Card
acceptance

Mashreq Bank and China UnionPay
team up in UAE

Mashreq Bank of the United Arab
Emirates (UAE) has signed a strategic partnership with Chinese
domestic card network China UnionPay (CUP) which will allow CUP
customers to use their cards at Mashreq outlets in the UAE.

The move makes Mashreq the first national bank
in the Gulf Cooperation Council states to accept CUP cards in order
to enable the growing number of Chinese tourists to use their cards
freely in the country at Mashreq ATMs and at point of sales
terminals.

This is the first phase of cooperation between
the two financial institutions – a second phase will allow the
issuance of Mashreq-CUP cards in the UAE.

“At the moment we welcome about 350,000
visitors from China to the UAE every year. We are also home to
about 200,000 Chinese expatriates,” said Abdul Aziz Al Ghurair, CEO
of Mashreq Bank.

“Many of those visitors and residents will be
UnionPay card holders, and that is why we have entered into this
partnership with CUP.”

According to recent estimates, more than 60
percent of Chinese expatriates in the UAE are salaried, and nearly
all hold a CUP card.

ATM network management

First Data selected for
Lithuanian ATM management

Three banks in Lithuania have now
selected global payment processor First Data to manage and maintain
their joint ATM network.

ATMs of Ukio Bankaswill will join the network
of Nordea Bank Lietuva and Danske Bankas. According to First Data,
the new agreement will enable all three banks to reduce their ATM
management costs and provide greater convenience to their
customers, who will be able to withdraw cash at ATM locations in
towns and cities across Lithuania.

The joint network also presents advantages to
the customers of the three banks, as they will gain access to a
broader network of ATM locations, and they will be able to use the
same network of ATMs to access card services and withdraw
money.

Currently, the joint network of Nordea Bank
Lietuva and Danske Bankas is comprised of more than 100 ATMs. The
network will grow to almost 150 ATMs in the coming months with the
addition of Ukio Bankas ATMs. All ATMs will be branded with red and
blue stripes and carry the logos of all three banks.

There are plans to expand the network to
include approximately 200 ATMs by the end of 2010.

“This is the first agreement of its kind in
the Baltic states and one of the best examples of how the
implementation of a joint technology solution can help banks reduce
overheads in the current economic climate and deliver additional
value to their customers,” said Zanda Brivule, general manager of
First Data in Lithuania.

“Connecting and leveraging networks in this
way typically allows banks to save substantially on their ATM
maintenance costs.”

Card launch

FNB launches World Cup credit
and debit cards in Botswana

First National Bank (FNB) of
Botswana has launched a range of debit and credit cards to tie in
with the 2010 FIFA World Cup football tournament which is taking
place in South Africa.

FNB customers will be able to request their
existing cards be replaced with the limited edition FIFA-branded
credit and debit cards.

FNB customers using FNB points of sale or FNB
ATMs will also be able to accumulate reward points that could win
them tickets for the Confederations Cup soccer tournament this year
and the World Cup in 2010.

Re-pricing measures

Egg loses interest

UK credit card issuer and Citi
subsidiary Egg Money is to scrap the credit interest it currently
gives credit cardholders, according to a report in The
Guardian.

The change, scheduled to take place from 15
May, will mean that the company’s 150,000 MasterCard customers will
no longer receive 4 percent interest on credit balances, and is to
be introduced alongside an increase in cash withdrawal charges.

Currently, the minimum charge for taking out
cash with the card is £3 ($4.36) or 3 percent, but this is set to
rise to £5 from 28 May, coming only months after Egg raised
interest rates on some of its cards by up to 7 percent.

The Egg Visa and Egg Money cards both charge
16.9 percent on balances, although Egg offers its Egg Money
cardholders one percent cashback on all purchases (up to a maximum
rebate of £200 per year).

Security and fraud

Payment standards organisation
founded

Three payment terminal
manufacturers, Hypercom, Ingenico and Verifone, have launched a
non-profit organisation aimed at implementing payment security
standards.

The Secure POS Vendor Alliance (SPVA) is a
non-profit business organisation tasked with implementing common
payment security standards among vendors of secure point of sale
devices used by retailers, merchant acquirers and cardholders.

One of the primary objectives of the SPVA is
to bring together industry experts to participate in technical
working groups, which will be tasked at looking to standardise
security standards across the market, increase current levels of
security and examine ways to educate the payment market about
current security threats.

SPVA chairman Christophe Dolique said:
“Hypercom, Ingenico and VeriFone hope to act as a catalyst and
kick-off a common initiative by establishing a forum for
industry-wide cooperation.

“By combining their expertise in the payment
systems arena, the three companies are committed to succeed in
accelerating widespread adoption of enhanced security
guidelines.”

Mobile payments

Epay24 launches unmanned POS
m-payments service in Switzerland

Epay 24, the Swiss mobile payment
provider, is to partner with Swiss bank PostFinance to launch a
mobile payments service in Switzerland. With Epay24, merchants can
accept payments made through PostFinance’s m-payments service
‘Handyzahlung Postfinance’.

Merchants need a valid bank account
and an Epay ‘residence’ number, to which Epay links the payments
from their customers.

The service was launched in 2008 in Horgen at
Zurichsee and has been extended to almost 100 locations across
Switzerland. Epay24’s mobile payment service focuses on unmanned
points of sale for florists and growers of fruit and
vegetables.

To make a payment, customers call a free
number, enter the location number and follow the spoken
instructions. <

LATIN AMERICA

Security and
fraud

Credit card details freely
available

A study by US internet security firm
Symantec has shown trade in stolen identities is becoming ever more
prevalent in the world’s rapidly developing economies. The survey
reports that the sale price of credit card details on the
underground economy also varies a great deal, from $0.40 to $30.
Bank account credentials, meanwhile, sell for as much as $800.

“The illegal world of internet crime is no
longer perpetuated by spotty teenagers, it is attracting
intelligent adults, very often, in some of the world’s developing
countries such as Brazil and India,” said Guy Bunker, chief
scientist at Symantec.

“This booming underground economy really is
bucking the global recession trend. With over 100,000 malicious
codes born every working day, it is not just the technology and
code that is getting clever. It is also the approach and the
strategy behind each attack.”

Consumer indebtedness

Brazil’s consumer debt
rising

Brazilian private credit rating
agency Serasa Experian has released the results of a survey that
shows consumer debt rose 22.6 percent in Brazil during March
compared to February, and also rose 16.6 percent compared to the
same month in 2008.

Consumer debt rose by 11.8 percent in the
first quarter compared to the same quarter last year. Credit card
debt accounted for 37.1 percent of the total debt in the first
quarter, higher than 31.4 percent for the same period last year.
Cheques without funds’ share of debt dropped to 17.6 percent in the
quarter, down from 23.4 percent in the same quarter in 2008.

Average credit card debt fell 13.3 percent to
BRL387 ($174) in the first quarter compared to the year-ago period.
Serasa Experian explained the rise in personal debt was due to the
recent increase in unemployment combined with a general economic
malaise.

“The level of debt must be monitored because
rising debt is synonymous with higher interest rates,” the credit
agency said.

Regulation

Interest rate caps
approved

Banco de México, the Mexican central
bank, has been granted the rights to limit interest rates and fees
that banks can charge. Mexico’s senate has approved a bill that
calls for policy makers to cap interest rates if they are deemed to
be too high or if they prevent low-income Mexicans from obtaining
credit. The legislation is also aimed at removing fees that
‘distort healthy banking practices’ such as consultation fees in
bank branches.

According to the bill, Banco de México will
ensure that institutions give loans or credit in accessible and
reasonable conditions, and it will take corrective measures so that
operations are offered under those terms. There is no maximum
interest rate specified in the bill, with legislators opting to cap
interest rates if they are deemed to be too high, or if they are
preventing some of the poorer sections of the population from
obtaining credit.

The bill is one of several measures intended
to reinvigorate the economy, which has been badly affected by the
downturn in the US, which buys almost 80 percent of Mexican
exports.

Economy

Nations tap into funds from
IMF

Colombia and Mexico have announced
they have applied to the International Monetary Fund (IMF) for
credit lines to help them weather the current economic storm.

The measure, called a flexible credit line
(FCL), is specifically offered to ‘strong performing countries’
affected by the global crisis, and is meant to underscore
confidence and further strengthen economies.

The flexibility of the FCL, and the ability to
tap it at any time, means it is particularly useful for preventing
major economic crises. The two countries are both asking for
multi-billion dollar lines. Colombia is currently seeking $10.4
billion, while Mexico has had $47 billion already approved by the
organisation.

IMF first deputy managing director John Lipsky
said: “The IMF executive board has approved the first flexible
credit line arrangement and, at the same time, the largest
financial arrangement in the fund’s history.

“The approval of this arrangement for Mexico
represents the consolidation of a major step in the process of
reforming the IMF and making its lending framework more relevant to
member countries’ needs.”

Card usage restrictions

Delays force Venezuelan banks
to limit credit card use

Venezuelan banks have warned that
the use of Venezuelan-issued credit cards abroad will be restricted
due to the debts the Foreign Exchange Administration Commission
(Cadivi) has with the financial institutions. 

Banks advised their customers that since
Cadivi failed to repay the sums cardholders have spent abroad, from
April, credit cards could only be used abroad to pay for
accommodation, food and emergency health care services. Banks went
on to say that if the Cadivi board fails to rapidly repay all
outstanding debts they could suspend the use of credit cards
completely.

The move would be in force until Cadivi
approves the outstanding authorisations of foreign exchange.

Cadivi’s debt to the banks allegedly totals
some $300 million. The banks have stressed some of the debts are up
to 45 days overdue, and the resulting lack of funds has left them
unable to repay credit card franchises.

According to the Central Bank of Venezuela,
international reserves were down $1.2 billion in two months and
stand at $28.2 billion currently.

Financial results

Citi card profits up in Latin
America

US banking giant Citigroup has seen
a rise in profits from its Latin American card operations since
last year.

Citi’s global cards unit in Latin America
announced a net profit of $669 million, up 30 percent from $516
million in the same period last year.

Revenues for the business increased 10
percent, on the back of the $1.1 billion pre-tax gain due to the
sale of the majority of its stake in Brazilian processor Redecard,
compared to a $663 million gain from selling Redecard shares in the
first quarter of 2008. Excluding the sale of Redecard shares in
both periods, revenues declined 25 percent.

Credit costs for the unit decreased 5 percent,
as credit losses, up 17 percent, were offset by a lower net loan
loss reserve combined with the impact of a weaker exchange rate.
The annual increase in net credit losses was largely down to poor
results in Mexico.

The loan loss reserve build in the current
quarter was $92 million lower than the year-ago period, mainly due
to the impact of foreign exchange and lower values.
 

NORTH AMERICA

Legal issues

Bank of America,
MasterCard, Visa sued over e-commerce payments patents

US holding company Actus is suing
Bank of America, MasterCard, Visa, Obopay and 17 other companies
over an alleged infringement of patents for an electronic payment
system.

Actus, a recently formed US patent holding
company, filed a lawsuit against the companies in the US District
Court for the Eastern District of Texas in mid-April. The other
defendants are Blaze Mobile, Capital One, Enable Holdings, Google,
Green Dot, Javien Digital Payments Solutions, JPMorgan Chase, Meta
Financial Group, M&T Bank, Sonic Solutions, Vivendi Universal,
Walt Disney, Western Union, WildTangent, AgileCo and Wal-Mart.

The patent involved is a way of handling and
sharing the revenue associated with smaller purchases such as,
according to an example cited in the lawsuit, Wal-Mart MP3 music
downloads as well as “methods and apparatus for conducting
electronic commerce using electronic tokens”, where digital
currency is used by customers for online payments.

According to legal newswire Law360, gift cards
offered by Bank of America, JPMorgan Chase, Visa and others are
among the products accused of infringing the patents. Google’s
Checkout service is also named.

Legal issues

First Data asked for
offshore data

Payment processing giant First Data
has been asked to aid the US Federal Government by handing over
information to help authorities identify merchants suspected of
using offshore accounts to evade US tax liabilities.

If approved, the summons will force First Data
to identify possible tax evaders among their clients.

“The petition alleges that the merchants have
opened bank accounts in offshore jurisdictions and directed their
payment card processor, in this instance First Data, to deposit the
proceeds from their debit or credit card transactions directly into
the offshore accounts,” the Justice Department said in a
statement.

As part of the inquiry, the Internal Revenue
Service asked a Federal District Court in Denver to order First
Data to turn over account information on scores of merchants that
sell or provide offshore services, like financial transactions
processing.

The court papers accuse First Data of actively
selling offshore services to American merchants, mainly at
investment and online advisory brokers, who then in turn could
advise their clients on how to avoid tax. First Data responded by
saying that it complies with all lawful requests for information
with due regard for the confidentiality of customer data.

Merchant acquiring

First Data becomes Visa
acquirer in Canada

Global payment processor First Data
has announced that it has entered into a relationship with Visa in
Canada, becoming the first merchant acquirer in the country to
directly participate in all three major schemes: Visa, MasterCard
and Interac.

First Data has been a merchant acquirer in
Canada for MasterCard since 2001 and for Interac since 2006.

Wayne Clarke, senior vice-president and
general manager of First Data’s business in Canada, said: “As a
direct participant in all payment schemes in Canada, we will offer
an unrivalled processing solution to our Canadian accounts. The
agreement also benefits our alliance partners across the world and
those wishing to expand into Canada, as First Data can now offer
them sponsorship into the Canadian market.”

Card processing

Money One FCU, TNB Card Services sign
deal

North
American credit union Money One FCU has said it is to hand its
entire $8 million card processing programme over to TNB Card
Services, a jointly-owned electronic payment processor.
Money One FCU, established in 1951, has 14,000 members.

Money One will be able to use TNB’s
software to enable real-time views of available credit and
transaction authorisations. TNB has said it will enable Money One
to identify key trends it can use to drive revenue and growth
opportunities, and also to improve its risk management
capabilities.

“While we have a healthy card
portfolio, our current processing platform has limited
capabilities, which has prohibited us from doing much with our card
products,” said Terri Groff, vice-president of member services for
Money One FCU. “TNB gives us more features and functionality to
drive card usage and acquire new cardholders.”

Distribution channels

US consumers turn to web
banking

The number of US online banking
customers continued to grow at a steady rate throughout 2008 as
customers looked to keep a tighter grip on their finances during
the recession, according to research from US web metrics firm
comScore.

comScore’s study found the growth in the
number of customers at the 10 most-visited online banks increased
in 2008 as financial institutions became more aggressive in their
customer acquisition efforts. Over 51 million US consumers visited
one of the top 10 online banking sites in the fourth quarter of
2008, around four million more than in the same period the previous
year. ComScore says nearly 60 percent of the total US internet
population now visits any one of the top 20 financial institutions’
sites in any given quarter.

The study also found that 71 percent are
“highly satisfied” with their primary online bank – a fall of 1
percent compared to the year-ago period.

Satisfaction with credit card issuers also
held steady at 62 percent, compared to 65 percent the previous
year.

Marc Trudeau, senior director of comScore,
said: “It’s interesting that a negative halo effect was not seen
with respect to banks and credit card issuers, perhaps because of
the reliability of services and the outreach they provided during a
time of financial strain for many customers.”