50 not out - verdict...citi has become the first major us credit card issuer to enable such in-app...

ANALYSIS PRODUCTS COUNTRY SNAPSHOTSThe UK tops cashless

payments, but lower-profile markets are also notable

Having conquered its home market of Italy, Jiffy looks

to new horizons

Critical overviews of card payments in Luxembourg, Slovenia and Saudi Arabia

50 NOT OUT

THE CORPORATE BARCLAYCARD CELEBRATES ITS HALF-CENTURY

Issue 558 / august 2018w w w. c a r d s i n t e r n at i o n a l . c o m

CI August 2018 558.indd 1 30/08/2018 13:32:33

2 | August 2018 | Cards International

contents

NEWS

05 / EDITOR’S LETTER06 / DIGEST• Most Americans unaware of non-

profit credit card debt relief• Credit cardholders seek better

reward programmes• MTY collaborates with DataCandy• Westpac NZ replaces cards after

Ticketmaster breach• EMVCo introduces test platform for

3-D Secure solutions• Entrust Datacard secures patent• $10m stolen in global bank heist• Dynamics, GMO Aozora to launch

interactive card in Japan• Chase teams up with Expedia on

expanded travel rewards• Sberbank rolls out Visa Platinum

business card in Russia• Canadian government reaches fee

deal with card businesses11

this month

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BARCLAYCARDCOVER STORY

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CI August 2018 558.indd 2 30/08/2018 13:32:51

www.cardsinternational.com | 3

contents

18

august 2018

22

INDUSTRY INSIGHT15 / DIEBOLD NIXDORFFinancial institutions are giving their digital offerings an overhaul, under pressure from changing consumer behaviours and because other organisations have evolved how they interact with customers. Matt Phillips writes

22 / REALVNCWith over 60% of UK residents reportedly using online financial services, bricks-and-mortar banks are not as important as they once were to the general public. RealVNC’s Matt Grant sees an opportunity for the ATM

11 / BARCLAYCARDCryptocurrencies are courting conventional banks, reports Ivan Castano. To really take off, however, the new players still need to win the approval of the payments establishment such as Visa and SWIFT. Can they succeed?

14 / CASHLESS PAYMENTSThe cashless revolution is, apparently, underway and cannot be stopped. While some areas are applauded for embracing the concept, others further from the limelight are evolving as well. Patrick Brusnahan writes

10 / JIFFYSIA has operated in Italy since the mid-1970s. It has increased its market share and, with its Jiffy offering, has entered the mobile space. With its home market conquered, it now wants to expand. Patrick Brusnahan reports

FEATURES ANALYSIS

PRODUCTS

16 / LUXEMBOURGLuxembourg’s payment card market is mature, with a high penetration of 4.0 cards per inhabitant. Cards are also the preferred payment instrument, accounting for 52% of the total transaction volume in 2017

18 / SLOVENIACash remains the dominant payment instrument in Slovenia. However, following concentrated efforts by banks, and the central bank’s financial inclusion programmes, the payment card market is gradually growing

20 / SAUDI ARABIAWhile high-value transactions are shifting to electronic platforms, low-value transactions are mostly made with cash. Use of debit cards, is gradually rising, although they are mostly used for cash withdrawals at ATMs

COUNTRY SNAPSHOTS

10

20

CI August 2018 558.indd 3 30/08/2018 13:32:55

Event Highlights :

∤ Two-stream format, with a wider variety of talks and discussions, case studies and keynote presentations

∤ Many issues related to innovation, transformation, regulation and change to be discussed to give a rounded picture of the life insurance market today

∤ InsurTech innovation lab where five of the best insurtech firms can demonstrate their innovative solutions

∤ Oxford-style live debate considering whether advances in robo-advice and D2C insurance will make most financial advisors extinct

∤ Industry thought leaders from the established insurers to those that are up-and-coming along with solution providers

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Life Insurance International: Innovation Forum and Awards 20187th November 2018 ∤ Waldorf Hilton, London

The 2018 edition of the Life Insurance International: Innovation Forum and Awards will be taking place in London on 7th November at the iconic Waldorf Hilton.

We will once again be bringing together life insurers, insurtechs and solution providers for a day of discussion covering the major issues in the retail banking sector.

For more details please contact:

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editor’s letter

Simple is best for KBC and Citi

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

Douglas Blakey, Editor

KBC Ireland’s mobile banking app is to feature an instant replacement service for lost or stolen cards.

Customers will be able to block their KBC card, apply for, and receive an instant digital card replacement via the app.

Sometimes the simplest of ideas are immediate wins for banks seeking to optimise customer experience. Take credit chargeback claims, a critical consumer-protection mechanism. Citi has become the first major US credit card issuer to enable such in-app functionality for card members. Citi credit card customers will have the ability, quickly and easily to dispute pending charges directly within the Citi mobile app. This new feature is also simple, and an extension of the dispute-posted-charges functionality that Citi launched in 2016.

It may be simple, but is a perfect example of a major card issuer introducing a new feature that does deserve the claim to improve the customer experience. KBC and Citi are winning friends by demonstrating that the incumbent banks can match or beat the startups and challengers in the innovation race.

Except that in Ireland, KBC is skilfully positioning itself as a challenger. For years, commentators forecast that Belgian-based KBC would exit the Irish market and retreat to its Benelux heartlands.

Ireland: core market for KBCKBC Ireland lost billions through its exposure to the Irish property market following the crisis, but last year announced that its Irish unit was now a core market for the bank.

KBC’s mobile app has attracted a lot of attention – and customers. KBC was the first bank in Ireland to offer new account opening via the app within five minutes. KBC also offered an instant digital card that could be used in advance of customers activating their physical card.

Other KBC Ireland firsts include the launch of Garmin Pay in June. KBC is the only bank in Ireland to offer digital wallets from four of the world’s leading technology companies: Apple Pay, Google Pay, FitBit Pay and Garmin Pay.

In addition to the ability to apply for a replacement which will go into customers’ digital wallets, KBC has rolled out an ‘Instant Credit Card’ whereby customers can apply for, receive

a decision on and potentially have a digital credit card within one hour. The virtual card allows debit transactions up to €2,500 ($2,925) and credit transactions up to €10,000.

KBC digital investment pays offThe results of KBC Ireland’s product and digital innovation are impressive. KBC added over 20,000 new customer accounts in the second quarter of 2018, bringing total number of new customer accounts added in the first half of 2018 to over 40,000.

KBC Ireland is now serving almost 300,000 customers in Ireland, with first-half highlights including the number of digital wallet transactions linked to a KBC current account up by 221% year on year. KBC remains on track to hit its target of growing customer numbers to 425,000 by 2020.

An impressive 78% of KBC Ireland customers are regular users of its mobile banking service. That is a figure that many a bank in mature markets around Europe would love to hit.

Elsewhere, OCBC is winning friends with another simple but popular feature. OCBC became the first bank in Singapore to enable customers to transact at merchants that accept Apple Pay within minutes of applying for a new Visa credit or debit card. Again, no need to wait for a physical card to arrive in the mail as the digital card can be added to Apple Pay instantly via the OCBC Mobile Banking app.

In the UK, Metro Bank continues to differentiate itself with the offer of instant card issuance of physical cards in-branch. The service ticks the box of offering speed and convenience, and avoids any fear about a card going missing in the post. It also benefits the issuer by positioning the card as top-of-wallet. Almost half of the largest US banks now offer instant card issuance, but the idea never really caught on in the UK until Metro Bank came along.

Meeting and exceeding consumer expectations by offering instant access to their accounts, creating a positive customer experience, is key for all banks, incumbent or start-up.

The growth of instant digital issuance will not slow down, but there remains a strong argument that more-established banks with branch networks ought to consider instant issuance of physical cards. <

CI August 2018 558.indd 5 30/08/2018 13:32:57

News | Digest

news digest


Credit cardholders seek better reward programmesA new study by data analytics business JD Power has revealed that credit card customers are seeking better reward programmes.

The 2018 Credit Card Satisfaction Study analysed interaction, credit card terms, communication, benefits and services, rewards and key moments. Of a total of 24,018 respondents, nearly half (47%) said they had switched card in the past 12 for better reward programmes.

The study found that customer satisfaction is directly associated with reward value. The highest satisfaction score for the amount of rewards earned per dollar is 170 points higher than for customers with average satisfaction.

It was found that 36% of respondents did not completely understand the rewards available to them. Meanwhile, the overall satisfaction score in customers who fully understand earning and redeeming of

rewards is 101 points higher than for those who do not understand.

A free FICO credit score with a card and associated mobile application increase

customer satisfaction. The study also indicated that older

customers are more satisfied with the transition to digital billing.

JD Power’s senior director of banking practice, Jim Miller,

said: “The key for issuers in this highly competitive environment is

to make sure they are offering the types of benefit that resonate with current and potential customers.

“It is better to have customers fully understand their benefits rather than provide benefits of which customers aren’t even aware.”

According to the study, Discover cards have highest customer satisfaction with a score of 836. They are followed by American Express with 830 and Barclays US with 806. <

Most Americans unaware of non-profit credit card debt reliefApproximately three-quarters (73%) of US consumers are uninformed about the ben-efits of non-profit credit card debt manage-ment plans (DMPs).

A Harris Poll revealed the statistic while researching a report on behalf of credit counselling provider Money Management International (MMI).

The majority (51%) of US citizens in credit card debt were found to have used some form of debt relief. The common form of relief was balance transfer to another credit account, with 36% using this. In addition, 30% of people sought help from friends or family, while 27% adopted debt consolida-tion loans; only 15% used a DMP.

MMI noted that these findings indicate lack of awareness of the benefits of DMP.

Around 62% of US consumers are unaware that DMP is used to combine credit card debts into a single payment that can be made monthly and distributed among all creditors.

Moreover, the majority of US consumers do not know that interest rates are low on debts included in a DMP.

MMI’s senior vice-president of counsel-ling, Jim Triggs, said: “It’s difficult to see those challenged by unmanageable debt overlook a proven solution simply because they are unaware of its existence or unfamil-iar with its benefits.

“Consumers are deciding how to address their debt without fully understanding all their options, but can make an informed decision by creating a plan with the help of our skilled counsellors.” <

MTY collaborates with DataCandy

Canada-based MTY Tiki Ming Enterprises has extended its alliance with gift card and loyalty solutions provider DataCandy to expand its gift card programmes into the US market.

Under the new long-term agreement, DataCandy’s technology platform will support MTY’s gift card programmes, and can be used to manage these programmes.

In addition, the platform is said to offer cost-saving benefits to all types of merchant at any location. It also stores customer data and reporting in one place, allowing businesses to effectively and easily track active customer promotions and marketing initiatives.

DataCandy president Lorne Schwartz said: “The opportunity to be a full-service gift card and loyalty provider for MTY in Canada and in the US is a true testament to our platform’s capabilities and to our team’s dedication to customer service.”

Since 2016, DataCandy’s platform has supported the BonApp MTY Rewards programme. It is currently used by 40 brands in more than 1,800 locations.

MTY COO Claude St-Pierre said: “With MTY’s continued and steady growth, DataCandy’s platform enables continuity across our loyalty and gift card programmes. DataCandy has proven to be a valuable partner in the BonApp MTY Rewards loyalty programme, and they have worked closely with us from the outset.”

MTY, a division of MTY Food Group, operates casual, fast-casual and quick-service restaurant dining franchises at more than 5,700 locations. <

CI August 2018 558.indd 6 30/08/2018 13:33:00

News | digest


EMVCo introduces test platform for 3-D Secure solutionsEMVCo has introduced a new test platform to facilitate functional testing of EMV 3-D Secure (3DS) solutions.

The EMV 3DS Test Platform will enable providers to check whether the performance of their solutions is in line with the EMV 3-D Secure Protocol and Core Functions Specification v2.1.0.

It is a messaging protocol that allows consumers to authenticate with card issuers during card-not-present e-commerce payments.

The platform’s features are said to promote more secure and consistent online transactions across various channels and connected devices. At the same time, it optimises the cardholder experience.

EMVCo executive committee chair Stephanie Ericksen commented: “EMV 3DS promotes consumer familiarity, convenience

and security across the rapidly advancing e-commerce environment. The availability of a functional testing framework for EMV 3DS is an important step towards the development of a globally interoperable, secure remote payments ecosystem.”

EMVCo is collectively owned by American Express, Discover, JCB, Mastercard, UnionPay and Visa. The technical body enables interoperability and acceptance of payment transactions.

The company has also collaborated with the Payment Card Industry Security Standards Council (PCI SSC) to align its 3DS testing with the council’s security standards and assessment programmes.

Both EMVCo and PCI SSC offer a workable structure for functional testing as well as security evaluation of EMV 3DS solutions. <

Entrust Datacard secures patent for card personalisationEntrust Datacard, a provider of trusted identity and secure transaction technology solutions, has secured a patent that will enable duplex card printing while phasing out the requirement for a second card printing mechanism.

The company said the new US Patent No. 10,049,320 will lower both the cost and the footprint of card personalisation systems.

The patent is intended to facilitate card-processing mechanisms that have separate return and primary card travel paths, and enables a card to be relaunched in the primary path and moved through a card processing station for a second time.

Entrust Datacard’s vice-president of bureau solutions, Dan Good, said: “For nearly 50 years, we’ve kept our finger on the pulse of innovation in the security and card-personalisation space, continuously investing in new technologies that have allowed us to provide the most cutting-edge solutions to our customers.

“We will continue to invest in and create solutions that not only meet our customers’ needs, but exceed their expectations.”

Secure ID and card personalisation solutions provider Datacard Group became Entrust Datacard following the purchase of identity-based security solutions provider Entrust.

The business was first launched in 1969, and has obtained over 200 US patents and several patents in Europe and China since its inception. It currently employs more than 2,000 staff, and has clients in 150 countries. <

Westpac NZ replaces cards potentially caught up in Ticketmaster breach

Westpac NZ has cancelled and started to replace a total of around 30,000 credit and debit cards that could be potentially at fraud risk due to the recent Ticketmaster payment data breach.

Customers who purchased, or tried to purchase, tickets on Ticketmaster between September 2017 and 23 June 2018 could be impacted by the breach.

Westpac has already dispatched replace-ment cards to customers in New Zealand, advising members to activate their new cards and destroy old ones.

Westpac NZ’s head of financial crime and security services, Tiffany Ryan, said: “We have been aware that the Ticketmaster-relat-ed data security incident could potentially affect our customers, and we’ve been moni-toring all activity closely since.

“We have strong fraud controls in place, but we wanted to take an extra proactive step to protect our customers and provide them with peace of mind around this issue.”

In June this year, Ticketmaster reported a breach of the payment card and personal details of customers who bought tickets on its UK website. The company disclosed that around 5% of its global customer base had been affected.

Ticketmaster identified that the fraud was carried out using malicious software on a customer support product. The product was hosted by Inbenta Technologies, a third-par-ty supplier to the company.

At the time of the announcement, UK-based mobile-only bank Monzo replaced all its cards used on the Ticketmaster website as a precautionary measure. <

CI August 2018 558.indd 7 30/08/2018 13:33:06

News | Digest


Dynamics, GMO Aozora to launch interactive card in JapanFinancial services provider Dynamics has partnered with technology bank GMO Aozora Net Bank to launch interactive debit and cash cards in Japan next year.

The battery-powered cards will offer enhanced security via a touch-sensitive keypad and digital display on the card. Cardholders need to enter a pass code onto the keypad present on the front of the product. The pass code activates the card’s display that shows the payment card number.

On entry of the correct code, the card will be turned on and can be used to swipe, tap or insert into a reader through a magnetic stripe, contact or contactless EMV chip.

Consumers will also be able to use the keypad to choose to use their card as a debit or cash product. This feature enables both debit and cash functionality on a single card.

The new interactive cards are compatible with existing payment infrastructure

and merchant systems, and can be used wherever Visa is accepted.

Dynamics CEO Jeffrey Mullen said: “We are very pleased to work with GMO Aozora Net Bank on delivering such a revolutionary payment experience to the Japanese market.

“Through this new card, we shall provide new convenience and security to the Japanese consumer, and together with GMO Aozora Net Bank we will deliver further value into the future.” <

$10m stolen in global bank heist

Despite warnings from the FBI, cybercrimi-nals have stolen $10m in a global bank heist.

Hackers managed to infect Cosmos Bank’s debit card system with malware and steal $10m through 14,800 ATM transactions in 28 countries.

The FBI issued a warning in the same week to banks that cybercriminals are planning to conduct a global fraud scheme called ATM cash-out. The confidential alert read: “Cybercriminals are planning to conduct a global Automated Teller Machine (ATM) cash-out scheme in the coming days, likely associated with an unknown card issuer breach and commonly referred to as an unlimited operation,” Krebs on Security reported.

In this process, hackers use cloned cards at ATMs worldwide to transfer money. The alert added that hackers will use malware to eliminate multiple security and fraud con-trols implemented by financial institutions to remove limits on transactions.

They will also be able to change account balances and other security firewalls, making

unlimited funds available during ATM cash-out transactions. The cloned cards used in the transactions are made using stolen card data, the details of which are transferred onto reusable magnetic strip cards.

Most ATM cash-out operations are carried out at weekends when banks and financial institutions are usually closed. The fraudsters are also said to target smaller and mid-sized institutions with fewer cybersecurity con-trols, making them more prone to phishing and cyberattacks.

The FBI has requested that all banks evalu-ate the performance of their security systems and implement proper authentication meas-ures as required. The advice also calls for a dual-authentication procedure for withdraw-al amounts above a specified threshold.

Barrie Dempster, head of cybersecuri-ty consulting at BlackBerry, said: “With increasing security measures in place, it’s becoming more and more difficult to hack cards, so criminals are aiming for machines.

“ATMs in particular can be vulnerable to attacks – partially because they offer an

immediate payout. Many are at the end of slow dial-up links, so require manual updates with an often quite slow connection depending on region, and a lot of suppliers may not necessarily have the bandwidth to ensure an engineer is manually travelling to each machine to update them.

“Currently, a number of ATMs are still running on Windows XP, an unsupported operating system, leaving them open to a huge amount of risk as this software is no longer being patched. It’s guaranteed to be vulnerable.”

Lu Zurawski, practice lead – retail banking at ACI Worldwide, said: “ATMs rely on oper-ating systems just like domestic computers, so it is common for ATMs to use versions of Windows or Linux. And just like with home PCs, owners need to keep their systems up to date with the latest releases of security software patches.

“Without such defences, enterprising criminals may be able to discover vulnera-bilities in the operating system. They may be able to plant viruses, malware or modified programs which allow them to alter the computer’s programme. For domestic users, this leads to distress when digital accounts and passwords become compromised. For ATM owners, this leads to fraudsters robbing a bank.”

George Avetisov, CEO of HYPR, said: “When passwords, bank card numbers, etc. are harvested through phishing, they are made available to hackers alongside massive libraries of credentials from attacks on other service providers like social media platforms.

“Since consumers often reuse credentials, this makes the credentials in the hands of hackers valid on many platforms, giving cre-dential stuffing attacks a 2% success rate.” <

CI August 2018 558.indd 8 30/08/2018 13:33:08


News | Digest

Sberbank rolls out Visa Platinum business card in RussiaThe Visa Platinum Business premium business card for managers and business representatives can now be acquired as a Sberbank card.

The new card can be used to pay for goods and services both in-store and online. It features privileges developed in collaboration with Visa that can be accessed during business trips and events, as well as other business-related events in Russia and other countries.

Cardholders will be able to use business lounge services at airports and railway

stations with Lounge Key technology. Users of the Sberbank card can also acquire premium travel insurance, and discounts on taxis, restaurants, hotels, car rental and baggage-packing services.

Managers can use the company’s online tool to set individual limits for all business cards issued within an enterprise.

Deputy chair of Sberbank’s executive board, Anatoly Popov, said: “We develop products for our clients in order to improve their businesses. At the same time, all of Sberbank’s products and services, including

personal ones, provide benefits. According to our clients, these benefits significantly outweigh the expenses. This is a guarantee that our co-operation will improve.”

The launch of the new Visa card follows Sberbank’s first rating of cashless regions and cities in the country.

According to the company, the proportion of card payments in total transactions for goods and services across Russia grew from 4% in 2008 to 39% last year. So far this year, the share is approaching 50%. <

Chase teams up with Expedia on expanded travel rewardsChase Card Services has partnered with Expedia Group to expand its Ultimate Rewards travel programme.

The new programme will have new capabilities and improved redemption flexibility, and members will have access to an enhanced Ultimate Rewards travel booking experience. The travel hub will be backed by Expedia’s network of flights, hotels, vacation spots and car rentals.

Card members will also benefit from increased transparency in flight fares and seat selection. In addition, 24/7 customer support will be available via a self-help website and by phone.

Initially, the new experience will be available for Chase Freedom and Freedom Unlimited members. It will be extended to Chase Sapphire and Ink cardholders over the coming months.

Chase’s head of Ultimate Rewards and loyalty solutions, Lorraine Hansen, said: “Our card members are searching, booking and redeeming for travel in Ultimate

Rewards more than ever, and together with Expedia Group we are taking the experience to the next level.

“Whether on desktop or mobile, we are providing simpler and smarter booking tools with over a million options to search, delivering even more value and flexibility to Ultimate Rewards card members.”

Expedia’s Partner Solutions brand president, Ariane Gorin, said: “The

flexibility of the Expedia Partner Solutions technology offering opens the door to the widest selection of travel products for customers, so they can redeem their points for travel in an easy-to-use, modern online travel marketplace.”

Chase Ultimate reward points can also be redeemed for other experiences, gift cards, cashback, and to make a paymment of statement credit. <

Canadian government reaches fee deal with card businessesThe government of Canada has secured vol-untary commitments from Visa, Mastercard and American Express to reduce merchant fees in Canada for small and medium-sized businesses accepting credit cards.

Visa and Mastercard have agreed to lower domestic consumer interchange fees to an annual average effective rate of 1.40% for five years. In addition, the companies have agreed to narrow the range of interchange rates that are charged to merchants, and have also mandated annual verification by an independent third party.

American Express, which operates a different business model with no interchange

fees, entered into a separate commitment focused on increasing fairness and transpar-ency on merchant fees in Canada.

All the commitments are aimed at making credit card acceptance fairer for small and medium-sized businesses, while maintaining card benefits such as reward programmes.

Canadian Minister of Finance Bill Mor-neau said: “The voluntary commitments an-nounced today are good news for Canadian businesses that accept credit cards, and good news for Canadian consumers.

“With lower interchange fees, businesses will be able to save money that they can use to invest, grow and create more jobs – an

important part of strengthening and growing the middle class.”

The decreased interchange fee is expect-ed to save C$250m ($191m) annually for Canadian small and medium-sized busi-nesses, assuming credit card sales of around C$250bn per year.

If medium-sized businesses having credit sales of C$5m a year receive a 10-basis-point reduction in interchange fees, they will save around C$25,000 over five years. For smaller businesses, with annual credit sales of C$1m per year, a 15-basis-point decrease in inter-change fees is expected to offer savings of up to C$7,500 over five years. <

CI August 2018 558.indd 9 30/08/2018 13:33:12


products | jiffy

Solutions provider SIA launched Jiffy in 2014. A mobile payment service, Jiffy only needed a contact’s mobile

number to send and receive money. Now Jiffy has five million customers

registered. It works with 130 banks, and is connected to 80% of bank accounts in Italy. Moreover, it works with 2,000 retailers – ranging from the small to the large.

BANCOMATExpansion does not stop there. SIA signed an agreement with card company Bancomat to launch digital payment service Bancomat Pay. This opens SIA up to another 37 million users, which would take it close to 100% of the Italian market. Bancomat Pay will integrate the Jiffy service, allowing Bancomat

users to utilise all of Jiffy’s services.Speaking to CI, Marco Polissi, head of

Jiffy at SIA, says: “This is a good opportunity, not only for Jiffy, but I think for the entire country and Bancomat as well.

“We started a few years ago, reaching to one bank after the other. Now, with the agreement with Bancomat, we are very happy because Jiffy will become the solution for B2B and B2C. This is a great opportunity.”

“During our 30 years in business, we have consolidated our most precious asset – the trust of the market and the customer,” says Bancomat chief executive Alessandro Zollo.

“With Bancomat Pay, we intend to take our first step to entering the world of payment services of the future, where it is not just cash that is dematerialised, but the card itself. Together with banks, we want to be the facilitators and champions of change and innovation for the country.”

Nicola Cordone, deputy CEO of SIA, says: “We have invested heavily in Jiffy, together with the 130-plus banks that already use it, and from today we are making its innovative features available to Bancomat to facilitate digitalisation and make the Italian country’s system even more efficient.”

Polissi adds: “It was a mutual convergence between two players: SIA and Bancomat. There was a natural synergy, two components that provided technical solutions for the other.”

BERGAMOJiffy is not just for the retail sector any more. Thanks to an agreement between SIA, UBI Banca and the ATB, Italians can use Jiffy to

pay for public transport. Season tickets can now be purchased using the mobile payment service; this is a first for Italy.

According to SIA, this is one of the many signs that alternative payments are growing. It states that “new digital payments” grew over 2016 and 2017 by 50% to stand at €46bn ($52bn) in 2017. Also, digital transactions by smartphone increased by 60% to reach €6.7bn by the end of 2017.

Natascia Noveri, marketing manager at UBI Banca, says: “The transport sector is going through a period of considerable change, and it is paying great attention to innovation in the field of digital payments. We are studying a totally new and user-friendly user experience with ATB and SIA.

“We believe that users should be assisted in those circumstances in which ease-of-use, speed and simplicity are key factors in making payments.”

CASHLESS IN ITALYWhy is Jiffy doing so well when there are plenty of players offering cashless transactions in Italy? Why has it stuck out of the crowd?

“The market in P2P and P2B is very congested. Jiffy has a couple of advantages,” Polissi explains. “One is that a customer does not need to make a new account to use Jiffy. The second point is the solution does not disintermediate banks.”

With close to 100% of Italy now able to use Jiffy, is this the right time for SIA to expand the service elsewhere?

Polissi concludes: “In Italy, this is a beautiful opportunity. This is a model that can be applied in other countries. Of course we want to expand outside of Italy soon.” <

jiffy: mobile payments gathering speedSIA has operated in Italian banking and finance since the mid-1970s. It has increased its market share and, with its Jiffy offering, has entered the mobile space. With its home market conquered, it now wants to expand. Patrick Brusnahan reports

Alessandro Zollo, Bancomat Nicola Cordone, SIA

CI August 2018 558.indd 10 30/08/2018 13:33:13


feature | barclaycard

Over 2,000 workers aged between 25 and 65 who incurred expenses were surveyed.

Employee corporate spending has evolved rapidly, and now the days of the petty cash drawer are long gone.

The 1960s, 70s and 80s were the peak of employee expenses. According to Barclaycard, UK employees are now far less likely to spend company money on entertaining clients. Just 10% of those surveyed said they often claim dinner at a restaurant with a client on expenses – less than half than in the 1960s (34%), 70s (27%) and 80s (28%), continuing a steady decline over the decades.

A number of factors have driven these changes. The introduction of company cards and businesses doing away with petty cash has changed the language of business payments.

Speaking to CI, Marc Pettican details the changes in the industry over the last five decades. “Barclaycard introduced the UK’s first corporate credit card in 1968,” he says. “Since then, we have helped thousands of businesses to grow. Our first card was created in a former shoe factory in Northampton, so we’ve certainly come a long way.

“We have enabled small businesses and corporates to better manage cash flow and build a credit history with the nation’s first card that was in a company’s name rather than an individual’s.

“From cash to cheque to chip-and-PIN card payments, over the past 50 years we’ve

seen many changes in how consumers are able to make a purchase. Naturally, these quickly translate into business payments too.

“However, while we introduced the first physical corporate cards 50 years ago, we’re now helping to take them away with virtual cards. The rise of this technology is probably the biggest change I see, alongside the demand from businesses to have payment solutions integrated into the platforms they already use.”

Pettican continues: “Although we’ve seen payment methods change over the decades, our core objectives remain the same: to ensure that businesses gain greater control of expenditure and increase efficiency in the payments they make.”

SHIFT TO DIGITALThe development of digital and virtual technology, such as virtual cards and electronic payments, has significantly shifted the way employees and businesses conduct expenses.

Since Barclaycard introduced the first corporate credit card in 1968, businesses have become more diverse and intertwined with technological solutions in order to accelerate growth and innovation. Rapidly moving into a digital environment, the range of expenses – and the methods of claiming them – changed almost overnight.

Over one in 10 (11%) of the retired workers surveyed by Barclaycard said that over

the course of their career, the expense process became more digital.

Pettican explains: “Business spending has changed dramatically since Barclaycard introduced the first corporate credit card. This was a major moment in the development of UK companies and how they were managed, because suddenly an entire generation of workers gained more flexibility in their day-to-day working lives.”

Employees today will continue to be part of an ever-expanding digital shift. Three in 10 workers stated that their preferred expense system would include an app. Online or on mobile, it would both support them in paying for business purchases, and automatically go through the relevant forms and information needed to claim those expenses back.

Closely behind in popularity (26%) was the use of an expense scanner. The machine would take a picture of the employees’ receipts and complete the relevant paperwork.

Referring back to Barclaycard’s findings, Pettican comments on the digital shift witnessed within the business travel space. “We see trends in consumer payments quickly seep into the commercial payments arena because, at the end of the day, commercial cardholders are consumers too.

“A few examples have already emerged in the business travel space. According to Barclaycard research, three in 10 travel managers say requests to pay via mobile wallets have increased over the last year, and

corporate barclaycard: a half-century

of innovationTo mark the 50th anniversary of the first corporate credit card in the UK, Barclaycard has released the results of a survey that highlights shifts in business payments. Briony Richter speaks to Marc Pettican,

managing director of Barclaycard commercial payments, about the most significant changes

CI August 2018 558.indd 11 30/08/2018 13:33:15



a quarter have noted a rise in the number of travellers who want to book their trips on a supplier mobile app.”

VIRTUAL CARDSVirtual cards are one of the hottest trends in the retail banking sector. Stronger at tackling fraud and more convenient, their popularity is on the rise and set to continue to do so.

It is not just millennials snapping up this technology. Virtual cards appeal to employees and businesses by reducing friction within the payments process.

“Over the last decade, many companies have started to use virtual cards – in other words, a single-use commercial card that is issued digitally – to facilitate payments between buyers and suppliers,” notes Pettican.

“Virtual cards first became popular in the travel space, when big bundles of trips – from air fares to hotel rooms – were bought and sold, and it’s still being used today. When a travel agency books travel on behalf of their customer they can generate a virtual card and pay the travel provider in real time, and simply reconcile the booking to the billed transaction.”

He continues: “This is a game-changer. When you think about the traditional procurement process, by the time an invoice reaches the finance team, the transaction has already taken place; they can’t do anything about it. However, with virtual cards, the business can now pre-approve the transaction before it happens. What’s more, because it’s a single-use card, the chances of fraud decrease dramatically.”

The technology allows greater transparency and flexibility, and can cover a wide range of business costs with enhanced security to protect companies from fraud.

“Virtual cards offer many of the features of traditional plastic cards plus other benefits, including simplified reconciliation. Purchases on a virtual card come with a greater amount of transaction detail in comparison to legacy payment solutions. For instance, instead of a single reference number there is the ability to capture as many reference fields as the business needs,” he adds.

“They not only simplify reconciliation; they can help companies unlock wider process efficiencies. Increasingly, virtual cards are integrated into a business’s existing finance and procurement systems, so this payment option is readily available in the purchasing process. Practically, this means the buyer can deploy a commercial card whilst in their

finance system, without the need to exit the workflow and login elsewhere.

“Thanks to this integration, finance systems can seamlessly collect, store, manage and interpret the increased amount of data provided.”

Consumers also benefit from using virtual cards, especially when it comes to payment security. With virtual cards, there is an extra security buffer between bank accounts and vendors around the world. A maximum spend limit can be placed on virtual cards, blocking any further payments or charges once the limit has been reached.

Moreover, the card details are destroyed after every transaction and new ones automatically regenerated, adding an extra layer of security. This means it is virtually impossible to replicate the randomly issued virtual card number for other purchases. These parameters drown all possibility of draining a consumers’ bank account.

For those who no longer want to carry cash, it is reasonable to expect that eventually they will no longer want to carry physical cards. Biometric solutions are also gaining traction, with biometric technology becoming increasingly accepted in sectors including government agencies, multinational organisations and banks.

In April 2018, UK biometric firm iProov was selected by the US Department of

Homeland Security to tighten the security of cross-border passenger travel.

INVISIBLE PAYMENTSThere 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 online is the biggest motivator for going digital.

However, Pettican does not envisage a fully cashless society in the UK. Although there is a clear shift towards digital methods, cash and cards will not be completely replaced. He claims: “We know that people are using credit and debit cards more and more, but we don’t necessarily think contactless, mobiles, wearables and other innovations will replace cash or chip and PIN; it’s more about payment choice.”

“Whether they’re a consumer or a business, in the future we predict everyone will want the ability to pay when they want, how they want. Financial institutions, including payment providers, will need to work ever-more closely to have platforms and systems that can speak to one another – it’s what their customers will expect,” he says.

Barclaycard is currently driving another form of innovation: ‘invisible’ payments. Speaking about their impact on consumers’ lives, Pettican states: “At Barclaycard we’re

focused on making payment as frictionless as possible, and this involves exploring many types of innovation. Right now we’re largely focused on invisible payments.

“Invisible payments have made consumers’ lives easier for several years in specific industries – just think of how Uber has revolutionised the taxi experience, effectively removing the need for passengers to physically engage in a payment transaction. This has increased consumer expectations and challenged payment providers to come up with new technologies that can incorporate this convenience elsewhere.”

Five decades on from the first corporate credit card, Barclaycard still has the same focus. Its priority is embracing customer-focused innovations and technologies.

we don’t necessarily think contactless, mobiles, wearables and other innovations will replace cash or chip and PIN

Marc Pettican, Barclaycard

CI August 2018 558.indd 12 30/08/2018 13:33:17



Keeping up with customer trends, Barclaycard brings those innovations into the corporate sphere in order to stay ahead of what a card holder desires.

LOOKING FORWARDThe rapid pace of innovation, new competitors, and increasing regulation has transformed the landscape of the financial industry over the past 50 years. This is true for the way business expenses are processed. There has been a significant shift to self-service. According to Barclaycard’s findings, 63% of employees now file their own expense claims, compared to 38% in the 1960s.

Asking about the future for the card industry, Pettican lays out some predictions that will impact the sector. “We see a couple of big trends coming down the pipeline: given their rising popularity in the consumer payment space, we expect to see increased appetite for e-wallets. More specifically, we expect consumers will want the option to house corporate cards alongside personal cards, with the ability to toggle between payment options.

“The second is an expanded use case for virtual cards. Traditionally, they were associated with travel purchases. Over the past few years, however, we’ve witnessed an increase in businesses that have incorporated virtual cards into their payment strategy to manage wider business costs. So, whether they’re buying their everyday stationery or large-ticket items for their supply chain, virtual cards are coming into their own in the B2B space.”

He concludes: “As businesses increasingly want to pay in a way that suits them, we’ll continue to offer products that help to maximise choice. In 2012, we launched Barclaycard Precisionpay, a platform that offers three different payment methods: debit, credit and prepaid.

“A few months ago we also added the ability to push payments directly into a supplier’s bank or merchant acquiring account. This will help in instances where suppliers do not accept card payments.

“The value-add on top of traditional bank transfers, however, is that Barclaycard will send the money immediately to the supplier and the business can pay us at the end of their billing cycle. Not only does this help the business to extend their working capital, it could also allow them to negotiate better rates with suppliers, thanks to their ability to always pay on time or early.” <

barclaycard: a history of innovation

• 1966: Launches the first UK credit card with a team of just 30 people headquartered in an old shoe and boot factory in Northampton.

• 1968: Introduces the UK’s first company credit card to help businesses make payments and keep track of staff expenses.

• 1986: Rolls out electronic card payment machines (PDQs) following the first deployment at a Miss Selfridge store in Brent Cross Shopping Centre, London.

• 1995: Bcomes the first UK credit card company to go online with Barclaycard Netlink. At first consumers were only able to pay utility bills, but by 1997 they could also check statements and settle their accounts with a debit card.

• 2003: Rolls out chip-and-PIN to over half of the adult population and almost 1,000 businesses in Northampton.

• 2007: Pioneers contactless payments in the UK with the OnePulse card, which can also

be used on London’s transport network.

• 2012: Becomes the first UK company to introduce wearable payment devices.

• 2014: Works with TfL on the first phase of contactless on London’s tubes, trains buses and ferries by aiding the evolution of the yellow Oyster card readers to enable them to read contactless cards.

• 2015: Creates the nation’s first payments fashion wearables through partnerships with TopShop and Lyle & Scott.

• 2016: Launches Android Contactless Mobile, and becomes the first financial services brand in the UK to allow customers to make contactless payments on an Android phone, enabling high-value contactless payments up to £100 ($128) without a card.

• 2018: Has 9.6 million consumer cardholders and more than 300,000 business customers in the UK. <

CI August 2018 558.indd 13 30/08/2018 13:33:19


analysis | cashless payments

There are plenty of benefits to adopting the cashless mentality. According to research from Expert

Market, digital payment technologies are helping economies thrive.

Examining all 28 EU countries, the Expert Market report looks at the countries with the most digitally ready businesses. According to the research, the UK is at the top of the list, having generated £81.3trn ($104.5trn) in cashless payments in 2016. In addition, the country had the highest amount of cashless payment transactions at 25.2 billion.

Card payments surpassed cash transactions for the first time. This suggests that the convenience of card payments is driving a rise in cashless spending. In 2015, according to the British Retail Consortium, cards overtook cash as accounting for the majority of retail transactions in the UK. Due to the greater likelihood of card use for higher-value purchases, the overall value for cashless methods was likely far higher.

According to National Rail, card purchases now account for 80% of rail tickets by value.

In the UK, London houses 20.4% of the entire country’s total card payments, according to research from Paymentsense; its The Capital of Card Payments report gave second place to Birmingham with a meagre 3.4%.

However, London is not the UK’s contactless capital: 59.5% of Bristol’s card payments are contactless, nearly two percentage points higher than London (57.1%). Other UK cities that performed well were Brighton with 55.9%, Hull with 55.7%,

and Birmingham, which recorded 53%.Contactless usage in the UK tripled in

2016, and Paymentsense predicts that over one in every four (27%) payments will be made in this fashion by 2026.

PREFERENCESNot everything is smooth sailing for contactless, however. While 80% of respondents said card transactions, including contactless, were their favourite way to pay, 46% were concerned about security of card transactions. However, 24% reported that contactless, specifically, was their favourite way to pay.

Dean Wallace, practice lead, real-time and digital payments at ACI Worldwide, says: “The UK is moving to digital payments for purchases from merchants and for paying each other, gradually replacing cash.

“Consumers simply demand choice, and financial institutions need a flexible and robust capability to ensure they can meet the varying demands of consumers.”

Second place for card-payment readiness went to Germany. Despite having 80% of transactions conducted in cash in 2014, Germany has quickly progressed to be a digital country. However, new measures, such as bringing in card payments to all taxis in Berlin in 2015, have been the catalyst for a contactless revolution in the country. Its annual cashless spend reached £48.7trn.

France, the Netherlands, and Spain completed the top 10. At the bottom of the table was Malta. In 2016, it only took £89bn in cashless transactions; for comparison, the UK took 535 times more.

According to the European Central Bank, 92% of transactions in Malta in 2016 still involved cash. The Expert Money report states that this could be down to “hidden economies” and cash being used to avoid tax.

This holds serious repercussions for businesses. They will be unable to tap into digital sales if the customer base does not want to embrace cashless payments.

Speaking to CI, Jared Keleher, editor and lead researcher at Expert Market, says: “The question around whether mobile payments will take off in Europe is interesting.

“On the one hand we’ve seen industry reports claim that nearly a third of British consumers are opting to pay for things using their phone, but when you look at our mobile wallet growth relative to the rest of the world, it’s pretty slow – as is the case with most of Western Europe.

“Our digital payments infrastructure is already so well established that there isn’t the same level of urgency to push consumers to use the latest e-money tech that you see in traditionally cash-dependent economies like China and India, where the rate of innovation has helped them skip the card payments party altogether and move straight to mobile payments. Most of Southern Europe still relies quite heavily on cash, so we might seem similar trends there.”

Keleher concludes: “Either way, it’s clear that Brits’ love affair with mobile payments is getting stronger, simply because it means one less thing to carry around, so it’s likely that merchants will need to ensure that their systems have the capacity to accept them either way.

“For small businesses, it’s an extremely exciting time because it gives them more ways to say yes to customers than ever before.” <

europe embraces the cashless mentalityThe cashless revolution is, apparently, underway and cannot be stopped. While some areas, such as the UK and Scandinavia, are applauded for embracing the concept, others further from the limelight are evolving as well. Patrick Brusnahan writes

THE CASHLESS TOP 10

1 The UK

2 Germany

3 France

4 The Netherlands

5 Spain

6 Poland

7 Italy

8 The Czech Republic

9 Belgium

10 FinlandSource: Expert Market

CI August 2018 558.indd 14 30/08/2018 13:33:20


industry insight | diebold nixdorf

Mobile technology has changed the rules of engagement forever, and the customer-experience

stakes continue to rise.The industry must respond: banks and

financial services organisations need to evolve, innovate and connect the complete customer journey in new and interesting ways. And they need to do this quickly.

Sounds like a familiar problem? It is one that has evolved out of changing consumer behaviours. For example, according to research, people have an average of 24 apps installed on their phones, and most people unlock their phones 28 times a day to check these apps. Millennials are almost never seen without their mobile phones in their hands, or placed on the table next to them in a meeting, with half carrying their phones with them everywhere they go.

TIME TO FOLLOW SUITOur obsession with everything digital is nurtured by many businesses already – and the time for the financial services industry to follow suit is now. Retailers have been particularly adept at finding new ways of connecting with customers – with Amazon and eBay among the most popular apps in the UK at the moment. These apps make transactions simple, seamlessly connecting customers to their purchases.

For many financial institutions, following in these footsteps – or fingerprints – involves a seismic shift – from relying on physical

touchpoints such as using a debit card at an ATM, to focusing on the digital, the unseen, and the automatic.

This is invisible banking. This is where engagement takes place over apps – not just over the counter – where the mobile wallets go beyond customer expectations, and where an open API economy offers up new opportunities.

TOP FIVE TIPSWith so much to achieve and with so little time, here are five key tips for making the most out of digital opportunities.1. Chose to focus on areas where you’ll

have quick wins: For banks, digitisation involves more than simply adding new and improved features to a mobile banking app. It is a big beast, and one that is constantly changing shape according to customer demands and the competitive landscape. Focusing on where you can make quick changes is a useful tactic to employ, if you want to make an impact, while working on the long-term strategy in the background;

2. Build in flexibility: The open API world is bringing with it a new realm of possibility for organisations that want to digitise. By creating an open and standardised platform, it becomes possible to integrate more offerings into your portfolio more quickly – with flexibility and adaptability built in from the beginning. Ultimately, being open and flexible like this, will allow

financial services firms to future-proof their operations and evolve quickly;

3. Do not close the doors on integration: Integrating out-of-the-box services into your offering can be a really effective way to bring new solutions to market, quickly. Many app creators have multiple ready-to-go financial services apps and hundreds of features that can be integrated with back-end platforms and data to bring them to more customers quickly;

4. Consider working with third parties: Many banks are already working on incubator schemes with third parties to develop, test and deploy new innovations into their complex systems. The Barclays Accelerator and the City Ventures Fintech Accelerator are two great examples. Both are helping fintech start-up concepts to find a place in the banking ecosystem, thus reducing pressure on internal teams, and

5. Consider your different markets: Every market is different, and customers have different needs in each. The UK is further advanced in the world of mobile banking than some other countries in Europe – with payments, contactless transactions, and even biometric authentication building momentum in the UK. So, if you are implementing person-to-person payments or customer experience bots as part of your digital offering, make sure they are tailored to your customer’s needs.

STRIKING THE BALANCEUltimately, digitisation is about more than just adding fads or gimmicks to your offering. It is about making banking a seamless part of your customer’s lives, improving their experience and bringing your services in line with their expectations. It does not matter that you are in a different industry to Uber, eBay, or Amazon; this, is what you are going to be compared to.

Striking the right balance is crucial. This new era of seamless banking happens in the background. Consumers do not see it, but they do experience it. For some firms this might involve making it possible for customers to pre-order cash, and then scan a code at their closest ATM to withdraw that cash. For others, it might involve using data intelligently to develop more personalised services or account aggregation apps. It depends on the market, the customer demand, and the overall business objectives involved.

Do you have your customer experience goals in plain sight? <

invisible banking: it’s in plain sight; here’s what to doIn today’s mobile world, financial institutions are working to give their digital offerings an overhaul, under pressure from changing consumer behaviours and because other organisations – such as retailers, restaurants and convenience firms – have evolved how they interact with customers. Diebold Nixdorf ’s Matt Phillips writes

CI August 2018 558.indd 15 30/08/2018 13:33:20


country snapshot | luxembourg

LUXEMBOURG

country snapshot: luxembourg

Payment cards are the preferred payment instrument in Luxembourg, accounting for 52% of the total

payment transaction volume in 2017.

Banking penetration in Luxembourg is one of the highest in the world, and consumers are keen users of bank products and services. The percentage of

Luxembourg’s population aged 15 or above with a bank account was 97.3% in 2017.

Luxembourg is also host to a number of wealthy individuals and large corporations,

0

500

1,000

1,500

2,000

20132016

2021f2017e

$bn

value of credit tRanSfers

Source: Central Bank of Luxembourg, GlobalData

0.0

0.5

1.0

1.5

2.0$bn

20132016

2021f2017e

value of cheque payments

A mature market with high card penetration

0

3

6

9

12

15$bn

20132016

2021f2017e

value of payment cards

Source: Central Bank of Luxembourg, GlobalData Source: Central Bank of Luxembourg, GlobalData

CI August 2018 558.indd 16 30/08/2018 13:33:31


country snapshot | luxembourg

and the majority of banks offer private banking, wealth management and asset management services. Payment cards are often cross-sold to customers as part of bundled offerings.

A favourable tax regime and bank-privacy legislation have enabled financial services to become a growth leader. The rising adoption of contactless technology contributed to the growth of payment card transaction volumes and values between 2013 and 2017.

With a growing number of retailers accepting contactless payments, the increased use of contactless technology is anticipated to further drive payment card transaction values and volumes over the next five years.

DEBIT CARDS PREFERREDDebit cards accounted for 55.2% and 54.2% of the payment card transaction value and volume respectively in 2017. Growth has been supported by a gradual shift from low-value cash transactions to debit cards, and the availability of contactless cards.

Some non-banks also offer debit cards, and the entries of digital-only banks such as N26 and FerratumBank have also supported the debit card market.

Germany-based mobile-only bank N26 launched operations in Luxembourg in November 2017. Account holders are offered a Mastercard-branded debit card to make payments in stores and online.

Similarly, Finland-based mobile-only bank FerratumBank offers services in several European countries, including Luxembourg. The bank offers a current account, an overdraft facility and a Mastercard contactless debit card.

PAY-LATER GROWTHPay-later card penetration in Luxembourg is among the highest in the world, with every citizen currently holding around three pay-later cards.

Rising disposable incomes and real household consumption are the primary reasons for the strong uptake of pay-later cards among individuals.

With Luxembourg’s largely wealthy population, banks are offering premium credit cards and a range of value-added services to these customers as part of bundled packages.

E-COMMERCE GROWTHE-commerce in Luxembourg recorded strong growth, increasing in value from €466.1m ($559.3m) in 2013 to $899.2m in 2017, at a CAGR of 12.6%.

Increasing consumer confidence in online transactions and a well-developed logistics infrastructure have supported e-commerce’s growth. The availability of virtual payment cards and a number of alternative payment solutions for online purchases has also been a key factor.

In November 2017, the Luxembourg government announced the launch of national e-commerce platform LetzShop. The platform provides an opportunity primarily for small- and medium-sized merchants to display and sell products online. Products can be picked up from physical stores or delivered to the customer’s address.

To make it cost-effective, transaction fees on purchases are waived for

merchants, although an annual fee of around $600 is charged. This initiative is anticipated to boost e-commerce in the country, which will drive electronic payments.

PAYMENT INFRASTRUCTURE The number of POS terminals grew from 11,608 in 2013 to 13,232 in 2017, mainly supported by an increase in the number of POS installations at smaller retail outlets.

To serve SMEs, payment service providers are offering mPOS solutions. In 2017, SumUp, a Germany-based POS provider, launched its mPOS solution in Luxembourg, allowing merchants to accept payments by mobile phone.

As preference for contactless payments grows, retailers are also installing POS terminals with contactless functionality. According to Visa Europe, there were 7,000 contactless POS terminals in Luxembourg as of February 2018. <

BanqueInternationaleà Luxembourg

14.9%

Others32.6%

BNP Paribas22.0%

Banque etCaisse d’Epargne

de l’Etat30.5%

Debit card shares by issuer

Source: GlobalData

Mastercard52.0%

Visa48.0% Visa 100%

Debit card shares by scheme

Source: GlobalData

Others40.8%

BNP Paribas59.2%

pay later shares by issuer

Source: GlobalData

Visa67.3%

Others6.8%

Mastercard25.9%

pay later shares by scheme

Source: GlobalData

CI August 2018 558.indd 17 30/08/2018 13:33:33


country snapshot | slovenia

SLOVENIA

Cash remains the dominant payment instrument in Slovenia, accounting for 54.0% of the overall transaction

volume in 2017.

However, following concentrated efforts by Slovenian banks to boost card use, as well as the central bank’s financial inclusion programmes, the payment card

market is gradually growing. Payment cards accounted for 21.0% of the overall payment transaction volume in 2017 – up from 16.7% in 2013.

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country snapshot: sloveniaBank and government initiatives challenge cash’s dominance

CI August 2018 558.indd 18 30/08/2018 13:33:38


Growths in the payment card transaction value and volume between 2013 and 2017 was also supported by the rising popularity of contactless cards. Most banks in the country offer contactless cards that can be used to make payments for transactions of less than €15 ($18).

Debit cards are the preferred card type in Slovenia, accounting for 79.9% of overall payment card transaction value in 2017. High banking penetration and consumer preference for debt-free payments and prudent consumer spending have led to the dominance of debit cards.

FINANCIAL INCLUSIONFinancial inclusion remains a priority for the Slovenian government, which plays a key role in promoting financial literacy. The central bank also runs education days to promote financial awareness. The Bank Association of Slovenia also works to create financial awareness by organising workshops and seminars.

Banks have also taken steps to improve consumer education. For example, Nova KBM spreads knowledge and awareness among children about bank products and services through its mascot, Dindin.

PAY LATER GAINSIn terms of transaction value, the charge card market accounted for a larger share than credit cards in 2017. Charge cards are mainly preferred by corporate customers for high-value transactions, as they have a fixed payment timeline.

Banks in Slovenia have taken steps to boost credit card use, and most offer instalment facilities. Abanka’s Visa Electron credit card allows holders to split payments into between two and 12 instalments.

E-COMMERCE GROWTHThe value of e-commerce grew from $222.3m in 2013 to $402.8m in 2017 at a strong CAGR of 16.0%. The young and working population is expected to drive the e-commerce market further. According to the Statistical Office of the Republic of Slovenia, 46% of the country aged between 16 and 74 made an online purchase between April 2016 and March 2017.

E-commerce growth is also supported by the availability of alternative solutions including PayPal, Skrill and paysafecard.

ALTERNATIVES GAINBanks and payment service providers are launching new solutions to boost electronic payments in the country.

NLB launched its mobile wallet, NLB Pay, in March 2018, which allows users to save Mastercard card details to the wallet and make in-store contactless payments in Slovenia and abroad.

In March 2017, Fortumo collaborated with Telekom Slovenije to launch its carrier billing service in Slovenia. The service allows users to pay for digital content with Google Play; purchases are then charged to the user’s mobile phone bill or prepaid balance.

In May 2016, Intesa Sanpaolo Bank launched its mobile wallet in Slovenia. The app works via both NFC and QR codes, allowing users to make in-store payments by waving their phone over contactless terminals, or by scanning a QR code at merchant outlets.

PREPAID CARD MARKETThe prepaid card market is at a nascent stage in Slovenia. Despite low penetration, the market recorded significant growth of 28.3% in the five years to 2017 in terms of number of cards in circulation, and 43.4% growth in transaction value.

Banks and non-banks offer prepaid cards to capitalise on growing demand. Intesa Sanpaolo Bank offers the reloadable multifunctional MOJA Activa Visa Electron prepaid card, which can be used for POS transactions and ATM withdrawals worldwide. The card can be recharged via universal payment order, fund transfer, or cash deposit at Intesa Sanpaolo branches.

Non-banking companies are also active in the prepaid market. For instance, city bus operator LPP offers the Urbana card, a prepaid card for electronic ticketing that can be purchased from LPP ticket offices, tourist information centres, kiosks, post offices and Ljubljana bus station. <

country snapshot | slovenia

NLB32.5%

Nova KBM16.5%

Others36.5%

Abanka14.6%


Source: GlobalData

Mastercard64.5%

Visa35.5%


Source: GlobalData

IntesaSanpaolo

10.9%Nova KBM

14.5%

Others35.1% NLB

39.5%


Source: GlobalData

Mastercard61.6%

Others20.1%

Visa18.4%


Source: GlobalData

CI August 2018 558.indd 19 30/08/2018 13:33:39


Country snapshot | saudi arabia

In Saudi Arabia, cash remains the preferred method of consumer payment, accounting for more than 90% of the

total payment transaction volume.

While high-value transactions are shifting to electronic platforms, low-value transactions are mostly carried out with cash. Although use of payment cards,

primarily debit cards, is gradually rising, they are mostly used for cash withdrawals at ATMs, rather than making payments at merchant outlets.

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country snapshot: saudi arabiaHigh-value transactions gradually shift to electronic platforms

SAUDI ARABIA


CI August 2018 558.indd 20 30/08/2018 13:33:46


Country snapshot | saudi arabia

The government, however, has been taking several initiatives to promote electronic payments, one being the introduction of the Wage Protection System regulation in September 2013.

While debit cards remain the dominant payment card type, use of credit cards remains low in Saudi Arabia for religious reasons, as Islam forbids interest.

To encourage credit card use, banks are now offering Sharia-compliant credit cards in addition to regular cards. Almost all leading credit card issuers in the country now offer Sharia-compliant credit cards.

The gradual adoption of contactless technology and the emergence of the e-commerce market – supported by the availability of several alternative payment methods – are both likely to drive the payment card market in the next five years.

GOVERNMENT INITIATIVESDebit cards are the dominant method of payment card transaction in Saudi Arabia. To encourage electronic payments, the Saudi Arabian Monetary Authority (SAMA) has taken a number of initiatives, including establishing electronic payment system called Mada, and introducing mandatory wage payments into bank accounts.

SAMA launched a modified payments network in September 2015 linking all ATMs and POS terminals across the country to a central payment switch, with the aim of boosting electronic payments.

PAY-LATER CARDSPay-later cards accounted for only 6.1% of the overall transaction value in 2017. One of the prominent factors inhibiting the growth of credit cards is the debt-averse nature of Saudi card holders and merchant reluctance in accepting credit cards.

The central bank has also set a minimum income requirement for the issuance of credit cards at SAR24,000 ($6,400) per annum for banked consumers and $8,000 for non-banked consumers, making credit cards available only to a certain segment of the population.

CONTACTLESS ADOPTIONThe gradual adoption of contactless payments is fostering the use of payment cards at the POS. Riyad Bank launched the country’s first contactless card in

September 2015, transforming its entire card portfolio to contactless technology.

In addition, in April 2016 National Commercial Bank transferred its entire credit card portfolio to contactless technology. To further boost electronic payments, SAMA launched a contactless payment service, Mada Atheer, in November 2016, allowing Mada card holders to conduct low-value transactions by waving their card at POS terminals.

In February 2018, SAMA announced plans to extend contactless functionality to smart devices. In March 2018 Riyad Bank partnered with payment technology provider Gemalto to launch Saudi Arabia’s first contactless payment wristband.

E-COMMERCE MARKETSaudi Arabia’s e-commerce market registered a strong CAGR of 25.2% between 2013 and 2017, supported by the growing young population,

rising smartphone penetration, and the government’s growing focus on e-commerce.

According to a report by the Communications and Information Technology Commission, Saudi consumers shop online at least once every three months, spending an average of $1,067 annually. The availability of solutions such as Masterpass and Visa Checkout will also support e-commerce growth.

PREPAID CARD MARKETPrepaid cards are gradually gaining prominence in Saudi Arabia due to the high unbanked and expatriate populations.

In line with the Wage Protection Law, in December 2017, the Ministry of Labor and Social Development mandated the payment of salaries to domestic workers through prepaid cards. The ministry has also given a deadline to employers to issue prepaid cards to domestic workers. <

Others40.6%

Al Rajhi Bank 31.1%

NationalCommercial Bank 18.5%Riyad

Bank9.9%


Source: GlobalData

Visa55.1%

Mastercard44.9%

Mada100%


Source: GlobalData

NationalCommercialBank 25.7%

Saudi BritishBank 9.9%

Others34.8%

SambaFinancial

Group 8.6%


Source: GlobalData

AmericanExpress 4.0%

Mastercard45.0%

Visa51.0%


Source: GlobalData

CI August 2018 558.indd 21 30/08/2018 13:33:47


industry insight | realvnc

With far fewer banks, it will become increasingly difficult for those who do not want

to handle their finances solely online to access services, unless the industry is able to come up with a solution that replaces the traditional bank.

While many believe ATMs have the potential to provide more advanced branch services, such as paying in cheques or printing statements, it is also projected that over the next few years, up to 30,000 cashpoints are expected to disappear from high streets because of the high cost of upkeep.

The industry, therefore, has a challenge to find ways to make ATMs profitable enough to stay open while also providing a sound alternative to the traditional bank. This is a difficult balancing act that requires a completely new way of thinking about ATMs and the services they offer. Banks must begin to perceive ATMs not just as cashpoints, but as a one-stop-shop for all kinds of transaction, and an opportunity for customer service, consumer engagement and upselling.

A number of pioneering financial institutions are beginning to recognise that ATMs can be much more than just a cash dispenser. NCR is developing a ‘bank in a box’ ATM, which claims to perform up to 80% of the tasks a bank branch can, and has the potential to eventually replace the need for physical branch locations. Actions such as depositing cash and cheques, the issuing of new cards and even customer service can be

handled at the cashpoint, providing a way for people to use a much wider range of services.

There are also plans for ‘iPhone ATMs’ with touchscreens, ‘recirculating cashpoints’ that let you deposit coins in the machine, ‘selfie ATMs’ that use face ID, and cashpoints that

allow customers to talk to an adviser by video link and order concert tickets.

These innovations are a step in the right direction to ensuring ATMs have the advanced capabilities to handle day-to-day bank branch activities.

Making cashpoints easier to use and able to perform a wider

array of functions will allow financial institutions to provide customers with an alternative banking avenue while also finding new revenue streams to make ATMs more profitable.

While innovating the traditional hole in the wall is a vital step in ensuring financial institutions do not disappear from the high street altogether, it is also critical that there are structures in place that allow the more advanced machines to work seamlessly.

Unlike a store front, ATMs have the potential to malfunction, which can take days or even weeks to get back up and running. Maximising uptime is a crucial way to increase the ROI and profitability of cashpoints and reduce customer frustration over closures. Implementing technology such as remote access software, which have the capabilities to allow engineers in a remote service centre to access an ATM, will provide a platform to quickly and easily fix any technical problems.

This means that ATMs can be maintained in real time, which improves uptime and dramatically reduces the need for expensive field service calls.

In a further attempt to reduce ATM downtime, operators are using remote access technology to organise and implement mass system updates. Using this software, engineers are able to remotely log into the machines at an appropriate time and add new updates and features, or roll out new operating systems across entire ATM estates.

As well as maximising uptime, the ability to regularly and easily update ATMs safeguards them against the threat of new data breaches, such as ‘ATM jackpotting’, and ensures customer data and money remains safe.

As ATMs play more of a role in the safeguarding of physical banking abilities, it is vital that their networks are secure and trusted by the public. And with banks having to pay back money stolen from customer accounts via a hacked cashpoint, security updates are a vital way of keeping ATM costs down.

In order to truly replicate the services offered by traditional banks, financial institutions also need to integrate more customer service applications into ATM offerings. Using remote access technology, they can create an interactive facility within the cashpoint that offers customers levels of services expected in a face-to-face branch experience.

This is a major enabler of customer loyalty in a time of mass bank closures, and will help to ensure banks continue to provide the personal touch without physical branches. Remote access software enables support teams to interact with users at the ATM, creating a cost-effective, ‘always on’ service capability.

Customer service desks can engage step by step with the customer to guide them through transactions or queries through video, audio and on-screen annotations. This helps banks continue to offer communication to the older and more lucrative customer demographic that value human interaction without the need for expensive, full-service branch locations.

If ATMs are to provide an alternative to traditional bank branches, it is vital that financial institutions and operators reinvent their role. The ultimate goal is to help users easily complete more actions at an ATM.

In order to ensure that the machines can offer the same experience as in-branch, technologies are needed to improve ATM uptime and introduce customer service capabilities that allow banks to continue to connect with customers. <

the future of banking depends on an atm revolutionOver 60% of UK residents now, reportedly, use online financial services, so bricks-and-mortar banks are not as important as they once were. It was also recently reported that the big five banks are currently closing 60 branches a month, meaning they are becoming less of a feature on the high street. Matt Grant, business development director at RealVNC, sees an opportunity for the ATM

Matt Grant, RealVNC

CI August 2018 558.indd 22 30/08/2018 13:33:48

SHAPE THE FUTUREOF RETAIL BANKING


Retail Banking: Europe 201828th November 2018 ∤ Hesperia Hotel, Madrid

Retail Banking: Europe 2018 is moving to Madrid for a day of discussion between traditional and challenger banks along with selected solution providers about the key issues of today in the European retail banking sector.



Key issues:

∤ The digital transformation of European banking

∤ How to make the most of Open Banking

∤ How can traditional banks benefit from open APIs?

∤ PSD2 and fraud: What new trends are developing?

∤ Enhancing customer experience in the digital age

∤ The role of branches in the 21st century

∤ Adapting for the millennial customer

∤ Are mobile-only banks the future?

∤ The opportunities for blockchain and cryptocurrencies

∤ GDPR: The early experiences following implementation

Silver Partner: Bronze Partner: Panel Host: In Association with:

Key Issues :

∤ Economic trends to 2020. Wealth management industry performance

∤ With technology playing an increasingly significant role in service delivery what benefit does institutional size confer?

∤ What are the implications for service, delivery and product distribution in the age of the digital wealth manager?

∤ How is technology enabling faster, more cost effective on-boarding, KYC and compliance reporting among wealth management organisations?

∤ How should Switzerland’s private banking industry define itself in the age of digital technology and intensifying competition?

∤ What channels are working for attracting, retaining and managing an increasingly diverse customer universe?

∤ What’s the connection between distribution and profitability? How are Swiss private banks adapting to the challenge of tight margins and higher costs?

∤ What does the country need to do to stay ahead?

SHAPE THE FUTUREOF PRIVATE BANKING


Private Banking & Wealth Management: Switzerland 201812th December 2018 ∤ Marriott, Zurich

Private Banking & Wealth Management: Switzerland 2018 Conference and Awards leverages the expertise across the Verdict research and publishing portfolio, including Private Banker International, Wealth Insight

and Wealth Intelligence Centre. The event is an opportunity to share ideas, discover trends and network with peers across the wealth industry.



Supported byGold Partner: Silver Partner: Bronze Partners: Exhibitor:

50 not out - verdict...citi has become the first major us credit card issuer to enable such in-app...

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