes on the prize”)

• Canadian federal and Albertan provincial privacy commissioners say US-based retailer TJX’s data security breach was foreseeable and preventable. Their investigation found TJX broke federal and Albertan privacy laws designed to regulate how businesses store consumer information. “TJX collected too much personal information, kept it too long and relied on weak encryption technology to protect it,” Federal Privacy Commissioner Jennifer Stoddart says.

TJX and merchant acquirer Fifth Third Bancorp have agreed to settle class action lawsuits brought on behalf of US, Puerto Rican and Canadian customers who were victims of the TJX data breach. The retailer did not disclose the cost of the proposed settlement.

Visa USA has launched Visa Micro Tag, a contactless payment device for use at Visa payWave-enabled POS terminals. The key fob contains an embedded contactless chip, and can be offered to Visa cardholders as a companion device to an existing credit, debit or prepaid card.

• Canadian debit card scheme Interac reports the processing of the country’s first chip and PIN debit card transaction at POS. In the transaction, which was processed by TD Merchant Services, a Bank of Montreal-issued chip and PIN debit card was used at a Toronto store on 12 September.

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