social service - verdict€¦ · analysis feature. security. complaints rise by 2% for . credit...

ANALYSIS FEATURE SECURITYComplaints rise by 2% for

credit cards, but fall for current accounts

Revolut and its ambitions to develop the UK as a

cashless society

The push for an industry-wide standard in the e-commerce space

SOCIAL SERVICE

VISA AND MASTERCARD LEAD THE WAY IN CUSTOMER ENGAGEMENT

Issue 555 / may 2018w w w. c a r d s i n t e r n at i o n a l . c o m

CI May 2018 555.indd 1 27/04/2018 10:15:41

2 | May 2018 | Cards International

contents

NEWS

05 / EDITOR’S LETTER06 / DIGEST• BJ’s Wholesale Club adds

Masterpass as payment option• Billon to integrate Igoria cards with

blockchain technology• OCBC first in Singapore to offer

instant issuance and Apple Pay• Equinox Payments to support JCB

contactless cards in the US• Tesco Bank divests Irish credit card

portfolio to Avantcard• Amex and Marriott unveil co-

branded credit cards• Ingenico launches new biometric

POS terminal• Google Pay integrates virtual Hop

Fastpass transit card• HomeStreet Bank unveils on-off

cards to prevent fraud• iZettle launches e-commerce

marketplace for small businesses• JCB and Idemia launch biometric

card pilot in Japan• Credit card customer sues JPMorgan • Mastercard to hire 175 in Dublin

16

this month

Editor: Douglas Blakey+44 (0)20 7406 6523

[email protected]

Senior Reporter: Patrick Brusnahan

+44 (0)20 7406 [email protected]

Junior Reporter: Briony Richter+44 (0)20 7406 6701

[email protected]

Group Editorial Director: Ana Gyorkos


Sub-editor: Nick Midgley+44 (0)161 359 5829

[email protected]

Publishing Assistant: Joe Pickard

+44 (0)20 7406 6592 [email protected]

Director of Events: Ray Giddings+44 (0)20 3096 2585

[email protected]

Head of Subscriptions: Alex Aubrey


Sales Executive: Jamie Baker +44 203 096 2622

[email protected]

Financial News Publishing, 2012. Registered in the UK No 6931627. ISSN 0956-5558Unauthorised photocopying is illegal. The contents of this publication, either in whole or part, may not be reproduced, stored in a data retrieval system or transmitted by any form or means, electronic, mechanical,

photocopying, recording or otherwise, without the prior permission of the publishers.

For more information on Verdict, visit our website at www.verdict.co.uk.As a subscriber you are automatically entitled to online access to Cards International.

For more information, please telephone +44 (0)20 7406 6536 or email [email protected].

London Office: 71-73 Carter Lane, London, EC4V 5EQ

Asia Office: 1 Finlayson Green, #09-01, Singapore 049246 Tel: +65 6383 4688, Fax: +65 6383 5433 Email: [email protected]

Customer Services: +44 (0)20 3096 2603 or +44 (0)20 3096 2636, [email protected]

SOCIAL MEDIA

COVER STORY

follow CI on twitter@Payments_News

08

CI May 2018 555.indd 2 27/04/2018 10:16:04

www.cardsinternational.com | 3

contents

20

may 2018

12 / SOCIAL MEDIAWith social media ever-present in everyday life, the opportunities to engage with customers are numerous. Visa and Mastercard consistently outrank banks in terms of social media outreach, but why? Patrick Brusnahan writes

14 / REVOLUTRevolut believes the UK could become fully cashless in just 10 years, and wants to be at the forefront of the revolution. CTO and co-founder Vlad Yatsenko tells Briony Richter why this vision is close to becoming reality

s to talk about cracking China, disrupting SWIFT, and leveraging WeChaCOUNTRY SNAPSHOTS16 / CHILEPayment card transactions are gradually replacing cash in Chile, mainly as a result of government and bank initiatives such as a financial inclusion programme and infrastructure modernisation

18 / NIGERIAThe use of cash for consumer payments remains highly prevalent among Nigerians, especially for those in rural areas. However, the Central Bank of Nigeria has taken a number of steps to improve this situation

20 / THE PHILIPPINESCash’s dominance in the Philippines is mainly a result of the country’s high unbanked population, inadequate banking infrastructure, limited public awareness of cards, and low levels of card acceptance

16

FEATURES

11

INDUSTRY INSIGHT22 / MYPOSFrom the casual dining crunch to major high street retailers facing financial troubles, there is little doubt that we are facing a difficult retail environment. However, this also represents an opportunity, writes Ambreen Khasru

15 / VIRGIN ATLANTICTwo new credit cards are the first products to be launched from the partnership between Virgin Atlantic and Virgin Money, facilitated by Mastercard. Briony Richter takes a looks at the cards’ primary features and benefits

PRODUCTS

10 / COMPLAINTSCredit card complaints rose by 2% in the second half of 2017 while current account complaints fell. Overall, a total of 3.76 million complaints were received in the six months to end-2017, reports Douglas Blakey

ANALYSIS

11 / E-COMMERCEShifting from magnetic stripes to chips in cards has been a long process; however, it was needed to improve security at the point of sale. Now, the biggest firms want a similar shift in e-commerce. Patrick Brusnahan reports

SECURITY

CI May 2018 555.indd 3 27/04/2018 10:16:26

Event highlights:

∤ Re-defining asset ownership for a digital generation

· The Baltic Approach: Regulatory arbitrage in the digital era

· GDPR and its implications for reporting, asset management and marketing

· Funding strategies for a lean world

· Re-defining sales and distribution channels for the digital era

· Harnessing the power of agile: Assessing the transformative potential of digital

· Embracing the circular value chain approach to lease delivery & design

· Taking the right risks for the rewards: Strategic implications of the era of asset ownership

· Using data and analytics to drive performance, deliver value

For more details please contact:

Vicki Greenwood on [email protected] or call +44 (0) 20 30W96 2580

Headline Sponsor:

LEASING LIFE CONFERENCE& AWARDS 2018

15th November 2018 ∤ Tallinn, Estonia

For its 14th edition Leasing Life Conference and Awards 2018 moves to the Baltic Region to bring together asset finance professionals and industry disruptors in an active discussion of the key issues facing the leasing industry.

This year’s Leasing Life conference explores how Europe’s leasing industry is responding to the value chain opportunity - the operational, and strategic, implications of the paradigm shift, and the role that technology

must play in transforming the industry so that it thrives in the digital age..

HEAR ∤ NETWORK ∤ DISCOVER ∤ CELEBRATE

Gold Sponsor: Silver Sponsors:

Brand Sponsor: Table Hosts:Badge and Lanyard Sponsor:Exhibitor:


editor’s letter

Tinkoff remains the Russian cards player to watch

Get in touch with the editor at: [email protected]

Douglas Blakey, Editor

Launched only 11 years ago by serial entrepreneur Oleg Tinkov, Russia’s number one direct bank can already claim to be the world’s largest fully online

bank by customer base.It is generally regarded as punching above its weight in terms

of credit cards, but is now repeating the trick with a successful range of debit cards.

The list of growing Tinkoff innovations is impressive:• The first organisation in Russia to roll out facial

biometric recognition to identify and verify customers in 2016;

• The first in Russia to implement real-time voice-authentication technology in 2014;

• With around 4,600 operators, Tinkoff has the largest cloud-based Home Call Centre powered by proprietary software in Russia;

• 20% of all incoming electronic messages are automatically handled by bots, and

• Tinkoff was among the first to launch Apple Pay, Android and Samsung Pay services in 2016.

Tinkoff is now transitioning to become an online financial marketplace: Tinkoff.ru offers a full range of both own-brand and partner retail financial services via mobile and desktop.

By chance, as CI was preparing to go to press, I spoke with Oliver Hughes, president and CEO of Tinkoff just minutes after speaking with Metro Bank chair and founder Vernon Hill as Metro Bank released its first-quarter earnings.

There are shades of Hill’s background, success and charisma in the background of Tinkoff’s founder. While Hill made his first fortune in fast food as part-owner of a group of Burger Kings, Tinkoff has, in his time, owned a network of restaurants, frozen food factories and brewing firms before concentrating on financial services.

There the similarities end, as while Hill and his UK and US banks, Metro and Republic respectively, are focused on the store, Tinkoff has no branches and has acquired and services all of its seven million-plus and growing customers via online channels and its call centre.

Tinkoff’s share of the credit card market has almost doubled in the past five years to more than 11.5%, second only behind

Sberbank, with more than 3.5 million customers. But debit card customer numbers are catching up fast, as Tinkoff ended 2017 with more than three million customers.

Hughes tells me Tinkoff is now attracting 120,000 new debit card customers every month; he says that the day is not far away when current account customers will exceed credit card customer numbers.

Hill, whom I have known and admired since his Commerce Bank days in the US, is fond of asking banking journalists just how many online-only banks have really made a success of their business with sustained profitability. Tinkoff can claim such a success: in fiscal 2017 Tinkoff posted net income of RUB19bn ($300m).

Hughes says Tinkoff is on track to report a net profit for fiscal 2018 of at least RUB24bn, and will hit its target of a net income increase for the next two years of 20-40% per annum.

The upcoming launch by Tinkoff of a premium Tinkoff Black product line and associated concierge service to target the mass affluent segment and the lower end of the private banking sector makes perfect business sense. It is just one of a number of new product lines in the Tinkoff pipeline likely to ensure that Tinkoff will hit its next business targets. <

Others27.7%

Sberbank45.5%

Tinkoff11.6%

VTB6.9%

Alfa8.3%

market shares

Source: Tinkoff

Russia: leading credit card issuers, 2017

CI May 2018 555.indd 5 27/04/2018 10:16:35

News | Digest

news digest


Billon to integrate Igoria cards with blockchain technology

UK-based blockchain services provider Billon has partnered with Polish business Igoria Trade to allow digital use of the multi-currency IgoriaCard in 150 countries through blockchain technology.

Billon uses a blockchain ledger to store and transfer real, regulated currencies and smart data. The collaboration will allow Billon customers to use Igoria cards for transactions in physical stores as well as online purchases at low exchange rates.

Available in plastic and virtual forms, the cards run on the Mastercard network,

and provide a digital system to manage limits and payment histories, and facilitate currency exchange.

Igoria cards will be stored in electronic form on Billon’s blockchain platform. Payments made using the cards will be funded through e-money present on the platform.

Billon CEO and founder Andrzej Horoszczak said: “The partnership with Igoria is the start of a relationship that could see us fully commercialise our distributed ledger technology and move from existing individual deployments to a much broader transformation of payments and the banking system.”

Igoria Trade CEO Wojciech Kuliński added: “The move to integrate Billon’s distributed ledger technology with IgoriaCard is truly exciting.

“We’re committed to staying at the cutting edge of technology and believe the partnership with Billon is the perfect opportunity for us to take the next leap forward.” <

BJ’s Wholesale Club adds Masterpass as payment option

US-based warehouse chain BJ’s Wholesale Club has added Masterpass, Mastercard’s digital contactless payment service, as a payment option for its customers.

The integration will enable BJ customers to pay for purchases without taking out cards or sharing credentials.

Masterpass securely stores sensitive pay-ment information such as card and shipping details, and payment preferences, and does not require all of a customer’s credentials to

be entered. It can be used with various devic-es and channels.

Mastercard’s executive VP for US mer-chants and acceptance, Linda Kirkpatrick, said: “We are thrilled to partner with BJ’s Wholesale Club to enhance its one-stop shopping experience with our latest and safest digital technology.

“With Masterpass as a payment option, BJ’s members are just a click away from a seamless and secure checkout.”

BJ’s Wholesale Club CFO Bob Eddy said: “As we continue to grow our Omnichannel capabilities, we’re focused on delivering a seamless experience for our members. Add-ing Masterpass as a payment option on BJs.com offers our members another convenient way to shop with us.” <

OCBC first in singapore to offer instant digital issuance and Apple PayOCBC has become the first bank in Singapore to enable customers to transact at merchants that accept Apple Pay within minutes of applying for a Visa credit or debit card.

OCBC customers no longer need to wait for a physical card to arrive – they can now add a digital card to Apple Pay instantly via the OCBC Mobile Banking app.

According to OCBC, Visa cards make up almost 80% of OCBC Bank cards currently linked to Apple Pay. Instant provisioning of cards for use with Apple Pay has been enabled for OCBC Bank Visa credit cards – including the 365, Frank, Voyage, Robinsons Group, Plus! Visa and NTUC Plus! cards and the Yes! debit card.

Aditya Gupta, OCBC Bank’s head of e-business Singapore, said: “This is the new digital – instant, embedded and frictionless access to banking products and services. Our customers can now receive their new card digitally and provision it to their Apple Wallet to start paying with it straight away – all from within our mobile banking app and within a few minutes.

“We believe this is a huge level-up in customer experience, and will accelerate our digital card applications and cashless payments market leadership drive.”

One in every two Visa contactless transactions in Singapore, including Apple Pay, are made with an OCBC Bank card. Monthly mobile wallet payments have doubled since 2016, while the number of credit cards provisioned to mobile wallets has increased sevenfold.

Around 60% of OCBC Bank cards linked to mobile wallets are on Apple Pay. Mobile wallets are particularly popular for lifestyle transactions including groceries, hire cars, food deliveries and fast food.

Vincent Tan, OCBC Bank’s head of credit cards, said: “With our instant digital card issuance, customers can immediately provision their new cards to Apple Pay via our mobile banking app, and start to enjoy our cards’ rewards and rebates.” <

CI May 2018 555.indd 6 27/04/2018 10:17:02

News | digest


Tesco Bank divests Irish credit card portfolio to Avantcard

The UK’s Tesco Bank has agreed to sell its Irish credit card portfolio to Spain-based consumer finance company Avantcard.As a result, around 27,000 credit card accounts are set to be transferred from Tesco Bank to Avantcard.

Cardholders will be able to continue using existing cards until they receive a new card, which also applies to Tesco Clubcard reward points, The Irish Times reported.

Tesco offers a variety of credit cards, each with different features. Its Purchases card offers interest-free payments for 28 months, while the No Balance Transfer

Fee card does not charge a fee for balance transfers, the Premium card focuses on reward points, and the Foundation card allows its holders to improve their credit ratings.

The deal follows Tesco Bank’s decision to cease accepting applications for its credit card services from Irish customers in May last year.

Avantcard MD Chris Paul said: “Avantcard’s strategy is to be a leading consumer finance provider in Ireland by 2020, and this will be achieved through ongoing product innovation, continuing investment and strategic partnerships.” <

AmEx and Marriott unveil co-branded credit cards

American Express and Marriott International have unveiled new the Marriott Rewards Premier Plus credit card and the Starwood Preferred Guest American Express Luxury card, along with the refreshed Starwood Preferred Guest Consumer and Business credit cards.

Set to be available from May this year, the Rewards Premier Plus credit card is part of Marriott’s loyalty programme and will feature a new 100,000-point limited-time offer for new card members, with a variety of other benefits such as reward points on purchases.

Both the new and refreshed cards under the Starwood Preferred Guest programme will be available from August this year. They will provide travel benefits and rewards that can be access at around 6,500 hotels in 127 countries.

The American Express Luxury card is designed for premium customers and features complimentary Gold Elite Status, additional cards at no charge, and a chance to earn Platinum Elite Status, among others. The Consumer and Business cards will offer new benefits such as points on purchases at select SPG and Marriott Rewards hotels, Annual Night Award and automatic Silver Elite Status.

The Business cards will also offer additional ways for small merchants to earn points when they make common purchases, including dining, gas, wireless bills and shipping.

American Express’s senior VP of US commercial cards, Courtney Kelso, said: “We know our card members love to stay at Marriott hotels when they travel the globe. With our expanded card offerings, soon they will get access to even more benefits to enhance their hotel stays and their entire travel experience – all while giving them more ways to earn the points we know they love.” <

Equinox Payments to support JCB contactless cards in the USPayment terminals provider Equinox Payments is set to upgrade its terminal lines to support contactless transactions on JCB cards in the US.

Equinox plans to integrate its Apollo, L5000 and Luxe terminal lines with contact-less chip technology. The business said an upgrade path will be provided for mer-chants with these terminals over the coming months, enabling acceptance of contactless payments through JCB cards and Apple Pay.

Commenting on the move, Equinox Payments VP Rob Hayhow said: “Merchants that adopt these solutions can improve the checkout experience for JCB card members, and make sure their business is ready for the

JCB EMV liability shift that takes effect next year. Once completed, all Equinox payment terminals will be automatically enabled to support JCB Contactless at the factory prior to release.”

Equinox also added JCB support to its L5300 terminal, which is used at various high-volume retailers, and the Apollo stand-alone terminal.

JCB’s VP of emerging technologies, Linda Horwath, said: “This relationship under-scores the partner-friendly approach that Equinox brings to the table.

“We are excited to extend the speed and convenience of contactless payments to our valuable card members visiting the US.” <

CI May 2018 555.indd 7 27/04/2018 10:17:12

News | Digest


Ingenico launches new biometric POS terminalPayment solutions provider Ingenico Group has launched a new portable mobile point-of-sale terminal, the Move/2500 B, with biometric capability.

The new product is intended to meet standard financial inclusion requirements for the unbanked population and government schemes. According to the company, India will soon require these systems for fingerprint authentication, and Mexican banks can use them to verify a loan recipient’s identity. Ingenico noted that the EMVco certification of fingerprint authentication may initiate new global schemes.

Promoted as secure and cost-efficient, the Move/2500 B supports all types of payment methods, and can match fingerprints in a fraction of a second.

VP of Ingenico’s marketing of banks and acquirers business unit, Frédéric Lepeintre, said: “We are pleased to introduce the Move/2500 B, our third-generation biometric POS, designed to support financial inclusion scenarios as well as innovative payment schemes in mature markets.

“The launch of the Move/2500 B illustrates Ingenico Group’s commitment towards reaching the two billion people excluded from financial services.

“It also demonstrates our ability to adapt to new regulatory frameworks and consumer demand for fingerprint authentication.”

The company plans to introduce its new biometric POS in India in June this year, and subsequently into the Middle East. <

HomeStreet Bank unveils on-off cards to prevent fraud

US-based HomeStreet Bank has introduced a new mobile security feature, Card Controls, to give clients greater control over their debit cards.

The new feature aims to prevent fraud and improve the security of debit cards. Available through the bank’s mobile app, the new capability allows customers to turn cards on and off, and enable usage alerts. It also enables cardholders to track spending, and manage expense limits, merchant types and geographic locations.

HomeStreet Bank CEO and president Mark Mason said: “Protecting our customers from fraud is one of our top priorities, which is why we continue to roll out security features like Card Controls.

“Through Card Controls, customers have total control over their debit card right at their fingertips, giving them peace of mind that their banking information is secure.

Mason added: “We’re committed to our customers, and we’re looking forward to rolling out more features that make their banking experience safer and more convenient.”

The Card Controls feature follows a series of digital upgrades such as Cardless Cash, Apple, Samsung and Android Pay launched by the bank over the past few months to enhance the customer experience.

The bank also plans to roll out the Zelle person-to-person payment network in the near future. <

Google Pay integrates virtual Hop Fastpass transit card

Init, TriMet and moovel have collaborated to integrate the virtual Hop Fastpass card for Google Pay users in the Portland, Oregon region.

Cardholders using TriMet, C-Tran and Portland Streetcar rides in the Portland-Van-couver region will now be able to use a virtual smart card to pay transit fares.

The card can be loaded through the Hop Fastpass mobile app available at the Google Play store. It is said to be the first regional account-based virtual transit fare card, and can be used at any of the 1,200 Init fare validators.

Init project engineer Thomas Schaich said: “The use of virtual transit cards marks the

beginning of a new era in the fare-collection world.

“The vision of a secure transit payment solution without carrying a card has now finally been realised.”

When the virtual card is used by riders, a back-office management tool, Mobile-var-io by Init, will estimate the fare, verify the transaction and provide the fare-validation result in real time.

TriMet general manager Doug Kelsey said: “The combination of Hop and Google Pay puts transit riders in the Portland-Vancouver region on the cutting edge of technology, while truly getting the best value with daily and monthly fare caps as they ride.” <

CI May 2018 555.indd 8 27/04/2018 10:17:40


News | Digest

iZettle launches e-commerce marketplace for small businesses

iZettle, the Swedish fintech business that serves small businesses in Europe and Latin America, has launched a new e-commerce platform that allows merchants to sell in-store, online and on mobile devices.

The platform will enable small busi-ness owners to set up and customise new webshops and start selling products through multiple online channels, including social media, blogs and existing websites.

The iZettle E-commerce platform is available in the UK as part of the iZettle Go Plus full-feature package that costs £29 ($42) per month. Small businesses that take up the offer will benefit from a full overview of in-store and online sales in one place. Inventories are automatically updated after each sale.

The platform will also enhance data pro-ductivity, enabling merchants to harness data

to maximise sales and improve the customer experience.

iZettle CEO and co-founder Jacob de Geer stated: “This is iZettle’s biggest product launch since 2011, and it is a huge moment for us.

“Today’s consumers expect businesses to be present both offline and online. Half of iZettle’s users currently don’t have an online shop, and the other half struggle with different complex online systems. iZettle E-commerce solves these problems, helping small businesses find new customers and sell more – all from one place.”

The online platform processes all major credit cards and online payments, and sup-ports PayPal. The launch is part of iZettle’s strategy to extend its commerce platform by offering a wider range of affordable tools to small businesses. <

Credit card customer sues JPMorganJPMorgan Chase has been sued by a credit card customer in Idaho over high interest rates and fees for buying cryptocurrency using a credit card.

According to reports, Brady Tucker has filed a lawsuit against the banking giant in the federal court in Manhattan, claiming JPMorgan considered the cryptocurrency purchases as cash advances and levied higher charges than usual.

JPMorgan banned the use of its credit cards for buying cryptcurrencies in February this year, but Tucker’s lawsuit claims the bank did not issue any notice that the purchases will be treated as cash advances.

The bank reportedly charged $143.30 in fees and $20.61 in interest for five cryptocurrency transactions made between 27 January and 2 February, and refused a request for their removal. Tucker, who is now seeking actual and statutory damages of $1m, said he used a credit card because it was the only means to make an instant cryptocurrency purchase on Coinbase.

Reuters quoted Chase spokesperson Mary Jane Rogers as saying the bank ceased processing credit card cryptocurrency purchases in February because of the credit risk involved, but that customers can use debit cards without incurring cash-advance charges. <

Mastercard to hire 175 to drive innovationMastercard has announced plans to bolster its footprint in Ireland by hiring 175 new technical staff at its facility in Leopardstown, Dublin.

The company will hire software engineers, blockchain and cloud infrastructure specialists, data scientists, analysts, project managers, information security experts and product designers.

Mastercard said the new employees will primarily focus on expanding innovation in payments and security solutions.

Mastercard Ireland country manager Sonya Geelon said: “At our Dublin office, we’re working on innovations that will shape the future of payments not just in Ireland, but all around the world.” <

JCB and Idemia launch biometric card pilotJapanese card issuer JCB has partnered with Idemia, an augmented identity business, to trial its first biometric chip card aimed at enabling faster checkouts.

The payment card integrates Idemia’s F.Code technology designed to replace PIN with fingerprint authentication to allow easy and secure transactions. Customers can use a smartphone or tablet app to initially record their fingerprints, which will be stored in the card.

At the time of purchase, they can make a payment by simply touching a fingerprint sensor embedded on the card. An Idemia algorithm then validates the identification by cross-checking with the stored data.

The pilot is set to be conducted in alliance with card-personalisation partner Toppan Printing, and will see issuance of cards to JCB employees in Japan.

Executive VP of JCB’s brand infrastructure and technologies department, Tac Watanabe, said: “This pilot programme, through our strong partnership with Idemia, is to demonstrate a use case of how JCB intends to provide customers with a secure and smooth way of making payments in the future.”

Executive VP of Idemia’s financial institutions business unit, Pierre Barrial, added: “F.Code is a unique technology that provides highly secured authentication and we are eager to implement it for the first time in Japan.” <

Jacob de Geer, iZettle

CI May 2018 555.indd 9 27/04/2018 10:17:52


ANALYSIS | COMPLAINTS

First off: the positives. Take a bow, Nationwide. Of the major UK banks and building societies, Nationwide

attracted the least complaints in the second half of 2017, with only 1.44 complaints per 100,000 accounts for banking and credit cards.

Skipton Building Society and Yorkshire also scored well with only 1.57 and 1.92 complaints per 100,000 accounts respectively.

At the other end of the scale, HSBC is the most complained-about major retail banking brand with 6.88 complaints per 100,000 banking and credit card accounts, just ahead of RBS with 6.69 and Barclays with 6.51.

Of the other major brands, Santander (5.26) and Lloyds (5.23) continue to attract more complaints per 100,000 accounts than challenger brands such as TSB (4.35) and Metro Bank (4.18). Co-operative Bank and Virgin Money, on only 3.09 and 2.68 respectively, performed strongly.

RBS’s private banking brand, Coutts, is among the worst overall performers (10.22); sister RBS brands NatWest and Ulster Bank, on 5.48 and 4.25 respectively, fared better.

CLAIMS HANDLINGThe latest FCA complaints data suggests that banks’ internal complaints-handling processes remain a work in progress.

A whopping seven in ten (70.1%) of banking and card customer complaints against Lloyds were upheld by the FCA. Sister brand Bank of Scotland (60.2%) also scored poorly by this measure. By contrast, less than one-half of all complaints against Bank of Ireland UK (43.0%), Allied Irish Banks UK (43.4%), Santander (43.5%), Tesco (49.0%) and Metro Bank (49.3%) were upheld.

Complaints about PPI rose by 40% to 1.55 million in the second half of 2017, the highest level of complaints about PPI for more than four years. In January, firms paid out £416m ($581m) in PPI compensation, the highest figure since March 2016. The total for compensation payments since January 2011 is now £30bn.

Banks continue to add to their PPI provisions, with Clydesdale Bank setting aside a further £350m for PPI claims in April. Clydesdale said it received 59,000 claims

in the six months to the end of March, and expected to receive another 110,000 by the complaints deadline set for August 2019.

Excluding PPI, the number of complaints received by firms was 2.21 million – around 13,000 fewer than the previous six months.

After PPI, the next most complained-about products are current accounts with 509,047 complaints, and credit cards with 314,586 complaints. These products have a higher proportion of complaints closed within three days (see table).

The amount of redress paid out in total during the second half of 2017 was £2.36bn, up 19% year on year. This was driven by an increase in redress payments for PPI complaints, which rose by 26% to £2.05bn. Redress per upheld complaint fell in the second half of 2017 for all product groups (see chart), with the average banking and credit card payment falling from £270 to £253.

Christopher Woolard, executive director of strategy and competition at the FCA, said: “Having set a deadline for PPI complaints, we are encouraging consumers to decide whether they want to claim, and if they do, to make their complaint as soon as possible, as many already have.

“We are continuing to monitor and challenge all firms to ensure they maintain the expected standards and are delivering on their commitments to make it easy for people to complain about PPI,” Woolard added.

“When PPI is taken out of the mix, the numbers of complaints firms are receiving has remained stable. Firms should be doing all they can to reduce complaints and ensure they are treating customers fairly.” <

CREDIT CARD COMPLAINTS INCH UP IN UKCredit card complaints rose by 2% in the second half of 2017 while current account complaints fell. Overall, a total of 3.76 million complaints were received in the six months to end-2017, up 13% year on year, as PPI continues to haunt UK banks, reports Douglas Blakey

UK – MOST COMPLAINED-ABOUT PRODUCTS, 2017

H1 2017 H2 2017 change % % closed within 3 days, H2 2017

PPI 1,112,043 1,551,897 40 9

Current accounts 518,608 509,047 -2 70

Credit cards 309,875 314,586 2 70

Motor and transport 241,319 230,146 -5 56

Packaged accounts 203,509 206,089 1 25Source: FCA

0

500

1,000

1,500

2,000

2,500

3,000

Investments

Home

finance

Insurance

(excl. P

PI)

£H1 2017 H2 2017

Pensions

Banking an

d

credit c

ards PPI

compensation

Source: FCA

Redress per upheld complaint, 2017

CI May 2018 555.indd 10 27/04/2018 10:17:54


security | e-commerce

Standardisation is not a new thing in payments. Europay, Mastercard and Visa combined their efforts to create

the EMV standard, now run by EMVCo.This introduced the ‘smart’ payment card,

or the chip card, to increase security at the POS. Now, companies are coming together again to re-enact this process for online purchases.

SUCCESSFUL TRANSITIONMike Cowen, VP of digital payments at Mastercard UK, tells CI: “It’s about trying to achieve something similar in the online world to what has been achieved in the physical world at the point of sale.

“We’ve all seen the very successful transition from magnetic stripe as a technology for payments being increasingly replaced by chip. One of the key benefits is driving security, and reducing fraud, at the point of sale. Now we want to do something similar in the online world.”

This comes in the form of the EMVCo Secure Remote Commerce (SRC) framework, which aims to give consumers the same simple, secure and convenient payment experience across every browser and device.

“We now feel it’s the right time to increase security in the online world,” Cowen explains. “We want to do it in a similar way to what we did with POS, and that is standardisation. That’s where the SRC standard comes in. This defines a secure framework in which online transactions can take place.”

In a blog post from Mastercard, the firm states: “SRC can be implemented as one,

common checkout button.” As a result, the checkout experience would be more consistent for consumers. In addition, it would reduce the amount of steps consumers need to take at different sites, as well as making it easier for merchants to implement.

Cowen says: “The security side is very important but it’s also about trying to standardise the user experience as much as possible. It’s about making it simple and consistent for consumers.

“There is a proliferation of different ways to pay online, and even when you’re paying the same way, there are proliferations of different user experiences that enable card transactions to happen. This is potentially confusing for people. It certainly reduces confidence, because if you’re asked to do something different every time, that ability to build up familiarity and comfort is reduced.”

THREE MAIN AREASCowen continues: “These are the three main areas where we see this development helping: security, standardisation and simplicity.”

One solution is tokenisation. Utilising tokens to protect sensitive data can aid security as well as bring a standard to all payment processes.

“Our ecosystem is a massively distributed one,” Cowen explains. “We’re talking billions of consumers, tens or hundreds of thousands of banks and tonnes of players in between.”

He adds: “The ecosystem is highly fragmented and people have different roles within the ecosystem and the value chain. This doesn’t take into account the physical world,

where we have the more traditional players. In the e-commerce world, we also have gateways, shopping cart providers, people who build part of the user experience.

“Many of these parties will have to make changes in order for these new standards to be adopted.”

HOW LONG?Mastercard is not the only firm pushing for standardisation. Visa and American Express have also displayed their support, and more are set to follow. With the amount of large companies backing the move, how long will it take to implement?

Cowen says: “This is not something that Mastercard is trying to do on its own. It is very much a call to the industry to adopt this new standard. It’s intended to be for the benefit of everyone. A better and more secure payment experience should help everybody.”

“In terms of timing, it’s not going to be overnight,” Cowen warns. “This is the start of a journey and that is the right way to talk about this.

“We’re talking months or maybe even one or two years. It’s not going to take anything as long as the journey from magnetic stripe to chip, which is not yet complete and it started 20 years ago.”

Cowen concludes: “The improvement in security should attract everybody, and that is an area we will push. We want to get to a point where every online or remote payment is at least as secure as a payment at POS. That means using the secure technologies we have available to us.” <

will a new standard revolutionise e-commerce?Shifting from magnetic stripes to chips in cards has been a long, almost everlasting, process; however, it was needed to improve security for consumers at the point of sale. Now, the biggest firms want a similar shift in e-commerce. Patrick Brusnahan reports

CI May 2018 555.indd 11 27/04/2018 10:17:54


Feature | social media

For the last four years, Visa and Mastercard have outranked banks in terms of social media, and placed in the top two.

According to CI’s rankings, Visa has 22,378,077 Facebook likes, an increase of 4% from 21,420,012 in 2017. Mastercard also saw a rise in the same time frame, from 14,950,982 to 15,974,241, a growth of 6%. State Bank of India is the closest bank in terms of Facebook likes, but it still falls behind Mastercard by more than four million at 10,615,876.

Clearly, ‘fans’ are engaging with both Visa and Mastercard’s brands on social media, but what are they doing to create this interaction?

INTEGRAL TO OPERATIONSAdrian Farina, senior VP, marketing, at Visa Europe, tells CI: “Visa uses social media in a variety of ways, and it has became integral to many of our team’s operations – be it marketing, corporate communications, customer services or recruitment.

“We see digital and social media as great tool to help us achieve our corporate vision of being the best way to pay and be paid, for everyone, everywhere.”

Kirsty Redfearn, head of consumer and digital marketing, UK and Ireland at Mastercard, has a similar opinion. Speaking to CI, she says: “Social media forms part of our integrated marketing mix.

“We would use social media as one of the many channels that form our marketing campaigns across the year. I think we find it quite a useful channel to have a dialogue with cardholders and consumers in the space of their everyday life. It’s a mutual channel where we are able to talk to them about their passions, their interests, and hopefully take them on a journey of understanding on how Mastercard can help them enable that.”

Farina adds: “Social media has become part of our DNA over the past five years and, from a marketing perspective, ever-more important

mastercard and visa: the experts in social media

Financial companies strive to relate to their customers, and vice versa. Branding can be crucial in this objective, and with social media being ever-present in day-to-day life, there are many opportunities to

achieve it. Visa and Mastercard consistently outrank banks in their social media outreach, but why? Patrick Brusnahan writes

20152016

20170

5.0

10.0

15.0

20.0

25.0

2018

millionsVisa Mastercard

facebook likes

Source: Cards International

CI May 2018 555.indd 12 27/04/2018 10:17:56


Feature | social media

as part of our media mix. Social media is extremely versatile and provides us with the means to position our brand with our clients, engage consumers around the benefits of Visa products, highlight elements of our corporate narrative, such as our focus on innovation and security, and operate promotions and competitions.”

Of course, the days where there were a handful of social media channels are long gone; Facebook, Twitter, Instagram, Pinterest, Snapchat – the list goes on.

Redfearn continues: “We use the majority of channels in some form or another, depending on the objective of the campaign. Don’t get me wrong, we would probably prioritise Facebook and Twitter as our main core channels. Most brands will tell you that the majority of their audience is in that space, so it makes sense for us to understand those channels and use them appropriately.”

“That is not to say we don’t use other channels. We have an Instagram channel; we have also been on Tumblr, where we saw some amazing creativity in our [music award show] Brits campaign. We have been on Snapchat as well. It’s not been haphazard; it’s all decision-based,” Redfearn explains.

24/7Social media is not static. There is content posted constantly, so it can be hard to stand out in an ever-changing field.

“Interaction rates have changed a lot recently, particularly on Facebook as they changed their algorithm again,” Redfearn notes. “This year, the organic reach is dropping considerably. This means we are more careful and more thoughtful on how we bring messages to life. We need to make them effective and enter a dialogue with consumers.”

“We put in a great deal of effort into ensuring that we are up to speed with the latest developments in how social media platforms prioritise content and reach consumers through their advertising formats,” Farina explains.

“This means working closely with our partners – either agencies or the platforms themselves – to ensure that our marketing investments are allocated appropriately and that the right content reaches the right people at the right time.

“As we shift our marketing investments from traditional to digital media, we aim to be at the cutting edge of creativity and targeting best practices. Ultimately, it comes down to reaching people wherever they choose to spend their time, whether online or offline.”

Redfearn adds: “We have an always-on team, a wonderful agency network and a wonderful agency team. It’s an always running thing.”

Banks are regulated and constantly monitored; they cannot post whatever they want. Companies such as Mastercard are similar, but the restrictions they face are not as strenuous.

“We have slightly different positioning as we are able to be a B2B2C company rather than a bank,” Redfearn says. “That gives us the position where we can utilise the channels as part of our brand, rather than just being a customer care portal – not that we don’t open ourselves up to answer queries. Our average response time is 24 hours, so we’re pretty real-time in getting back to our consumers. That’s high up in our priorities, but at the same, [we aim] to make sure it’s part of our integrated marketing mix, whatever channel it is.

Redfearn continues: “I think we’ve gone from the days where social media was a separate channel on its own. It’s very much at the centre of our thinking as we plan campaigns. It’s become quite integral to us understanding our consumers and their passions. We spend a lot of time and energy making sure that we’re relevant and adding value.” <

recent distinctive campaignsKirsty Redfearn, Mastercard:“We’ve been sponsoring the Brit Awards for 20 years, and this year was quite an occasion. We’ve been trying hard this year to build an integrated campaign that connected some of the dots in the Brits ecosystem, such as the Brit school and the charities that the Brits works with. We worked with David Arnold, a famous composer, who composed a track for us which we could then illustrate and create an experience where music brings people together.

“We’ve had some wonderful responses, and it even had around 99% sentiment response; for most brands, that’s an unheard-of space.”

adrian farina, visa:“Generally we use our sponsorships as a backdrop for the benefits that Visa brings to consumers – an approach that we took during our recent contactless campaign around the Winter Olympics.

“This global campaign was fully integrated across our social and digital channels and saw us working closely with our Team Visa athletes [individual Visa-sponsored athletes from a range of national teams] who were able to amplify our campaign through their personal social media channels.

“Our cross-border campaign last summer consisted of a series of short videos designed to encourage travellers to consider the benefits of using their card abroad instead of cash. We were able to use our social media channels to deliver these videos to travellers journeying between Europe and America, serving the right message to the right traveller when he or she was most receptive.” <

KEY STATISTICS, 2018visa mastercard

Twitter followers 368,464 473,058

Facebook likes 22,378,077 15,974,241

Instagram followers 27,141 91,655

Youtube subscribers 39,751 31,958

Youtube views 334,538 62,580,808

Source: Cards International

CI May 2018 555.indd 13 27/04/2018 10:17:56


Feature | revolut

Revolut has been breaking down barriers in the banking industry since its launch.

According to GlobalData research, the number of Revolut users sat at around 1.5 million in 32 countries, as of April 2018.

There is no denying that the vast majority of consumers enjoy and benefit from a range of digital payment methods. The simplicity of conducting banking tasks is one of the biggest motivators to go digital. Carrying wallets and numerous cards has become an annoyance.

Speaking to EPI, CTO and co-founder, Vlad Yatsenko details what the UK needs to do to become cashless: “If the UK aspires to be fully cashless within the next 10 years, we need to continue to innovate and encourage the use of financial technology. Britons still have a very strong emotional connection to cash, even if they aren’t using it as much, so it’s best to slowly make the transition into becoming a fully cashless society.”

Across the world, cash transactions are continually and significantly falling. According to the 2017 World Payments Report (WPR), non-cash transactions will increase at a CAGR of 10.9% between 2015 and 2020.

So should the UK accelerate its cashless efforts? Yatsenko certainly thinks so: “The advantages of a cashless society are an increase in ease, convenience and security. Cashless transactions speed up services and reduce the risk of crime – specifically robberies. Digital transactions are easier to track.”

The idea of a cashless economy can appear utopian, and yet in Sweden, it is within touching distance. Yatsenko explains that the UK is behind due to infrastructure.

“Unfortunately, UK infrastructure lags behind countries like Sweden, and our relatively large population isn’t an ideal test-bed for cashless innovation.

“We’ve still got a long way to go until lumbering traditional banks fully adopt cashless technology, and even then not all consumers tend to trust the big banks or institutions with their information.”

WIPING OUT CASHSweden is wiping out cash at a rapid rate. According to the WPR, 36% of the population in Sweden claim they never use cash, compared with 17% of Brits.

SEB, one of Sweden’s largest banks, only handles cash in seven of a total of 118 branches, and the bank has stated in the past that its new focus will be on providing digital tools in branches that are designed to encourage customers to complete banking tasks on their own. ‘No cash accepted’ signs are increasingly becoming a common sight across Sweden.

Cashless technology can be tricky to integrate into places in the UK that are rural and more difficult to reach. Many worry that a cashless society could further marginalise the elderly and lower-income citizens.

Whether you are for or against increased surveillance, a cashless society will significantly increase the level of insight governments and banks have into individuals’ lives. In a world without cash, every payment is traceable.

Today, Facebook profiles reveal a public persona that an individual can tweak and control, but in payments, consumers put their money where their mouth is.

Many argue, correctly, that digitising all payments will reduce levels of financial crime, such as extortion, corruption and burglary. That said, it also opens the doors to different types of financial crime. Companies and consumers will still be vulnerable to security risks such as online fraud and cyberattacks. If all transactions are digital, a well-executed cyberattack could lead to massive losses. Furthermore, by adding more financial details online, along with the personal data that is already accessible, crimes like identity theft will increase.

Revolut believes that, overall, a cashless society has more positives than negatives, and wants to lead the way in creating a thriving and secure one. Yatsenko states: “Revolut is enhancing the accessibility and ease of cashless societies with its mobile and contactless payments services.

“Revolut’s latest feature, disposable virtual cards, includes card details that automatically change after every transaction, protecting customers against account fraud, cybersecurity threats and runaway subscription fees.

“We believe that digital-only banks are beginning to be recognised by the majority of the public, driving significant numbers of customers to change banks, and building awareness and trust,” Yatsenko notes.

“Digital-only banks are offering powerfully attractive alternatives and improvements on how people handle their finances, and increasingly convincing consumers they can be trusted by delivering on their promises for security, reliability and privacy.”

Technological innovation is pushing countries towards a cashless environment. Looking at London in particular, where contactless technology was successfully rolled out by Transport for London, it is clear there is scope for such innovation to thrive in the UK. Whether it takes 10 years or longer, Revolut is set to make breakthroughs in developing more cashless initiatives. <

cashless society: leading the revolut-ionRevolut believes the UK could become fully cashless in just 10 years, and wants to be at the forefront of the revolution. CTO and co-founder Vlad Yatsenko explains to Briony Richter why this vision is close to becoming reality

Vlad Yatsenko, Revolut

CI May 2018 555.indd 14 27/04/2018 10:18:01


products | virgin atlantic

The Virgin Atlantic Reward and Virgin Atlantic Reward+ credit cards will enable customers to earn

Flying Club miles when using their card.Their bold and eye-catching designs,

created by Virgin, reinforce the Virgin Atlantic ethos of standing out from the crowd with strong statements.

Miles earned on the cards can be exchanged for the full range of Flying Club rewards including flights and cabin upgrades. Customers will also have free access to Virgin Money lounges and several offers from the Virgin Group.

Depending on spend, customers using the Reward and Reward+ credit cards can access a range of credit card rewards.

Red Flying Club members can choose a free premium upgrade when flying economy, or an economy reward companion seat which enables them to take a companion for no additional miles.

Silver members have access to the same options, as well as a premium reward companion seat or a pass for a Virgin Atlantic Clubhouse. Gold members can choose two Clubhouse passes, an economy, premium or upper-class reward companion seat. They can also choose a free premium upgrade.

Key features of the Virgin Atlantic Reward card include:• Earn 5,000 bonus Flying Club miles

with the first card purchase – this only applies within the first 90 days of the account opening;

• Earn 0.75 Flying Club miles for every £1 ($1.50) spent;

• If £20,000 is spent in a year, customers can choose a credit card reward, and

• No annual fee attached.

The features of the Virgin Atlantic Reward+ card differ slightly:• Earn 1.5 Flying Club miles for every £1

spent;• Earn 15,000 bonus Flying Club miles

with the first card purchase – within the first 90 days of the account opening;

• If £10,000 is spent on this credit card a year, customers can choose from a range of credit card rewards;

• Free access to over 1 million global hotspots via Boingo Wi-Fi, and

• An annual fee of £160.

Both cards offer double miles when bookings are made directly with Virgin Atlantic Virgin Holidays as well as access to Virgin Money lounges across the country.

Simon Hall, senior public relations manager at Virgin Money, tells CI: “Successful partnerships are a key part of Virgin Money’s strategy and we’re delighted to be working with Virgin Atlantic to offer customers exciting products supported by excellent customer service.

“Choice in the airline rewards credit card market has reduced significantly compared with recent years, so we’re delighted to offer new and attractive options for customers looking to earn miles.

“The Reward and Reward+ cards give customers an easy way to earn Virgin Atlantic Flying Club miles when they use their card for everyday spending, which can be redeemed for flights and ticket upgrades, and customers can also receive companion seats and Clubhouse access.”

However, users must be careful to play by the rules with these credit cards, or they could face some hefty penalties. For example, the representative APR on the Reward Plus card is 63.9% and on the Reward card 22.9%.

Furthermore, the purchase rate is 22.9% and while there is a 0% balance transfer offer for the first six months, it comes with a 3% fee. These charges are high and can eat into any potential rewards offered.

Oliver Byers, senior VP of sales and customer loyalty at Virgin Atlantic, concludes: “We are incredibly excited to launch our new credit cards. With our cards, customers can earn miles on their everyday spend to redeem for flights and upgrades and more. On top of that, we’re offering our most valuable customers even more choice of rewards so that they can create the Virgin Atlantic experience that suits them best.’’

Customers have access to Virgin Money lounges, as well as free refreshments, use of iPads and Wi-Fi. Offers from the Virgin Group include discounts on train tickets, holidays and experience days.

Virgin Money believes the new credit cards meet the demands of travel-hungry consumers, and will allow them to accrue holiday benefits no matter where they are in the world. <

virgin atlantic: flying higher with new credit cardsTwo new credit cards are the first products to be launched from the partnership between Virgin Atlantic and Virgin Money, facilitated by Mastercard. Briony Richter takes a looks at the cards’ primary features and benefits

CI May 2018 555.indd 15 27/04/2018 10:18:02


country snapshot | chile

CHILE

country snapshot: chile

Cash remains the preferred method of consumer payment in Chile, accounting for 73% of the total

payment transaction volume in 2017.

However, payment card transactions are gradually replacing cash in Chile, mainly as a result account of government and bank initiatives such as a financial

inclusion programme and infrastructure modernisation.

Furthermore, government efforts to provide basic banking and financial

0

2,000

4,000

6,000

8,000

10,000

20132016

2021f2017e

$bn

value of credit tRanSfers

Source: SBIF, CCA, GlobalData

0

100

200

300

400

500

600$bn

20132016

2021f2017e

value of cheque payments


Changing lifestyles and new facilities boost card uptake and use

0

10

20

30

40

50

60

70

80$bn

20132016

2021f2017e

value of payment cards


CI May 2018 555.indd 16 27/04/2018 10:18:20


country snapshot | chile

services have helped a large proportion of the population to become banked: the percentage of individuals aged over 15 with an account grew from 56.7% in 2013 to 77.6% in 2017.

Payment card uptake has been accelerated by the availability of convenient and more accessible banking models in the country. For instance, BancoEstado offers branchless banking services through Caja Vecina banking terminals, to bring unbanked consumers into the formal banking system.

Changing lifestyles and rises in the economically active population, disposable income and the popularity of online shopping supported the growth of payment cards during the period between 2013 and 2017 – a trend that is anticipated to continue to 2021.

CUENTARUTBanks are offering low-cost accounts to bring more of the population into the formal banking system.

BancoEstado, for instance, issues the low-cost CuentaRUT savings account to those who do not qualify for conventional current accounts. The bank issues a debit card with the account, which can be used at ATM and POS terminals, although cheque books are not issued.

The scheme is offered to legal resident females aged 12 and above, and legal resident males aged 14 and above, with the aim of capturing the country’s unbanked population. According to BancoEstado, there were 9.7 million CuentaRUT accounts as of September 2017.

CREDIT CARDS GAININGDemand for credit cards increased between 2013 and 2017, mainly as a result of increased short-term credit demand among the lower- and middle-class populations. Banks responded to this by lowering interest rates for credit card consumer loans; according to the central bank, the average interest rate charged fell from 34.3% in January 2013 to 21.9% in December 2017.

Another important driver for growth of credit cards is the option to convert purchase amounts into monthly instalments. Santander Chile offers an interest-free instalment payment facility on its credit cards, while Scotiabank Chile and

BancoEstado also offer instalment facilities to credit card holders at preferential rates.

E-COMMERCE GROWTHE-commerce transaction value grew at a strong CAGR of 22.0% between 2013 and 2017, supported by a rise in the number of internet and smartphone users coupled with a growing preference of online shopping.

E-commerce transactions are high in Chile during festive seasons. Cyber Day in May, for instance, marks the most important day for e-commerce transactions, with online merchants including travel and tourism, electronics, and clothing and apparel retailers recording high levels of demand.

Growth in the e-commerce market is also supported by the availability of various alternative payment solutions such as PayPal, Servipag, Masterpass and Visa Checkout.

INFRASTRUCTUREThe number of POS terminals rose from 142,417 in 2013 to 202,850 in 2017, indicating that Chilean consumers are increasingly inclined to use cards to make in-store payments. As merchants recognise the benefits of switching from traditional POS terminals to ones with more features and higher levels of mobility, mPOS terminal uptake is increasing.

In November 2017, BancoEstado partnered with SumUp to offer mobile card acceptance to small businesses, collectively intending to serve 600,000 SMEs and 1.2 million sole proprietors.

In May 2016, Transbank launched an mPOS solution that enables small businesses and service providers to accept card payments in Chile. The solution involves the conversion of smartphones into POS devices with the help of a wireless pinpad card reader that is connected to the smartphone via Bluetooth. <

Santander12.6%

Others29.1%

Banco deChile

13.4%

BancoEstado44.9%

Debit card shares by issuer

Source: GlobalData

mBank21.7%

Others42.3%

BankPekao12.1%

Redcompra100%

Debit card shares by scheme

Source: GlobalData

Banco deChile 22.2%

Santander30.5%Others

37.6%

CAT Administradorade Tarjetas 9.7%

pay later shares by issuer

Source: GlobalData

Mastercard57.3%

Others7.8%

Visa35.0%

pay later shares by scheme

Source: GlobalData

CI May 2018 555.indd 17 27/04/2018 10:18:23


country snapshot | nigeria

NIGERIA

Use of cash for consumer payments remains highly prevalent among Nigerians, especially for the

country’s large rural population. This is

primarily a result of a combination of limited public awareness of other payment instruments, and restricted access to banking infrastructure.

However, the Central Bank of Nigeria (CBN) has taken a number of steps to improve this situation. As part of its Financial System Strategy 2020, the CBN is focusing on bringing the unbanked population into the formal banking system, as well as promoting the use and acceptance of electronic payments in the country.

Banks are also attempting to address the issue by launching basic and low-cost banking accounts, expanding the overall payment infrastructure, and making ongoing efforts to change Nigerian consumer payment habits.

A rise in the economically active population, the advent of digital-only banks, the growing popularity of online shopping, the gradual acceptance of cards by retailers, and the proliferation of new payment solutions will help to drive electronic payments in Nigeria.

0

5,000

10,000

15,000

20,000

25,000$m

20132016

2021f2017e

value of credit tRanSfers

Source: World Bank, CBN, GlobalData

0

2,000

4,000

6,000

8,000

10,000$m

20132016

2021f2017e


Source: World Bank, CBN, GlobalData

country snapshot: nigeriaMoves to increase the banked population begin to take effect

CI May 2018 555.indd 18 27/04/2018 10:18:42


BANKED POPULATIONMore than half of Nigeria’s total population is unbanked.

As part of the central bank’s financial inclusion programme, banks are striving to provide unbanked individuals with access to formal financial services.

In one example of this, Access Bank launched the Smart Saver initiative in Nigeria in January 2016 with telecoms operator Airtel Nigeria. The service allows all Airtel subscribers to open an account with the bank directly via mobile phone.

Similarly, United Bank for Africa (UBA) and Visa launched the SmartMoney banking service in 2016, which comprises a prepaid card and a mobile app. This service enables users to make in-store and online purchases, and withdraw cash from ATM terminals.

CREDIT CARDSThe credit card market accounted for just 0.5% of the total value of payment cards in 2017.

To increase adoption, banks target less risky segments such as salaried individuals and high-income consumers. Many banks offer discounts, cashback, reward points, and loyalty programmes to encourage consumer usage.

For example, Ecobank Mastercard Advantage credit card holders receive discounts of between 3% and 20% at partner retailers. In 2017, Access Bank launched a loyalty programme, Rewarding Every Act of Loyalty, that allows credit card customers to earn and redeem reward points on card purchases.

NON-BANK CARDSIn a move to boost Nigeria’s underpenetrated credit card market, financial services business O3 Capital Nigeria launched the country’s first non-bank credit card in September 2014. Naira-denominated credit cards are issued to consumers with a limit range of NGN100,000–1.5m ($277.80–4,166.70).

The card is issued free of charge, and offers an interest-free credit period of 15 days and a minimum monthly payment of 10%. The company set relatively relaxed qualification criteria – anyone aged above 21 years who is employed and lives in Nigeria can apply.

The company also offers the O3 Business credit card and the O3 Corporate credit card, and in May 2015 it partnered with retail chain Game to launch the O3 Game credit card. The card is issued free of charge, and has a credit limit of between $277.80 and $4,166.70.

E-COMMERCE GROWTHThe Nigerian e-commerce market recorded a robust (CAGR) of 30.2% in five years, rising from $333.2m in 2013 to $956.5m in 2017.

Traditional payment instruments – which include cash, cheques, bank transfers and payment cards – remain the preferred method of payment for online shoppers in Nigeria, and collectively accounted for 73.3% of total e-commerce transaction value in 2017.

Alternative payments such as KongaPay, Paga, and PocketMoni are also increasingly used for e-commerce purchases.

PAYMENT INFRASTRUCTURETransaction volumes at POS terminals increased from 12.3 million in 2013 to 103.8 million in 2017, at a CAGR of 70.4%, while the transaction value increased from $578.64m to $3.50bn, at a CAGR of 56.8%.

With a growing preference for card payments, banks and payment service providers in Nigeria are launching low-cost mPOS terminals.

In 2016, fintech business Innovectives introduced an EMV-compliant mPOS terminal, called SmartPesa, onto the Nigerian market. The terminal provides a range of benefits, with costs reduced by 20% compared to conventional POS terminals.

In other similar moves, UBA launched mPOS terminals in Nigeria in January 2015, while Mastercard aligned with FirstBank and GTBank to deliver mPOS terminals to SMEs in Nigeria in March 2015, enabling them to accept card-based payments. <

country snapshot | nigeria

UBA32.2%

First Bankof Nigeria

20.1%

Others31.7%

AccessBank

15.6%


Source: GlobalData

Verve59.3%Visa

22.1%

Mastercard18.6%


Source: GlobalData

Access Bank22.7%

Ecobank21.0%

UBA19.8%

Others36.6%


Source: GlobalData

Visa48.8%

Others10.3%

Mastercard41.0%


Source: GlobalData

CI May 2018 555.indd 19 27/04/2018 10:18:47


Country snapshot | the philippines

Cash remains, by a very considerable margin, the most popular consumer payment instrument in the

Philippines, and accounted for 99.5% of the

country’s total payment transaction volume in 2017.

Cash’s dominance is mainly a result of the country’s high unbanked population,

inadequate banking infrastructure, limited public awareness of electronic payments, and generally low levels of payment card acceptance at merchant outlets.

However, with ongoing concentrated efforts by the Philippine government and the central bank, the share of cash is anticipated to decline gradually over the next five years.

As part of the government’s financial inclusion plan, a number of micro-banking offices, electronic money issuers, microfinance providers, pawn shops and remittance agents are being employed to provide access to financial services in unserved or underserved areas.

Consequently, the number of payment cards in circulation, the transaction volume, and overall transaction value recorded strong growth rates between 2013 and 2017 – a trend that is anticipated to continue to 2021.

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8$bn

20132016

2021f2017e

value of cheque payments

Source: Philippine Clearing House Corporation, GlobalData

0

5

10

15

20

25

30

35$bn

20132016

2021f2017e


country snapshot: the philippinesCash continues to dominate, despite strong card growth

THE PHILIPPINES

Source: Philippine Clearing House Corporation, GlobalData

CI May 2018 555.indd 20 27/04/2018 10:19:12


Country snapshot | the philippines

Debit cards have the highest transaction value in the country followed by credit and charge cards. The emergence of contactless technology and growth in the e-commerce market are also anticipated to support payment card market growth.

Rising investment in POS infrastructure and the proliferation of new payment solutions will further push electronic payments in the Philippines.

FINANCIAL INCLUSIONDebit card penetration in the Philippines is among the lowest compared to its regional peers.

As part of a key initiative to encourage financial institutions to establish branches in the country’s largely underserved rural areas, the central bank approved a new regulation in April 2015 whereby the processing fees associated with establishing new branches are waived.

The central bank has also expanded the scope of activities for micro-banking offices, allowing them to open bank accounts in rural areas.

As of September 2016, there were a total of 651 micro-banking offices operational in the country.

REMITTANCES DRIVE USERemittances form a key part of the Philippine economy, accounting for roughly 10% of the country’s GDP in 2016.

Remittances also play an important role in driving growth in the country’s payments market. With levels of migration steadily increasing, banks are offering bank accounts and debit cards that allow migrants to transfer money to beneficiaries in the Philippines.

For instance, in November 2016 BPI partnered with Australian banking group Westpac to allow Filipinos working in Australia to send money to friends and families back home.

CREDIT CARDS GAINThough small in size, the Philippine credit card market has registered robust growth, which can be attributed to the steady rise in the middle-class and young working populations.

Also driving growth in credit card transactions are the introduction of monthly instalment facilities and pricing

benefits such as annual fee waivers, reward programmes and cashback.

Furthermore, the government has introduced regulatory measures to strengthen and stabilise the credit card market. The implementation of the Philippine Credit Card Industry Regulation Law in 2016 is a key example of these measures.

To boost the credit card market, in August 2016 the Philippine Credit Card Industry Regulation Law was introduced granting Bangko Sentral ng Pilipinas (BSP) with powers to supervise all credit card issuers and acquirers operating in the country. Violation of any rules or regulations by credit card companies will result in a penalty.

BSP requires all credit card issuers to perform customer identification and due diligence procedures before issuing credit cards, and prohibits card issuers from adopting unfair and abusive practices when collecting credit card debt.

PREPAID CARD MARKETThe prepaid card market in the Philippines recorded significant growth between 2013 and 2017, both in terms of the number of cards in circulation and transaction value.

This trend was primarily driven by the unbanked population, and the issuance of gift and travel cards, and cards for remittances.

To capitalise on the increasing inflow of remittances in the Philippines, issuers are offering remittance prepaid cards, allowing consumers to receive funds remitted on their cards.

For instance, the Philippine National Bank offers the Global Filipino Reloadable Card, allowing holders to receive money transfers onto the card. The card has a maximum monthly reloadable limit of PHP100,000 ($1,998) and supports debit features, allowing card holders to access funds at all local BancNet ATMs in the country. <

Others45.8%

Land Bank ofthe Philippines

23.1%

Banco de Oro16.1%

BPI14.9%


Source: GlobalData

Others13.3%

BancNet73.1%

Mastercard13.6%


Source: GlobalData

Metrobank19.6%

Banco de Oro19.0%

Others42.3%

BPI19.0%


Source: GlobalData

Others16.7%

Mastercard48.3%

Visa35.0%


Source: GlobalData

CI May 2018 555.indd 21 27/04/2018 10:19:15


industry insight | mypos

At first glance, if there are fewer retailers struggling to entice customers into stores, this spells

bad news for the card and payment sector. On closer inspection, however, it represents

a huge opportunity and it is up to our industry to shout about the difference we can make to struggling retailers, along with the solutions we can offer to new players seeking to succeed in a changing landscape.

Technological developments in the payments sector are enabling businesses of all sizes and sectors to survive and thrive in the face of challenges.

THE CHALLENGERetailers face large, macroeconomic challenges that might seem too significant for the payments sector to tackle. These challenges range from shifts in consumer confidence and spending patterns to increases in inflation or a fall in wages.

Of course, no one technology solution can totally solve these issues, but in addressing cash-flow concerns, offering new sources of revenue and enabling businesses to provide greater convenience to consumers, the card and payment sector should be pushing for greater recognition of its role in equipping retailers to take on a tough environment – and here is how:

NEW REVENUE STREAMSBoosting revenue and building customer loyalty is hugely important for retailers during difficult times.

Fortunately, the payments sector is continually developing in a way which enables

retailers of all sizes, including sole traders, to do exactly that.

Sophisticated payment tech is diversifying revenue streams by also, for example, allowing retailers to offer customers mobile phone top-ups when making payments.

This boosts customer loyalty among shoppers who appreciate the added convenience, while also providing an additional reason for shoppers to visit the store in the first place.

Payment tech is also evolving by allowing retailers of varying sizes to offer private-label gift cards, which again boost customer loyalty and revenue as well as helping to generate brand awareness.

COMPETING ONLINEOne of the big challenges facing bricks-and-mortar retail is the increasing volume of online spending, which is proving a particular problem for larger retailers who overinvested heavily in physical store space during better economic times.

Clearly, the solution for retail is to adapt to and meet consumer requirements, and here again, the payment sector offers solutions.

More integrated payment solutions are ensuring that retailers, including sole traders, are able to create a single, consistent physical and online presence, processing payments across online, in-store and through the use of near-field communication.

While smaller retailers are, in some ways, less exposed to a shift away from bricks and mortar retail, many have previously not been able to process payments online. Innovation in the payments sector means they can now evolve with changes in consumer spending

habits and maximise their potential to bring funds into their business.

CASH-FLOW CONCERNSIn a tough retail environment, cash flow is a concern for the majority of SMEs in particular. The card and payment sector would not always have been seen to be the solution, as historically it took days for businesses to receive funds after accepting a card payment.

However, new integrated platforms are now playing a role in tackling the cash-flow challenge, with retailers able to accept and settle payments instantly, meaning small businesses gain instant access to their funds when accepting card payments.

This is a particularly important benefit for small businesses, who are most likely to be affected by cash flow concerns and might previously have declined to accept cards because of the delay in receiving payment.

As a result, the payments sector is helping a broader range of retailers present themselves as credible businesses, while offering consumers convenience in an increasingly cashless society.

PAYMENTS SECTOR CREDITIt is up to the card and payment sector to promote these innovations – demonstrating collaboration across the industry and with retailers and entrepreneurs to tackle a challenging environment.

While retail woes might dominate current headlines, our industry must shout about the role it can lead in the fightback – offering valuable new technologies and enabling a broader range of businesses and entrepreneurs to succeed in retail. <

retail woes: how they present A new opportunityFrom the casual dining crunch to reports of major high street retailers facing financial troubles or entering administration, there is little doubt that we are facing a difficult retail environment. However, as myPOS director Ambreen Khasru writes, this also represents a significant opportunity

CI May 2018 555.indd 22 27/04/2018 10:19:16

Event Highlights :

∤ A high profile programme featuring keynotes presentations, case studies, Q&A with the

speakers and exciting debates on a wide range of key issues challenging the market

∤ All top wealth managers and private banks in attendance and share best practice and experience

∤ Be an active part of discussions and interact with speakers through our new technology tool Slido

∤ Learn about market trends and the rising competition in the UK wealth management market

∤ Get up-to-speed with the policy update and review of regulatory parameters

∤ User perspective on technology in private banking and wealth management

∤ CPD certified event that lets you earn points towards your professional development

∤ Unrivalled networking opportunities in a 5 star venue at the centre of London

∤ Gala dinner to reveal the winners of the Private Banker International 2018 Awards, celebrating excellence in the wealth industry

SHAPE THE FUTUREOF PRIVATE BANKING


Private Banking and Wealth Management London 20187th June 2018 ∤ Waldorf Hilton Hotel, London

Private Banking & Wealth Management: London brings together private banks, family offices, independent wealth managers and intermediaries in an active discussion of the key issues facing the industry. The event

is an opportunity to share ideas, discover trends and network with peers across the wealth industry.


Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580

Silver Sponsors: Supported byGold Sponsor: Brand Sponsors:

Key issues:

∤ Open Banking and the main results of the

first stage implementation

∤ How Millennials are shaping the future of payments

∤ Artificial intelligence and machine learning

∤ Innovation in branch transformation

∤ Digital security and cyber crime

∤ RegTech - Leveraging technology innovation to comply with regulation

∤ Optimising customer experience in today’s competitive environment

∤ Technophiles v Technophobes - meeting the needs of different customers

SHAPE THE FUTUREOF RETAIL BANKING


Retail Banking: London 201810th May 2018 ∤ London

Retail Banking: London 2018 brings together high-street banks, new market entrants, financial professionals and industry disruptors in an active discussion of the key issues facing the industry: new regulation, digitalisation and

tech innovations that are shaping the future of retail banking.


Vicki Greenwood on [email protected] or call +44 (0) 20 3096 2580

Headline Sponsor Silver Sponsors Event supported byPanel SponsorBrand Sponsors

social service - verdict€¦ · analysis feature. security. complaints rise by 2% for . credit...

Documents