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CREATING LOYAL CANADIAN CREDIT

CUSTOMERS

November 2016 Issue 537 www.cardsinternational.com

• COUNTRY SURVEYS: Kuwait, Switzerland and the U.A.E.• EVENT: Prepaid Europe Summit & Awards 2016

• DISTRIBUTION: Pin4• GUEST COMMENT: Equifax

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Cards International

www.cardsinternational.com November 2016 y 1

EDITOR’S LETTER

CONTENTS2 NEWS: DIGEST

6 PRODUCTS: CREDIT CARD LOYALTY

Canada has seen a significant number of credit card launches, co-branding deals and portfolio acquisitions in recent years, as issuers capitalise on Canadians’ appetite for reward programmes and added value. Robin Arnfield reports on this strategy and how it’s affecting the sector

10 EVENT: ANNUAL PREPAID EUROPE SUMMIT AND AWARDS

One day, four sessions and multiple keynote speakers from leading companies from Italy and the wider Europe highlighted the healthy state of the growing prepaid market and its prospects. Douglas Blakey reports on the key points made during the event and the winners of the awards

12 DISTRIBUTION: PIN4

HalCash North America is targeting unbanked and underbanked US consumers with its Pin4 cardless ATM service in partnership with remittance firm Viamericas. Robin Arnfield reports

14 COUNTRY SURVEY: KUWAIT

16 COUNTRY SURVEY: SWITZERLAND

18 COUNTRY SURVEY: THE UAE

20 GUEST COMMENT: EQUIFAX

With unwanted findings regarding fraud, as well as major breaches in cybersecurity, a stronger strategy towards security is needed now more than ever says John Marsden, head of ID and fraud at Equifax

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There is, however, a but: cuts to loyalty programmes due to caps on interchange fees risk customer relationships.

Financial services brands are generating value and support from customers through loy-alty, so say marketing specialists Collinson Group.

A survey of 2,500 loyalty programme members finds that 81% of loyalty programme members are part of a financial services programme, com-pared to airline carriers (53%) and hotel compa-nies (42%). It also finds that over half (53%) of the respondents said that their financial services loyalty programme is their favourite.

The survey of 2,500 consumers covers the US, the UK, Singapore and the UAE.

My strong suspicion is that if the study had extended to Canada (see feature on page 6) sup-port for banking loyalty programmes would have been even higher.

The findings suggest that financial service organisations understand the rewards that con-sumers genuinely value in loyalty programmes and recognise that these help to build positive, ongoing relationships.

Of those consumers who are members of a financial services provider’s loyalty programme, 63% said that they valued the wide range of rewards and offers.

This was followed by the ability to collect points and spend rewards in-store (55%), and being able to spend their points on goods and services online (51%).

More than half (57%) of those surveyed said that they like the ability to customise their loyalty programme to ensure that it is relevant to them.

Financial services brands should continue to explore ways to offer flexibility and choice in both the collection and redemption aspects of reward

programmes. If they are looking for ideas for inspiration, they

could do worse than look towards Canada.Royal Bank of Canada and Toronto Dominion,

for example, have outstanding programmes ena-bling customers to earn coveted travel rewards with their ‘travel anytime’ messaging resonating with cardholders frustrated with an inability to redeem for flights on the major coalition pro-grammes.

Despite the positives in the Collinson report, loyalty programmes in the financial services sec-tor remain under threat from EU legislation which has capped interchange fees.

Analysis by First Annapolis Consulting found that in the first six months since the introduction of the cap on interchange fees, financial service brands reduced the value of their reward pro-grammes and the number of reward options avail-able. It remains to be seen if this turns out to be a false economy.

Meantime, a report comes to hand from Deloitte, noting that enrolment in loyalty pro-grammes in the US across various industries in the US grew by 20% to 3.32 billion in 2015 from 2.65 billion just three years earlier. The study rightly suggests that loyalty rewards programmes repre-sent strategic investments for all of organisations.

It also finds that many programmes are not real-ising full potential, due to account inactivity; low redemption rates; time delays; high transaction and system management and customer acquisi-tion costs and low client retention. One suggested way forward is the use of blockchain, to eliminate many inefficiencies.

Douglas [email protected]

Financial companies delivering better value for customers in loyalty programmes

EDITOR’S LETTER

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Cards International

www. cardsinternational.com 2 y November 2016

NEWS: DIGEST

DIGITAL

Cardtek partners with NXP for wearable paymentsTurkish payment solution provider Card-tek and Dutch semiconductor manufactur-er NXP Semiconductor have partnered to launch the Digital Enablement Platform, a digital payment solution for wearables.

The new solution will allow users to make safer and easier transactions, including on-boarding payment cards and transit tickets.

Cardtek will integrate NXP PN66T and P60 wearable chips with its devices, support-ing issuers, wearable OEMs and other service providers to enable payment and non-pay-ment services in wearables.

Cardtek executive vice-president of sales and marketing for North America, Emilian Elefteratos, said: “Wearables bring many advantages to the payments industry. One of the key benefits is that issuers or service pro-viders will have full ownership of their own wallets without being dependent on third-party providers.

“Built-in NFC wearables enable consum-ers to leave their wallet at home and make transactions simpler and safer than ever before,” Elefteratos continued. “Cardtek is pleased to play a leading role in helping drive

the rapidly emerging wearable payments market.”

NXP vice-president of transactions Charles Dach said: “The integration of contactless secure applications in wearable devices can be a significant business opportunity for hardware and service providers.

“With NXP's PN66T loader service fea-ture, implementation of new services on wearables is simple and secure – opening the door for more convenience in being able to use your wearable for identification, bank-ing, ticketing and access.” <

TECHNOLOGY

R3 teams up with MAS to open blockchain labDistributed ledger technology firm R3 has partnered with the Monetary Authority of Singapore (MAS) to launch a new lab devot-ed to the emerging technology.

The R3 Asia Lab will be based in Lat-tice80, and will operate as a dedicated research and development centre.

The lab will accommodate visiting special-ist DLT technologists, innovators and busi-ness leaders, R3 said.

These solutions will be intended to improve efficiency and transparency, reduce costs for financial institutions, and ultimately be commercialised across global capital mar-kets, the company added.

MAS chief fintech officer Sopnendu Mohanty commented: “The practical spin-offs from fundamental research in distrib-uted ledgers and blockchains are beginning to be realised. MAS is pleased to collaborate with the financial industry through broad, international, consortia such as R3 to cre-ate and conduct rigorous experiments that will inform and encourage adoption of these advances.”

Tim Grant, CEO of R3’s Lab and Research Center, and member of the MAS Interna-tional Technology Advisory Panel, said: “We look forward to deepening our relationships with local financial services companies, regu-

latory bodies and the tertiary education com-munity, and to using Singapore as a means to connect the region with our many initiatives around the world.”

R3 group CEO David Rutter commented: “As one of the world’s leading fintech hubs and a key global financial centre, Singapore is the ideal location for our Asia lab.

“We are honoured to have the support from the MAS and we look forward to working closely with them as we continue to research and develop applications that can help regulators and financial institutions improve efficiency, transparency and reduce costs. This is an exciting venture.”<

MOBILE

Visa, Micromax and Transerv launch mVisa serviceVisa, Indian consumer electronics company Micromax, and digital payment firm Tran-serv have joined forces to introduce the mVisa payment service for all Udio mobile app users across the country.

Supported by RBL Bank, the payment solution has been launched through the Visa Developer Platform, an open platform that provides devel-opers at merchants, financial institutions and technology firms with access to Visa’s pay-ment services and capabilities to cre-ate new digital commerce experiences.

mVisa customers can use the service to make cashless transactions, pay bills and send money to friends and family members.

To make cashless purchases, Visa debit, credit or prepaid cardholders must link their cards to the mVisa app and scan an mVisa

quick response (QR) code at the point of sale.

mVisa, which can be pre-embedded into different types of smartphone, will be made

available to Micromax smartphone users through the native Udio app

on their handsets.Visa India and South Asia

group country manager TR Ramachandran said: “With the launch of Visa Developer Plat-

form, clients and partners now have access to some of Visa’s most

popular payment capabilities.“This enables them to create commerce

experiences with Visa technology integrated, enabling greater security, scale and conveni-ence.

“We are excited to work with Micromax and TranServ to bring mVisa to more con-sumers across the country and believe this

will lead to increased adoption of digital payments.”

TranServ co-founder and CEO Anish Wil-liams said: “The launch of mVisa on the Udio mobile app delivers a world-class payment experience to the large customer base of Micromax users.

“Owing to the simplicity of the process, we are confident of it becoming very popular with the cash-centric segments of society.”

Micromax co-founder Vikas Jain said: “The integration of mVisa on Udio is a step towards simplifying mobile payments.

“Our collaboration will further leverage Micromax mobile devices and our presence across a vast consumer base.

“We believe that single-platform integration with multiple disparate services will broaden access and mobiles are central to this function-ality. Micromax consumers will experience a seamless digital wallet experience.” <

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Cards International


NEWS: DIGEST

STRATEGY

Quarter of Indian currency ceases to be legal tenderWhile almost all global attention was focused on the US presidential election, Indian PM Narendra Modi took measures to crack down on rampant corruption and counterfeit currency in the country by axing the country’s two largest rupee banknotes: the INR500 ($7.50) and INR1,000.

There was no advance notice, and the sur-prise news was not leaked.

To put the move into context, of the 90.26 billion notes in circulation, more than 22bn billion are now no longer legal tender.

In terms of value, the notes to be with-drawn account for 86% of the total value of all Indian bank notes in circulation, accord-ing to the Reserve Bank of India.

Modi said: “Black money and corruption are the biggest obstacles in eradicating pov-erty.”

Modi was elected following a campaign as an anti-corruption moderniser in May 2014. He pledged to speed up efficiency measures in the Indian economy.

The move to abolish the INR500 and INR1,000 notes is the PM’s most dramatic move yet to try and curb ‘black’ money, fake currency and corruption.

In a televised address, Modi set out what Indian consumers must do, but gave them lit-tle time in which to do it.

Existing INR500 and INR1,000 notes can be deposited at bank and post office accounts between 10 November and 30 December.

From midnight 8 November, the exist-ing INR500 and INR1,000 notes ceased to be legal tender and are now ‘just worthless pieces of paper’.

New INR2,000 and INR500 notes will be introduced.<

DISTRIBUTION

MasterCard expands in PakistanMasterCard has expanded its presence in the Middle East and Africa by opening a new office in Karachi, Pakistan

The new MasterCard Pakistan office will offer payment services including debit, cred-it, prepaid, corporate, MasterCard Payment Gateway Services, MasterCard Rewards Solutions and digital payment solutions.

The company recently launched Master-pass QR in Pakistan. Masterpass QR is a

digital payment service that allows banking consumers to use a mobile banking app to pay for in-store purchases and invoices.

MasterCard’s division president for the Middle East and North Africa, Khalid Elgibali, commented: “Pakistan has always been a key strategic market for MasterCard.

“In the last couple of years we have sharp-ened our focus to tap into the country’s tre-mendous growth potential and appetite for

innovation in payments technology,” Elgibali continued.

“We are proud of the strong business rela-tionships we share with prominent our part-ners across the country, and look forward to collaborating and engaging with them on a deeper level in the hope that we may advance the cause of financial inclusion in Pakistan and drive the country’s shift from a cash to a cashless economy.”<

PRODUCTS

Axis Bank and Flipkart launch new credit cardIndian private sector lender Axis Bank has launched a new credit card for online shop-pers in collaboration with online retailer Flipkart.

The Axis Bank Buzz credit card provides enhanced rewards and benefits. Cardholders receive a Flipkart voucher ranging from INR1,000 ($15) to INR7,000, and an exclu-sive discount of 5% at Flipkart throughout the year.

Customers are also entitled to a minimum

15% discount at more than 5,000 restau-rants.

Axis Bank head of cards and payments business Sangram Singh said: “We strive to offer value to our customers, and tying up with an industry pioneer like Flipkart does exactly that for our online savvy customers.

“The Axis Bank Buzz credit card is contactless enabled and provides online shoppers with discounts and rewards.”

Flipkart’s head of category design, Kalyan

Krishnamurthy, said: “With the economy turning digital and payment through cash being replaced with on-the-go mobile bank-ing, Flipkart’s partnership with Axis bank will provide customers with a host of benefits during this festive season.

“At Flipkart, we have constantly worked towards innovation and bringing maximum value to our customers. This collaboration will further enhance the customer shopping experience.”<

M&A

Linxens buys Smartrac’s ID & transaction divisionLinxens, a French manufacturer of micro-connectors for smart cards, has purchased Smartrac’s Secure ID & Transaction (SIT) division, a maker of radio-frequency identi-fication (RFID) products, for an undisclosed amount.

Amsterdam-based Smartrac is a manu-

facturer of RFID products and Internet of Things solutions, and enables businesses to identify, authenticate, track and complement product offerings.

Smartrac’s SIT division offers RFID com-ponents for government-issued documents, payments, and transport.

The combined company will focus on shared programmes to accelerate new prod-uct development, and is expected to generate over €500m ($535m) in revenue.

The transaction is subject to regulatory clearance, and is expected to be complete by the end of 2016.<

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Cards International


NEWS: DIGEST

MOBILE

Sberbank adds Samsung Pay support for MasterCardRussian lender Sberbank and Samsung Elec-tronics have signed an agreement enabling Sberbank customers with MasterCard-branded cards to use Samsung Pay to carry out safe payments.

The service allows users to pay with com-patible Samsung devices by tapping against magnetic secure transmission and NFC device readers.

Samsung Pay works with the Samsung Galaxy S7 and S7 edge, S6 edge+, Galaxy Note5, Galaxy A5 and Galaxy A7.

The payment service is now available from seven major banks: Alfa Bank, VTB 24, MTS, Reiffeisen Bank, Russian Standard Bank and Yandex.

Samsung Mobile Russia head Arkadij Grad said: “Since 28 September, Samsung

Pay has provided our Russian users with a simple and secure payment method that can be used almost anywhere they can swipe or tap their payment cards.

“We are delighted to announce the avail-ability of Samsung Pay for Sberbank custom-ers.

“With this partnership, Samsung Pay now covers 65% of all private bank accounts in Russia and 80% of the country’s urban population.”

Sberbank Board deputy chairman Alexan-der Torbakhov said: “Very soon credit cards will become a relic of the past.

“Smartphones and smart watches – which let users pay for purchases quickly and safely – are to replace cards.

“Now Sberbank customers can use a convenient Samsung Pay service and make payments with a single touch of the smart-phone, almost anywhere payment cards are accepted.”<

STRATEGY

Uber partners with Mexico’s Bankaool Ridesharing company Uber has launched its first debit card in Mexico, in collaboration with Mexican fintech bank Bankaool and MasterCard.

The Uber Bankaool debit card will provide an alternative channel to pay for rides, using

a mobile banking app. It is suitable for users who do not have a credit card or whose debit card is not open for e-commerce.

Benefits include a free ride up to a value of MXN100. It offers unlimited interbank transfers (SPEI) free of charge, and online

access to account balances and statements.The card requires a monthly deposit of

up to MXN15,000 ($783), and is currently only available through Bankaool.com; it will eventually also be distributed through con-venience stores.<

DISTRIBUTION

UnionPay expands card acceptance in ItalyUnionPay International and Italy-based ICCREA Banking Group (ICCREA) have signed an agreement under which ICCREA’s merchants will accept UnionPay cards.

UnionPay’s merchant coverage in Italy will increase from 50% to 60% within the next year.

Currently, more than 80% of ATMs and 50% of merchants in the country’s prime tourist destinations of Rome, Milan and Florence accept UnionPay.

The aim is to use these locations as a springboard to launch in other destinations

with high footfall.China UnionPay president Shi

Wenchao said UnionPay is rapidly expanding its footprint in Europe, and is able to meet tourists’ payment

needs in these destinations.In Italy, the company plans to continue to

invest more in the market, and is carrying out in-depth cooperation with mainstream institutions.

“With this agreement, all ATMs and POS terminals in the ICCREA network will be able to accept UnionPay,” Wenchao com-mented.

“This will provide stronger support for the regional economic development and person-nel exchanges.

“The company will promote future coop-eration in card issuance and mobile payment while launching the acceptance programme. It is essential that we continue to build infra-structure in this way,” Wenchao added.<

STRATEGY

TSYS and Rabobank renew payments dealPayment solutions provider TSYS and Rabobank, the Dutch banking and financial services company, have renewed their pay-ments agreement.

TSYS will continue to process the bank’s consumer card portfolio. TSYS will also offer additional services including fraud and risk management, as well as customer service through its Managed Services EMEA unit.

TSYS International group executive Rob Hudson commented: “For more than a dec-ade we have enjoyed a great relationship with Rabobank, a key leader in the Dutch payments market.

“We are excited to continue providing them with innovative products and services.”

Rabobank senior vice-president Erik Kwakkel added: “Since 2005 TSYS has sup-

ported our business, and the unparalleled strength, stability and resiliency of TSYS’s consumer card platform has been a key ele-ment in the results we have seen within our growth and customer journey experience.

“We count on them to help us meet the evolving needs of our consumers, and are proud to carry on the partnership,” Kwak-kel continued. <

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Cards International


NEWS: DIGEST

RESEARCH

One in five card payments in UK now contactlessMore than one in five card payments are now made via contactless cards in the UK, accord-ing to figures released by the UK Cards Asso-ciation.

In August 2016, contactless cards were used for 21% of card payments, totalling £2.3bn ($2.8bn), compared to 7.9% of card payments in August last year.

The average contactless card transaction in August 2016 stood at £8.97, compared to £7.12 in August 2015.

The number of contactless transactions increased from 89 million in August 2015 to

260.7 million in August 2016. Additionally, the number of contactless debit cards in circula-tion rose from 74.5 million in August 2015 to 97 million in August this year.

The UK Cards Association head of policy, Richard Koch, said: “Contactless cards have exploded in popularity over the past year and are now being used for one in every five card payments.

“While more shoppers than ever are using contactless cards for small purchases, we are excited by the possibilities they will bring to public transport operators and charities.”<

M&A

CardFlight signs m-payments deal with SCSCardFlight and Security Card Services (SCS), a bank-focused merchant services provider, have agreed to provide the CardFlight SwipeSimple solution to SCS merchants, allowing them to accept EMV chip card pay-ments on the move.

The SwipeSimple solution has been designed as a turnkey mobile payment acceptance platform that enables business

owners to accept payments.The platform features an EMV-enabled mobile

chip card reader, a mobile app for iOS and Android, and a back-office reporting portal.

SCS will deliver a white-label version of SwipeSimple known as Mobile Pocket.

SCS senior vice-president of product and customer experience Joan Kuykendall said: “CardFlight offers the latest mobile POS

technology and security, and that is impor-tant to us. Having an easy-to-use, EMV-enabled mobile PoS solution is critical to our merchants.”

CardFlight founder and CEO Derek Web-ster said: “We are excited to partner with SCS and to enable their merchants to grow their business by accepting EMV payments from anywhere.”<

MOBILE

Russia’s Tinkoff Bank adds Apple Pay offeringCustomers of the Russia-based Tinkoff Bank can now use Apple Pay to make secure and convenient contactless and online payments.

Customers can add Tinkoff MasterCard credit or debit cards to Apple Pay, or by log-ging into Tinkoff.

When a user adds a credit card to Apple Pay the actual card numbers are not stored on the device or on Apple servers; instead, a unique device account number is assigned, encrypted and securely stored in the secure element.

In bricks-and-mortar stores, Apple Pay

works with iPhone SE, iPhone 6 and later, Apple Watch, iPad Pro, iPad Air 2, and iPad mini 3 and later. The solution can also be used in Safari on any Mac introduced in or after 2012 running macOS Sierra.

Tinkoff Bank CEO Oliver Hughes said: “Our clients have been eagerly anticipating Apple Pay for Tinkoff Bank cards; we are proud to be among the first banks to launch this new, secure and private way to pay.

“Payments are now even easier and we are certain that our clients will take to the contactless functionality.”<

DISTRIBUTION

ANZ launches new debit cards for visually impairedAustralia and New Zealand Banking Group (ANZ) has introduced new debit cards with larger fonts and redesigned edges for visually impaired clients.

The ANZ Access cards feature larger fonts, tactile indicators and high-visibility leading edges to help make everyday banking easier for those with sight issues.

The new feature will assist cardholders in

identifying the correct way to insert cards into ATMs and Eftpos machines.

ANZ Access cards were supported by Vision Australia, a not-for-profit organisa-tion for the blind and partially sighted.

ANZ ran focus groups to test the effective-ness of the new card design, and all new and replacement cards will have contactless func-tionality. <

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Cards International

6 y November 2016

PRODUCTS: CREDIT CARD LOYALTY

Canada’s credit card loyalty marketCanada has seen a significant number of credit card launches, co-branding deals and portfolio acquisitions in recent years, as issuers capitalise on Canadians’ appetite for reward programmes and added value. Robin Arnfield reports on the state of play of loyalty and reward in the North American giant

According to Bond Brand Loyalty’s 2016 Bond Loyalty Report, pub-lished in association with Visa, Canadian consumers belong to an

average of 11.3 loyalty programmes and are active in 7.3.

Rewards programmes are a major driver of Canada’s credit card market, which saw the number of MasterCard and Visa credit card accounts rise from 26.4 million in 2006 to 32.3 million in 2015, according to the Cana-dian Bankers Association.

“Each major Canadian bank operates a proprietary travel rewards programme and cashback product, making these the two most popular categories among Canadian credit cardholders,” says Mike Bradley MD at NorthCard, a Toronto-based payment consultancy.

“Co-branded credit cards, which are usu-ally MasterCards, are particularly important to Canadian retailers such as Canadian Tire and Loblaw Companies, as they build off major loyalty programmes at these retailers,” Bradley adds.

“There are a lot of very strong value prop-ositions attached to some of the co-branded cards,” according to Lynda Lovett and Mary-Anne Huestis of Canadian financial market research firm MarketSense.

Coalition schemesCredit cards affiliated to Canada’s two main coalition loyalty schemes, Air Miles and Aer-oplan, are an important component of the Canadian market, with three out of Canada’s top six banks participating in coalition pro-grammes. Aeroplan is owned by Aimia, and Air Miles is owned by LoyaltyOne.

In 2013, Aimia signed a 10-year deal with TD as the primary issuer of its Aeroplan-branded Visa credit cards, having previously had CIBC as primary issuer. Amex Canada also offers Aeroplan credit cards.

As part of a settlement with CIBC, TD acquired around 550,000 Aeroplan credit cardholders – the half of CIBC’s Aeroplan

customers who did not have a broader rela-tionship with CIBC.

CIBC, which re-launched its proprietary Aventura travel rewards credit card in Octo-ber 2013, retained the remaining 50% of its Aeroplan portfolio under a 10-year agree-ment with Aimia.

In a separate deal in 2011, TD acquired MBNA’s Canadian credit card portfolio, which continues to use the MBNA brand.

“TD and CIBC’s Aeroplan dispute created a lot of churn, as issuers flooded the market with introductory offers to attract people concerned about what would happen with their Aeroplan credit cards,” Lovett and Huestis say.

“We haven’t seen any growth in card num-bers for issuers affiliated with Aeroplan; it’s been pretty stable. There’s a core group of cardholders who really benefit from Aero-plan, as they are high-spenders or travel a lot, and can maximise their Aeroplan point earnings.”

Air milesAir Miles credit cards are offered by BMO Bank of Montreal (BMO) and Amex Cana-da. Unfortunately for these issuers and their cardholders, at the end of 2011 LoyaltyOne introduced a five-year expiry date on Air Miles rewards miles. From 1 January 2017, any unused Air Miles collected before 2012 will expire, and miles earned from 2012 will start expiring on a quarterly basis once they hit the five-year mark.

Aeroplan introduced a seven-year expiry rule in 2007. But, after consumer criticism, Aeroplan cancelled the rule before Aeroplan miles started expiring in 2014.

Market dynamics“The average Canadian credit cardholder carried 2.2 cards in their wallet in 2015, con-tinuing a downward trajectory from 2012, when the figure was 2.7,” Lovett and Hues-tis say. “A desire to maximise reward points and consolidate spending to better manage

expenses are behind this trend.”“Canadian bank market share is very

concentrated among relatively few players, and provides scale for the Big Five banks’ credit card businesses to offer a broad range of cards to their customers,” say Lovett and Huestis. “This means banks’ customers don’t have to venture outside their bank to find the type of cards and rewards they desire.

“Royal Bank of Canada (RBC), TD Canada Trust (TD) and CIBC all offer both Visa and MasterCard to cardholders, while Scotiabank offers both Visa and Amex and is the only Canadian bank issuing Amex.

“The range of programmes and card types offered by all issuers is broad, so unless some-thing is truly unique – or offers a stronger value proposition – cardholders can often find a card to satisfy their needs from their existing bank.”

Credit card penetration“The average credit card penetration among their chequeing account customers varies from between 41% to 62% among the Big Five banks,” say Lovett and Huestis.

“Some issuers such as TD and RBC are more successful at placing their cards among their existing client base.

“Others, such as BMO and CIBC, are attracting cardholders to their franchise from outside their customer base due to the nature of programmes such as Air Miles and Aeroplan.

“The value propositions attached to the Air Miles and Aeroplan programmes are strong enough to attract cardholders solely for the programmes, not for other products and services.”

This may change in 2017, as Lovett and Huestis note growing dissatisfaction with Air Miles and expect to see some fallout, espe-cially with the point expiry deadline looming.

“The fact that Air Miles points will begin to expire on a quarterly basis will make it dif-ficult for people to accumulate and redeem large balances for travel purchases,” they say.

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Quebec is very different from the rest of Canada, with Mouvement des caisses Desjar-dins dominating the Quebec card market, Lovett and Huestis say.

“78% of Desjardins cardholders deal with that FI,” they note. “Quebecers are very loyal to their own brands, and other banks have a hard time competing with Desjardins and National Bank in Quebec’s credit card market.”

Reward categories“Travel rewards continue to be the most popular category of reward credit card, with 46% of Canadian credit cardholders carry-ing a credit card with some type of travel reward on it,” say Lovett and Huestis.

“This number has been incredibly stable. Retailer rewards credit cards are the second-most-widely carried, now sitting in the wal-lets of 37% of cardholders.

Cards in this category include the Presi-dent’s Choice Financial MasterCards issued by President’s Choice Bank, Canadian Tire’s MasterCards products, and the Walmart Canada Rewards MasterCard, issued by Walmart Canada Bank.”

The cashback category continues to see many new entrants.

“This is being driven to some extent by cardholders seeking a more straightforward reward for their spending,” say Lovett and Huestis. “In 2015, 27% of MarketSense sur-vey respondents reported carrying a cashback rewards card. Of the new cards launched in 2015, half were cashback rewards, as issuers recognise and tap into this growing interest.”

A desire for consolidation continues to be a sentiment held by an increasing number of cardholders with 35% of MarketSense sur-vey respondents in 2015 seeking to consoli-date their credit card accounts.

“At the same time, we’re seeing strength-ening in the importance of rewards as more cardholders agree that they only carry credit cards with rewards (59% of cardholders), up from 34% when we began tracking the mar-ket in 2006,” say Lovett and Huestis.

“Rewards are responsible for driving an increased preference for credit cards over other payment methods, with 48% of cardholders surveyed in 2015 preferring credit cards, 17% preferring cash, and 35% preferring debit.”

Walmart Canada“We’re watching with interest what will happen to the composition of Canadian cardholders’ wallets,” say Lovett and Hues-tis. “Costco Canada no longer accepts Amex, and Walmart, in certain regions, is no longer accepting Visa. This has the potential to increase the presence of MasterCard in the

Canadian market.” Walmart Canada warned in June 2016

that it would ban Visa cards at its 400-plus stores across Canada unless it got a better deal on what it said was the ‘unacceptably’ high cost of Visa interchange.

Its first move was to stop accepting Visa-branded cards at its stores in Thunder Bay, Ontario from July 2016.

As of October 2016, the only province where Walmart Canada has banned Visa cards is Manitoba, having as yet failed to reach agreement on fees with Visa.

CBC quoted Walmart as saying in October 2016 that the Visa ban ‘could spread to other Walmart locations in other provinces’, and that ‘Manitoba was selected, because stores in the province are most ready to phase out Visa’.

However, Walmart told the Canadian broadcaster it is committed to continuing negotiations with Visa, and is still hopeful of reaching an agreement.

“We know from our experience in Thun-der Bay, Ontario that consumers want the option to use the payment method of their choice when shopping,” Visa Canada said. “Visa remains committed to actively work-ing with Walmart so Canadians can use their Visa cards wherever they wish to shop."

Comparison between issuers“The major issuers are somewhat different in their approach to the cards market,” say Lovett and Huestis. “RBC and TD have their own programmes which allow them to con-trol the delivery of some of the more coveted travel rewards.

Their travel anytime messaging resonates with cardholders frustrated with an inability to redeem for flights on the major coalition programmes. RBC and TD’s respective port-folios include a range of value propositions to satisfy their client base and keep them within the franchise.”

“BMO’s portfolio was heavily reliant on the Air Miles proposition, but we’re notic-ing the increased promotion of BMO’s World Elite MasterCards, both the travel and cashback versions of the World Elite cards,” says Lovett and Huestis.

“Scotiabank has been a unique player in the credit cards space with its successful Momentum cashback and Scene Visa cards. Although it offers its own rewards pro-grammes, Scotiabank is continuing its part-nership model with its GM Visa and More Rewards cards.

“CIBC is aligned with Aeroplan, but also offers cardholders an alternative with its Aventura rewards and a broad range of other Classic, cashback, student and retail partner cards.”

“National Bank is a small player overall, but has a stronger position in Quebec where 10% of cardholders claim to carry one of its cards,” say Lovett and Huestis.

“Recognising the growing interest in cashback rewards, National Bank launched a new Echo Cashback Rewards card in 2016. The Quebec cards market is poised for growth, and Quebec appears to be ready to catch up with the rest of the country in terms of carrying cards with rewards, especially cashback.”

“TD has been focused on building the base within its Aeroplan portfolio, and promoting its proprietary travel rewards credit card,” says Bradley. “Scotiabank continues to invest heavily in its Momentum cashback card and its Amex partnership. Its online-only subsidi-ary Tangerine has just launched a popular new Money-Back credit card.”

“RBC is mining retail banking relation-ships to promote its RBC Rewards pro-gramme and Avion travel cards,” says Bradley. “Following the loss of its exclusive Aeroplan partnership, CIBC has diversified its strategy with a further push on Aventu-ra cards, Dividend cashback cards and a co-branded credit card with Tim Hortons, the iconic Canadian coffee brand.”

CIBC“We provide a mix of travel, cashback and retail rewards to ensure our clients have reward options that best fit their lives,” says Jeff Smith, CIBC’s vice-president of card products. “Cash is the credit card reward that Canadians value most.”

According to Statistics Canada, after hous-ing, Canadians spend more money on grocer-ies and petrol than anything else, so CIBC developed its Dividend Visa lineup to provide enhanced cash rewards for these purchases. The CIBC Dividend Visa Infinite and Plati-num Visa cards offer 4% cashback on petrol and groceries.

Smith says the CIBC Tim Hortons Dou-ble Double Visa Card is designed for clients looking for instant gratification.

“The rewards are earned on the card in real-time and can then be redeemed instantly at any Tim Hortons restaurant in Canada,” he says. “We’ve seen considerable growth in our Aventura and CIBC Dividend Visa port-folios since the products were respectively re-launched three years ago and one year ago,” says Smith.

“As Tim Hortons is a well-loved Cana-dian brand, the CIBC Tim Hortons Double Double Visa Card resonates with various demographics including clients living in areas where there is little CIBC presence. In fact, nearly 60% of Double Double cardholders are new to CIBC.”


CI 537.indd 7 17/11/2016 13:22:17


PRODUCTS: CREDIT CARD LOYALTY Cards International

RBC “The growth and momentum of our retail cards portfolio is very strong,” Athena Varmazis, RBC’s vice-president of global loy-alty programmes and rewards tells CI. RBC ranks as number one in credit card purchase volume in Canada.”

In 2015, RBC had over seven million credit card accounts and had approximately 23% of total Canadian credit card purchase vol-umes, according to RBC.

RBC had net credit card purchase volumes of C$90.8bn ($67.5bn) in 2015, up from C$84.2bn in 2014. Its average Canadian credit card balances grew from C$14,100 in 2014 to C$15,100 in 2015.

In 2015, RBC saw ‘strong account and balance growth in its Avion credit card,’ its annual report states.

“Avion continues to be attractive in the market and we continue to win new Avion customers,” says Varmazis. “We have a promise of any flight anywhere anytime, no points expiry and no blackout periods – if the seat is there, you can book it.”

“We offer flexibility as we aren’t part of any coalition loyalty schemes,” says Varmazis. “We secure valuable partner-ships for our clients which offer benefits to them. For example, we have points redemption partnerships with the Apple Store and Best Buy Canada which let you buy products with a combination of cash and points from these retailers within our RBC Rewards e-mall.

“Other retailers’ products available in the e-mall include Burberry, Cuisinart, Kitch-enAid and Miele.

“We’re working on many more rewards redemption partnerships with retailers to bring a breadth of offers across our entire cardholder base.”

Varmazis stresses that RBC Rewards points do not expire, which she says is good for cardholders who do not accumulate rewards points as quickly as cardholders in higher-spend categories.

Although RBC’s co-branded credit card deal with Shoppers Drug Mart/Phar-maprix has ended, RBC offers a co-branded MasterCard with Canadian airline WestJet.

“We continue to look for retail co-brand credit card deals,” says Varmazis. “Our cri-terion is that these deals have to offer excep-tional client value and client experience.”

RBC offers credit cards for all segments of the Canadian market. “We have entry-level credit card products and credit cards for new immigrants to Canada,” says Varmazis.

Our goal is to offer credit card products that are relevant to anyone, whether they are travel reward-focused or focused on points for retail, want cashback or wish to use their

reward points to pay off their credit card bal-ances.”

In October 2016, RBC launched the RBC Rewards app for iOS and Android, offering the same features provided on the RBC Rewards website’s functionality, such as researching and booking travel, buying Apple and Best Buy products with points and cash, and using points for RBC Rewards merchandise and gift cards.

Since December 2015, RBC Avion cardholders and other RBC Rewards mem-bers can earn twice the RBC Rewards points for every Uber ride paid for with their RBC credit card anywhere in the world Uber oper-ates.

Shoppers Drug MartIn June 2016, RBC and Canadian pharmacy chain Shoppers Drug Mart (which trades as Pharmaprix in Quebec) mutually agreed to end their co-branding relationship, which had enabled co-branded credit and debit cardholders to earn Shoppers/Pharmaprix Optimum reward points.

RBC said that the RBC Shoppers/Phar-maprix Optimum Banking account and RBC Shoppers/Pharmaprix Optimum MasterCard are no longer available. According to CBC, RBC and Shoppers had 200,000 combined customers in their co-branding relationship.

RBC Shoppers/Pharmaprix Optimum MasterCard accounts in good standing were converted in October 2016 to a replacement RBC credit card account that does not earn Optimum Points.

The background to the end of the RBC/Shoppers deal is the fact that in 2013 Shop-pers was bought by Loblaw which has a strong MasterCard credit cards offer through its PC Financial MasterCard. Loblaw’s retail chain brands offer banking products includ-ing credit cards through President’s Choice Financial.

“We expect to see some consolidation across those customers who are common to Loblaws store brands and Shoppers,” Lovett and Huestis say. “So some PC Financial cred-it cards are likely to be offered at Shoppers, as Shoppers is already displaying PC Finan-cial products. It makes sense that they would also offer a credit card giving PC Financial points or Shoppers points.”

National Bank of CanadaNational Bank of Canada, the sixth-largest Canadian bank, markets its MasterCard-branded credit cards across Canada.

Louis-François Poirier, senior manager of credit card solutions and payments at the Quebec-based bank admits that National Bank’s primary market is Quebec and East-ern Canada, including the Atlantic provinces.

In addition to its own credit card mar-keting channels, National Bank of Canada works with partners such the Canadian Automobile Association (CAA) with whom it launched the co-branded CAA Rewards MasterCard in May 2016 in all Canadian provinces except British Columbia and Que-bec.

The partnership involved National Bank acquiring the CAA’s credit card portfo-lio from Bridgewater Bank encompassing 42,000 cards across seven provinces.

“Our other credit card partners are MD Management which provides wealth man-agement services for Canadian doctors,” says Poirier. “We have some white-label and co-brand partnerships with Investor Group and its Great West and London Life subsidi-aries, and a co-branded card with the Ultra-mar petrol station chain.”

National Bank launched its À La Carte credit card rewards points programme in 2004. “The programme has flexibility,” says Poirier. “We give as many options to clients as possible, including a variety of merchan-dise, gift cards, upscale brands and access to a dedicated travel agency which offers advice and recommendations.

If they prefer, cardholders can just use their reward points to buy travel without using the dedicated travel agency. We also provide up to C$250 a year in reimbursement for lug-gage fees, parking at airports and seat selec-tion fees.”

À La Carte allows cardholders to redeem points for investments in registered retire-ment savings plans and tax-free savings accounts.

ScotiabankIn October 2015, Scotiabank acquired JPMorgan Chase's Canadian MasterCard and private-label credit card portfolio com-prising C$1.7bn in receivables and two mil-lion active customer accounts. Chase issued the MasterCard-branded and private-label cards on behalf of Sears Canada under an agreement which ended in November 2015.

A Scotiabank spokesperson tells CI that, as of November 2016, no Sears Canada credit cards are in issue. Sears Canada cardholders were being converted to Scotiabank cards, the spokesperson said.

In May 2014, Scotiabank bought a 20% stake in Canadian Tire’s financial services business for C$500m. Scotiabank also pro-vided a commitment to provide credit card receivables financing up to C$2.25bn to Canadian Tire’s financial services business.The agreement provides an option for Cana-dian Tire to sell up to an additional 29% of its financial services business to Scotiabank by 2024 at the then fair market value.

CI 537.indd 8 17/11/2016 13:22:18

Cards International



n CREDIT CARD STATISTICS – VISA AND MASTERCARD (C$), 1977–2015

Fiscal year ended 31 October

Number of cards in circulation (m)

No. of accts with balances (m), including those paid off every month

Net retail volume (bn)

Net dollar volume (bn)

Gross sales slips processed (m)

Average sale

% delinquency 90 days and over

Merchant outletVisa/MCI principal issuers

1977 8.2 – $3.61 $4.04 118.8 $30.46 1.3% 271,150 –

1978 9.0 – $4.90 $5.44 150.8 $32.50 1.3% 290,692 –

1979 9.9 – $6.64 $7.32 185.8 $35.72 1.2% 322,115 –

1980 10.8 – $8.82 $9.44 218.4 $39.47 1.3% 347,845 –

1981 12.0 – $10.59 $11.51 249.6 $42.43 1.0% 371,831 –

1982 11.6 – $13.83 $13.38 274.9 $50.30 1.7% 382,206 –

1983 12.1 – $14.84 $14.85 297.6 $49.88 0.9% 419,610 10

1984 13.1 – $16.92 $17.10 325.2 $52.05 0.7% 442,928 10

1985 14.0 7.3 $19.35 $20.42 372.9 $51.90 0.7% 527,042 10

1986 15.5 7.9 $23.01 $23.57 417.2 $55.15 0.8% 571,771 10

1987 17.6 8.8 $26.37 $26.90 450.7 $58.52 0.7% 642,429 12

1988 19.4 9.5 $30.33 $31.20 490.0 $61.90 0.7% 646,844 13

1989 20.4 10.3 $36.10 $36.90 546.7 $66.00 0.9% 709,674 14

1990 23.2 11.1 $38.60 $42.48 591.8 $67.22 1.8% 786,288 14

1991 24.3 11.8 $40.45 $44.00 617.8 $67.40 1.3% 857,159 14

1992 24.4 12.2 $43.10 $46.90 639.9 $69.30 1.0% 896,365 14

1993 25.0 12.4 $47.90 $52.80 695.8 $70.50 0.7% 904,689 13

1994 27.5 13.2 $55.10 $61.10 778.1 $72.40 0.9% 955,993 13

1995 28.8 13.6 $61.26 $68.12 840.0 $74.51 0.9% 981,851 13

1996 30.2 14.1 $67.70 $75.10 896.6 $77.80 1.0% 1,076,694 15

1997 31.9 15.0 $76.00 $84.30 949.5 $82.50 0.9% 1,106,141 17

1998 35.3 16.0 $84.10 $93.90 1,001.1 $89.96 0.9% 1,143,110 19

1999 37.7 17.3 $94.30 $106.00 1,076.4 $90.35 0.9% 1,139,228 18

2000 40.1 18.5 $109.87 $125.18 1,184.7 $95.57 0.7% 1,187,745 19

2001 44.1 19.6 $121.82 $138.63 1,226.6 $99.16 0.8% 1,206,779 19

2002 49.4 20.8 $135.69 $154.57 1,390.6 $100.51 0.7% 1,265,157 23

2003 50.4 22.2 $150.49 $172.18 1,524.8 $102.00 0.8% 1,187,384 23

2004 53.4 23.2 $168.78 $192.17 1,664.8 $104.00 0.8% 1,128,410 23

2005 56.4 24.6 $190.60 $216.04 1,839.7 $106.00 0.8% 1,137,849 23

2006 61.1 26.4 $214.70 $243.81 2,017.8 $109.00 0.8% 1,150,779 23

2007 64.1 27.0 $240.52 $275.21 2,224.0 $111.07 0.9% 1,186,462 23

2008 68.2 27.4 $266.97 $304.88 2,432.8 $112.80 1.0% 1,203,545 23

2009 69.6 27.6 $264.47 $296.21 2,508.5 $108.29 1.3% 1,223,782 24

2010 70.3 27.7 $279.84 $308.98 2,700.8 $106.18 1.2% 1,223,999 27

2011 74.5 28.1 $301.86 $331.81 2,897.3 $107.05 1.1% 1,253,195 28

2012 73.9 29.2 $325.74 $355.64 3,127.3 $106.79 0.9% 1,402,423 28

2013 76.3 30.2 $341.62 $371.24 3,371.2 $103.85 0.8% 1,429,079 28

2014 72.0 30.9 $369.60 $399.23 3,675.6 $103.09 0.8% 1,485,147 28

2015 68.5 32.3 $390.67 $421.03 3,917.8 $102.12 0.8% 1,568,810 28

Source: Canadian Bankers Association, table includes data from all Visa and Mastercard issuers

Amex Canada In September 2016, Amex Canada launched Use Points for Purchases, which lets card members redeem reward points towards virtually any purchase made on an eligible card. Amex cardmembers can redeem points via the Amex Canada website or the Amex

Mobile app.In October 2016, Amex Canada launched

a new phase of its Realize the Potential brand marketing campaign, first introduced in Can-ada in 2009.

“We evolved the campaign both in terms of messaging and style, showcasing our digi-

tal and mobile services designed to make our cardmembers’ lives simpler, and presenting our brand in a more youthful, relevant and engaging way,” Amex says in a statement.

“This is a multimedia campaign on TV, digital platforms, and across our social media channels.”<

CI 537.indd 9 17/11/2016 13:22:19

Cards International


Held in Milan at the Principe di Savoia Hotel, the annual Prepaid Summit Europe 2016 hosted by Cards International and spon-

sored by Visa, once again confirmed that the prepaid cards sector in Europe remains in rude health, with hugely excit-ing prospects for further growth.

The day was enriched by keynote speeches from prepaid big-hitters such as Greg Shep-pard, head of prepaid of Visa, Peter Moller Jensen, director of regulatory affairs at Visa, and SEPA delegate Ugo Bechis, who outlined the state of the prepaid market, with a focus on innovations and the prospects for further prepaid growth in Europe.

According to Greg Sheppard, payment needs are changing and prepaid is the pay-ment platform that best serves this evolution, or even revolution. Prepaid cards have gone from being a simple, secure and reliable pay-ment tool to building new payment ecosys-tems and core solutions to open new markets leveraging new channels to communicate with clients and offer content.

Andrea Zamboni, senior marketing man-ager for Southern Europe at Visa, outlined how apart from e-commerce, which has sig-nificantly influenced the success of prepaid, there are other business opportunities in Europe that can support further growth for consumer travellers, corporate business trav-ellers, youth and services for the unbanked or financially underserved people.

There are also interesting opportunities in the segment of closed-loop cards, such as luncheon vouchers.

Innovations in the prepaid sector are being boosted by the advance of biometrics result-ing in increased consumer appetite for pre-paid. The growing digital economy requires an increased focus on fraud prevention, and Philippe Le Pape of Safran Identity & Secu-rity’s presentation focused on how prepaid cards can be susceptible to misuse by fraud-sters and money launderers.

Verifying the identities of prepaid card users in a quick and secure way not only prevents money laundering but also reduces payment fraud. Le Pape said that the know-your-customer process, proposed by Safran,

is fundamental in preventing card fraud while letting financial institutions and their customers complete the identification pro-cess via smartphone in a secure way.

New solutions for wearable devices and the growth of fintech platforms were high-lighted by Bernardo Nicoletti, director Europe and Middle East at Transigma Part-ners. He explained how new the initiatives are growing at an encouraging rate, and represent a disruptive force in the traditional financial services system.

It is estimated that roughly 66% of fintech businesses are in the realm of payments, with leading examples being provided by PayPal and Apple Pay.

Conference highlights included a case study presented by Andrea Verri, co-founder & CEO of Amilon. He focused his pres-entation on the new opportunities arising in loyalty and welfare schemes for prepaid products.

Amilon briefed the Italian Institute Target Research to conduct multi-country research aimed at investigating the differences among key European countries with respect to peo-ple’s perception and experience of loyalty programmes.

It is also aimed at revealing the process of rewards digitalisation in loyalty pro-grammes. What clearly emerges from the research – with some national differences – is the growing role of prepaid in loyalty rewards schemes with gift cards continuing to gain ground.

Andrea Veri also outlined how the Stabil-ity Law in Italy has offered great opportuni-ties for prepaid products in welfare services. The new measures encourage initiatives to improve satisfaction at work and in employ-ees’ quality of life: the range of benefits eli-gibility has been extended and employers are being aided via the use of simple payments tools, such as prepaid vouchers.

Gaetano Giannetto, founder and president of Epipoli, a leading European relationship marketing company focusing on customer value management, retail management and gift cards, highlighted the firm’s growth dur-ing the past decade.

Epipoli introduced the gift cards in Italy in 2006, and in 2015 alone sold over 3.5 mil-lion via relationships with more than 350 partners at 25,000 stores.

Giannetto said it has a market share of 88% for gift cards, and has more than 300 B2B clients.

HighWays, its flexible and modular plat-form, is managing customer engagement pro-grammes in store and digitally.

Added Giannetto: “Gift Cards are any-thing but a simple prepaid tool. To be suc-cessful, gift cards must be all in one: physical, virtual, and mobile. Depth of assortment is key. They are a powerful generator of profit for retailers – gift cards are a destination cat-egory.

“They are also an efficient way to reward clients, generating huge savings compared to physical products.”<

10 y November 2016

EVENT: ANNUAL PREPAID EUROPE SUMMIT AND AWARDS

Prepaid taking Europe by stormOne day, four sessions and multiple keynote speakers from leading companies from Italy and the wider Europe highlighted the healthy state of the growing prepaid market and its prospects. Douglas Blakey reports on the key news, developments and presentations from the event

y Monica Carlesso, Barclaycard

CI 537.indd 10 17/11/2016 13:22:20

Cards International


FEATURE: ANNUAL PREPAID EUROPE SUMMIT AND AWARDS

“Visa - the partner of choice”: Bertrand SavaAt the conference, Bertrand Sava, Regional MD, Southern Europe Visa told CI that disruptive factors including regulation, innovation, demo-graphic trends, globalisation the ever-growing levels of customer experience expectations ‘were all coming together to change our world’.

“The pace of change is accelerating and Visa will keep adapting to the new world to ensure that it is the partner of choice in this new world.

“Not just in products but in services and security and the way we partner with our clients and with other partners.”

Sava added that there was an urgent need to

ensure a balance between convenience and security within the framework of regulation.

“As long as it is safe, the customer experience should be as seamless as possible.”

He said that across Europe, retailers are willing to invest to make payments as seamless as pos-sible. The scale offered by Visa, with the system handling one in every seven euros of European spend, benefitted retailers due to a reductions in cost.

“Embracing change will be beneficial to retailers and for consumers.

Combined with the tendency towards e-commerce, retailers in Italy are reaching the stage where the card is more logical, and they prefer to be paid by card rather than by cash.

“The best way to reach the common goal of cash displacement is strong partnerships.”

Sava is also especially upbeat about the phe-nomenal growth in the use of contactless.

“People are embracing contactless despite rumours about security, and retailers see it as an opportunity because for them speed is funda-mental – and contactless saves them money due to the cost of managing queues.” <

Barclaycard scores hat-trick at Prepaid Europe AwardsAs a conclusion of the conference, the Annual Prepaid Europe Awards 2016 ceremony took place to honour the best prepaid projects in the last 12 months. The winners were as follows:

Prepaid Innovation of the Year

Barclaycard

Prepaid Marketing Campaign of the Year

UBI Banca

Best New Loyalty/Reward Prepaid Card

CaixaBank Electronic Money ● EDE

Financial Inclusion Programme of the Year

Contis Group Ltd & Monese

Best Corporate/Payroll Prepaid Card and Gov-ernment Digital Prepaid Initiative of the Year

Contis Group and Suits Me

Prepaid Mobile App of the Year

VFX Financial

Mobile Wallet of the Year

Barclaycard

Prepaid Security/Anti-Fraud Programme of the Year

Safran Identity & Security

Prepaid Service Provider of the Year

Prepaid Financial Services

Prepaid Personality of the YearPoste Italiane team Best Prepaid Travel CardTravelexBest Basic Bank Account with Prepaid CardFfreesBest Contactless/Proximity Payment SolutionBarclaycardBest Contactless/Proximity Payment SolutionVodafone WalletBest New Payments StartupMonzo Issued by Wirecard Card Solutions

y Andrea Zamboni, Visa y Neil Bowen, Barclaycard y Gaetano Giannetto, Epipoli

y The team from Safran y The team from VFX Financial y The team from UBI Banca

CI 537.indd 11 17/11/2016 13:22:23


Cards InternationalDISTRIBUTION: PIN4

Pin4 targets the US unbanked and underbanked market

HalCash North America is targeting unbanked and underbanked US consumers with its Pin4 cardless ATM service in partnership with remittance firm Viamericas. In addition to cashing out P2P transfers, Pin4 can be used to redeem promotional offers at ATMs. Robin Arnfield reports on this offering

Pin4 offers real-time cardless cash-outs of up to $500 at ATMs from digital wallets, bank accounts, P2P transfers, digitally-scanned cheques, small-dol-

lar loans, and reward, rebate and loyalty offers.

“Customers can use any type of cellphone, not just smartphones, to receive SMS mes-sages containing Pin4 security codes," says Richard Witkowski, HalCash North Ameri-ca’s CEO. "Our system works with any make and type of ATM, and ATMs just need a soft-ware download.”

Pin4 order recipients do not need bank accounts to use Pin4. A Pin4 order supplier, for example a money services business (MSB) sending remittances, sends the recipient an SMS containing a PIN.

In addition, HalCash sends a four-digit secret code to the recipient which the sender does not know.

To withdraw cash, recipients must enter both PINs and their cellphone number at a Pin4-enabled ATM. The SMS they receive from HalCash has a link to a global GPS app that shows them the nearest Pin4-enabled ATM to their location.

Pin4 transactions are surcharge-free for recipients withdrawing cash from Pin4-ena-bled ATMs.

“The ATM owner receives a share of the fee we charge the issuer of the Pin4 order, be this a retailer, rewards scheme or MSB,” Witkowski tells CI.

SpainThe Pin4 technology was originally devel-oped in Spain by five Spanish banks to pro-vide a convenient method for customers to

send cash to their friends and relatives.Abanca, Bankinter, Banco Popular,

Cajamar and Caja Laboral formed a Madrid-based company, HalCash International (HCI), to launch the platform in Spain and internationally.

HalCash North America has licensed Pin4 from HCI, which has also licensed Pin4 oper-ations in Poland, India and Morocco.

AlliancesIn February 2016, HalCash began work-ing with its first US ATM network partner, Louisville, Kentucky-based Payment Alli-ance International (PAI), to Pin4-enable PAI’s 70,000 ATMs.

HalCash also has a US promotional rewards partner which works with three out of the top five US health insurers.

“These insurers reward their customers for healthy behaviour like joining a gym, by sending them prepaid rewards cards, but they’re interested in using Pin4 instead of mailing prepaid cards,” says Witkowski.

HalCash’s MSB partner is Bethesda, Mar-yland-based Viamericas which offers remit-tances to Latin America, the Caribbean and Africa.

The International Finance Corporation (IFC), a member of the World Bank Group, is Viamericas’s largest institutional share-holder. With Viamericas, HalCash is initially focusing just on domestic US P2P transfers, primarily for unbanked and underbanked consumers.

The US annual P2P payments – informal payments made from one person to another by cash, cheque, digital money transfer or other means – is estimated to have reached

over $540bn in 2014.HalCash cites the Federal Reserve System’s

Cash Product Office saying that cash stands as the preferred method of payment for pur-chases and bill payments even within the digital transaction environment.

Rollout“It took us longer than anticipated to get PAI’s ATMs Pin4-enabled, primarily because of EMV upgrades at their ATMs,” says Wit-kowski.

“Over the last three to four months, we’ve made reasonable progress, and now have Pin4-enabled ATMs in 46 US states. We’re now bringing on 5,000 PAI ATMs a week into our network.”

“In our business model, in addition to hav-ing Pin4-enabled ATMs in 46 States, there needs to be saturation of Pin4-enabled ATMs in specific local markets so consumers can easily find ATMs to withdraw their remit-tances,” says Witkowski.

“With PAI we’ve identified 15 markets in the US which are the 15 cities that give us the best opportunities for revenue generation with our P2P transfer partners and our pro-motional partners.

We looked at the existing MSB businesses in those 15 markets in terms of the number of their payout outlets, and put together a network of ATMs in those areas that will exceed the number of MSB offices available there.”

This strategy means it will be more con-venient to get cash from Pin4-enabled ATMs than to look for an MSB payout office, Wit-kowski says.

HalCash expects commercial rollout to

CI 537.indd 12 17/11/2016 13:22:26

Cards International


occur in early 2017. “As we’re now avail-able in 46 States, we’re letting our partners use our distribution network to get people more interested in their business model, for example through pilots.

“We’re not pushing local promotions in big cities yet until we feel confident there are enough Pin4-enabled ATMs in those cities to serve the marketplace.”

Witkowski says PAI has guaranteed to have 20,000 ATMs Pin4-enabled in 15 core markets by year-end 2016. “We’re working with Viamericas to have at least some of the cities that are important to them available for ATM access in December 2016,” he says.

ViamericasHalCash has integrated Pin4 with Viameri-cas’ Vianex digital money transfer platform through an API integration. “We rolled out Pin4 to family and friends of our staff in Feb-ruary 2016,” says Paul Dwyer, Viamericas’ CEO.“We anticipate that much of our Pin4 cus-tomer base will be migrants and cash-prefer-ring consumers. Initially, with Pin4 we’re just focused on the domestic US market, as there is a huge opportunity here.”

Pin4 could be attractive to millennials as a way of instantly transferring funds, since P2P services such as PayPal use the ACH system and take several days, says Dwyer.

To use Vianex, consumers transfer funds on Viamericas’ Govianex.com using their bank account, credit or debit card.

“For people using Vianex, we’ve added Pin4 to the list of pay-out options that peo-ple paying with a card can use,” says Dwyer. “But you don’t have to use payment cards to make Pin4 transfers from one of our agency offices.”

Separate to its Pin4 alliance, Viamericas has launched what it terms Money Transfer as a Service (MTaaS).

“We have a central processing capability, the licenses to handle money transfer trans-actions and a global payout network,” says Dwyer.

“So MTaaS is a way to make those capa-bilities available to different categories of partners which have large a base of cus-tomers or followers who are likely to want international money transfers as a service. We offer an easy-to-install set of open APIs, enabling us to integrate with these organi-sations’ websites or mobile apps. This saves them having to set up a licensed money trans-fer operation of their own.”

Unlike MSBs such as MoneyGram and Western Union which only allow senders to specify a recipient country, Viamericas ena-bles senders to specify the payout network in the recipient country that offers the best price and has the most convenient payout locations.

“We work with 20 different payout net-works in Mexico, for example, some of which are banks and others are retailers,” says Dwyer.

“So, whereas MoneyGram and West-ern Union have a single price and a single exchange rate for the sender, we have varia-ble pricing and exchange rates depending on which payout network the sender selects.”

AML/KYCIn the P2P market, HalCash only works with licensed MSBs, as they have an obligation to comply with AML laws, says Witkowski.

“We push the AML/KYC compliance requirements back to our MSB partners,” he says.

“Because Viamericas, for example, has stringent AML/KYC controls, we know that, when we get an order from them, they’ve already vetted the sender and recipi-ent. At our end, we verify that the recipient’s cellphone number has the two correct Pin4 codes that were issued to it.”

Dwyer says Viamericas verifies the identity of the recipient before releasing the second, secret Pin4 code to HalCash to text to the recipient.

“We also do an identification process for the Pin4 sender,” he says. “Our verification is risk-based depending on the amount and frequency of sending.”

Digital cheque-cashingHalCash is establishing partnerships with US cheque-cashing companies to offer digital cheque-cashing.

The partnerships we’re setting up will let consumers scan a cheque into their phone for deposit using a mobile app and, once the cheque-cashing firm has cleared the cheque, they are sent a Pin4 code enabling them to withdraw the funds at an ATM,” Witkowski says.

“Once we have the ATM footprint, we can generate a significant number of orders with digital cheque-cashing.”

Witkowski says that, by the end of 2016, HalCash will be announcing a new ATM partner which will add a significant number of ATMs to its ATM footprint.

It will also be announcing two additional P2P partners, one of which is very focused on international remittances, and two new loyalty partners.

LoyaltyThe advantage of using Pin4 to redeem offers is that consumers don’t need to wait for cheques or prepaid rewards cards to arrive in the mail, says Witkowski.

“For our sister HalCash companies in Spain and Poland, cashing out rewards and promotions represents the major share of their transaction volumes,” says Witkowski.

“These two networks have seen a 30-50% increase in promotional market volumes.”

HalCash brand promotion clients in Europe include Coca-Cola, Pepsi, Bacardi and Nestlé.

“We initially thought there would be a large promotional weight to the Pin4 orders we would be putting out,” says Witkowski.

“In fact, our digital cheque-cashing and MSB business are much stronger than we anticipated, and we’re currently evenly weighted between the P2P side and the pro-motional/loyalty side of our business.

“However, we’re having a lot of conversa-tions with loyalty providers.”<

DISTRIBUTION: PIN4

“Pin4 could be attractive to millennials as a way of instantly transferring funds, since P2P services such as PayPal use the ACH system and take several days” Paul Dwyer, Viamericas

CI 537.indd 13 17/11/2016 13:22:36


Cash remains the preferred mode of retail payment in Kuwait, primar-ily for transactions less than $100 (KUD30.50). Kuwait’s broadly safe

environment, with low levels of pickpock-eting, snatching and mugging, encour-ages consumers to use cash. However, payment cards are also gradually gaining prominence with the improvement of pay-

ment infrastructure, the adoption of new technology such as Europay, MasterCard and Visa (EMV) and contactless, as well as the expansion of Islamic banking.

In October 2009, Visa aligned with the National Bank of Kuwait and Zain to com-mence the first trial of near field communica-tion (NFC) technology in the country. This technology is largely accepted by merchants,

and offers low-value payment solutions such as NFC wallets and over-the-air card-provi-sioning software.

To expand the adoption of contactless payments, mobile payment provider Boloro partnered with Zain in February 2013, to conduct a pilot programme on public trans-port. Bus travellers were provided contactless stickers and were able to pay fares by tap-ping their phone against payment terminals on selected buses. Consumers were also per-mitted to make online and in-store payments using contactless Boloro stickers.

In September 2015, Gulf Bank partnered with KNET and MasterCard to launch a contactless POS terminal that can be used to accept NFC payments. In February 2016, Boubyan Bank partnered with digital secu-rity company Oberthur Technologies to offer contactless payment cards in Kuwait.

The frequency of use per card in Kuwait was 52.7 in 2015 – higher than the UAE (47.6), Lebanon (31.6), Oman (23.1) and Bahrain (16.9).

Rise in Sharia-compliant bankingThe expansion of Islamic banking has increased competition in the domestic finan-cial sector.

The share of Islamic banking assets in Kuwait was the fifth-largest in the world as of June 2014, and its expansion has led many

14 y November 2016

n VALUE OF CHEQUE PAYMENTS ($BN) IN KUWAIT, 2011–2015

0

10

20

30

40

50

60

70

80

20112012

20142015

2013

Source: Central Bank of Kuwait and Timetric

n VALUE OF PAYMENT CARDS ($BN) IN KUWAIT, 2011–2015

0

5

10

15

20

25

30

20112012

20142015

2013

Source: Central Bank of Kuwait and Timetric

COUNTRY SURVEY: KUWAIT Cards International

Cash remains king in Kuwait, but card growth picking up

Cards growth is accelerating in Kuwait, albeit from a low base, as the country’s payment infrastructure improves. Investments from Visa and MasterCard have instigated a situation whereby more investors are eyeing the country as a potential growth market with a lot of unearthed potential

CI 537.indd 14 17/11/2016 13:22:44

Cards International

www.cardsinternational.com

conventional banks to convert to Islamic banks. Commercial Bank of Kuwait, for instance, converted into an Islamic bank in 2014. Kuwait International Bank and Ahli United Bank converted in 2007 and 2010, respectively, and have modified and improved their Sharia-compliant products.

To capitalise on the trend, banks have started offering Sharia-compliant credit cards. Kuwait Finance House launched the Sharia-compliant Visa Signature credit card in April 2015. Kuwait International Bank and Ahli United Bank also offer Sharia-com-pliant credit cards.

Integrated GCC POS serviceThe debit card market accounted for 89.9% of the overall payment card trans-action value in 2015.

To encourage debit card use, the cen-tral banks and monetary authorities of the Gulf Cooperation Council (GCC) countries launched an integrated GCC POS service in April 2014, allowing debit cardholders in GCC countries to make purchases at all POS terminals in the region, in a move to reduce associated debit card transaction costs.

In 1999, the region’s ATM network was interconnected through the GCC ATM ser-vice. Wider acceptability, cost benefits and convenience of use are expected to boost debit card transactions.

Demand for premium cards is risingDemand for premium cards is high due to Kuwait’s growing high-income population. Consumers have become more sophisti-cated, and cards are now an essential part of their lifestyles. Local consumers demand high-quality services and rewards, and in response banks are offering exclusive bene-fits and rewards to serve the most profitable customers.

Warba Bank introduced exclusive offers for premium credit cardholders in July 2015, offering discounts on bookings at around 100 five-star hotels worldwide, free over-night stays, and discounts at over 35 restau-rants in Kuwait.

In July 2014, Gulf Bank launched the World MasterCard credit card which offers multiple benefits including the Gulf Rewards Programme, special discounts provided by MasterCard and Gulf Bank, a global con-cierge service, complimentary travel insur-ance, and airport lounge access in the Mid-dle East.

Rise in e-commerceE-commerce grew from $400m in 2011 to $1.3bn in 2015, at a compound annual growth rate (CAGR) of 33.36% between 2011 and 2015. Kuwait’s e-commerce mar-

ket is mainly driven by rising internet pen-etration and a high per capita income – the fourth-highest in the world as of July 2016. Transaction safety, convenience, speed and value for money are also driving e-commerce in Kuwait.

To capitalise on the rising e-commerce market, banks now offer customised cards to online shoppers.

Gulf Bank provides the Visa Internet credit card exclusively for online shopping; this EMV-enabled chip card is offered free of charge for the first year.

Alternative payments are also gaining prominence in e-commerce, with the avail-ability of PayPal and Boloro.

Infrastructure growthThe number of ATMs increased from 1,238 in 2011 to 1,708 in 2015. This number is

expected to reach 2,085 in 2020. Similarly, the number of POS terminals increased, from 25,596 in 2011 to 43,322 in 2015.

NBK offers multi-currency ATMs at Kuwait International Airport, allowing con-sumers to withdraw cash in six different cur-rencies: the Kuwaiti dinar, the US dollar, the euro, the pound sterling, the Emirati dirham and the Saudi riyal.

The industry also registered an increase in the uptake of mPOS solutions.

International telecommunications compa-ny Ooredoo and mobile payments solutions provider GoSwiff entered into a partnership to launch an mPOS solution in Kuwait in December 2015.

The partnership enables GoSwiff to offer a multi-payment mPOS solution, mobile money and airtime top-ups for Ooredoo’s customers. <

November 2016 y 15

COUNTRY SURVEY: KUWAIT

n KUWAIT’S DEBIT CARD MARKET SHARES BY SCHEMES (%), 2015

Visa50.2%%

MasterCard49.8%

Source: Timetric

n KUWAIT’S DEBIT CARD MARKET SHARES BY ISSUER (%), 2015

Others30%

KuwaitFinance House28.9%

National Bankof Kuwait22.6%

CommercialBankof Kuwait17.9%

Source: Timetric

n KUWAIT’S PAY LATER CARD MARKET SHARES BY ISSUER (%), 2015

Gulf Bank 11.1%%

Kuwait FinanceHouse 38.4%

National Bankof Kuwait32.9%

Others18.5%

Source: Timetric

n KUWAIT’S PAY LATER CARD MARKET SHARES BY SCHEME (%), 2015

MasterCard47.3%

Visa43.5%

Others10.2%

Source: Timetric

CI 537.indd 15 17/11/2016 13:22:46


Switzerland’s payment cards market is mature, with a high penetration of payment cards, at two per inhabitant. The average annual spend per card

is higher than many of its European peers, including the Netherlands, Luxembourg, Belgium and Austria.

The country’s payment cards market grew in terms of both transaction value and vol-ume between 2011 and 2015, supported by infrastructure modernisation, and growth in the retail, e-commerce, and tourism indus-tries.

Switzerland’s payment cards market grew during in the same time period, in terms of the number of cards in circulation, trans-action volume and value, with respective compound annual growth rates (CAGRs) of 3.69%, 11.27% and 3.57%. The payment card market’s positive growth was supported by a consumer shift from cash to card-based transactions.

The average transaction value (ATV) on all payment cards decreased from $140.20 in 2011 to $105.30 in 2015, and is anticipated to decrease further between 2016 and 2020,

from $98.40 in 2016 to $91.20 in 2020.The decline in ATVs is a reflection of the

continuing migration of low-value cash payments to payment cards, alongside the increasing use of contactless cards.

Switzerland is a host to a number of wealthy individuals and large corporates, and the majority of banks offer private bank-ing, wealth and asset management services. Payment cards are cross-sold to these cus-tomers as part of bundled offerings. In the matured market, attention is now gradually turning towards other consumer segments,

16 y November 2016

COUNTRY SURVEY: SWITZERLAND Cards International

Travel cards boost Swiss prepaid cards growth

Alternative payments are gaining prominence in Switzerland with the rise in e-commerce, while the growing popularity of travel cards is boosting prepaid cards growth. However, oversaturation is leading many banks to shift their focus from HNWIs to women and the younger population

n VALUE OF CREDIT TRANSFERS ($BN) IN SWITZERLAND, 2011–2015

0

1

2

3

4

5

20112012

20142015

2013

Source: Timetric

n VALUE OF CHEQUE PAYMENTS ($BN) IN SWITZERLAND, 2011–2015

0.0

0.5

1.0

1.5

2.0

20112012

20142015

2013

Source: Timetric

n VALUE OF PAYMENT CARDS ($BN) IN SWITZERLAND, 2011–2015

0

20

40

60

80

100

20112012

20142015

2013

Source: Timetric

CI 537.indd 16 17/11/2016 13:22:52

Cards International


and banks are offering customised cards for students, the young, travellers, women and SMEs.

Lower interchange fees To encourage card acceptance among Swiss merchants, Comco lowered Visa and MasterCard credit cards interchange fees from 0.95% to 0.70%, effective August 1, 2015; it plans to further reduce the fee to 0.44% from August 1, 2017, which will result in savings of around $62.3m annually.

No interchange fee is charged on Maestro debit cards. As a result, merchants are likely to show more inclination towards card pay-ments.

Advancement of payment infrastructureAll cards issued in Switzerland are EMV-compliant, and the majority host contactless technology. According to the central bank, the number of contactless cards was 7.1 million in 2015; the number is expected to increase from 8.8 million in 2016, to reach 14.2 million by 2020, as banks and issuers are keen to promote contactless technology.

Retailers including avec, Ikea, Jumbo, kki-osk, Coop, Migros, McDonalds, Spar and Starbucks now accept contactless payments.

The introduction of the WISE solution in the framework of the EMVI’16 is likely to complement initiatives to improve consumer convenience and payment security.

EMVI’16, a new chip specification, ena-bles Swiss banks and international issu-ing processing customers of SIX Payment Services to offer secured contactless pay-ments. With combination of both EMV and contactless features, it allows cardholders to make payments by waving a card in front of a contactless terminal.

The e-commerce market registered a CAGR of 14.46% in terms of transaction value between 2011 and 2015. While pay-ment cards continue to be the most popular online payment method, the emergence of new alternative solutions such as PayPal, Apple Pay, MasterPass and Twint is antici-pated to challenge the dominance of payment cards in the e-commerce space.

To offer a faster checkout experience, PayPal expanded its One Touch instant checkout service to Switzerland in August 2015. One Touch can be activated from the PayPal website, and is used to skip the login process at eligible websites.

Apple Pay, which launched in July 2016, enables Visa and MasterCard credit cardholders to make remote in-app online payments. MasterCard launched the Mas-terPass digital wallet in Switzerland in 2015. It allows consumers to store all their cards,

shipping and billing address details in one place, and use any of them to make payments for online purchases.

Growing preference for prepaid cardsThe prepaid card market grew rapidly in terms of the number of cards in circula-tion, at a CAGR of 6.74% between 2011 and 2015. Anonymity, changing consumer attitudes to debt and bankless transactions were the main factors for this – giving pre-paid cards the potential to capture a range of consumers, including students, travellers, and the unbanked population.

Growth in the prepaid card market was primarily driven by the popularity of travel cards. Banks issue these cards to retail and corporate customers, and bundle them with insurance, reward points, and emergency card replacement features.

Consumers can reload cards at ATMs and online, or by sending an SMS to the bank.

A prominent example of a travel card in Switzerland is Raiffeisen Bank’s Travel Cash Card. This is a prepaid card with chip-and-PIN functionality, and can be loaded at an ATM or via an app.

The card is accepted at more than 31 mil-lion establishments worldwide. Cardholders also receive reward points and special dis-counts at partner retailers. In the event of card loss or theft, the bank immediately issues a new card.

To serve the growing needs of outbound travellers and reduce use of travellers’ checks, Credit Suisse offers the prepaid Travel Cash card. The card is available to consumers in Switzerland and Liechtenstein and can be used to withdraw cash at ATMs or make cash-free payments in store.<

November 2016 y 17

COUNTRY SURVEY: SWITZERLAND

n SWITZERLAND’S DEBIT CARDS MARKET SHARE BY ISSUERS (%), 2015

Raiffeisen Bank12.2%

PostFinance47.2%

Others20.9%

UBS19.7%

Source: Timetric

n SWITZERLAND’S DEBIT CARDS MARKET SHARE BY SCHEMES (%), 2015

PostFinance47.2%

Others7.2%

MasterCard45.6%

Source: Timetric

n SWITZERLAND’S PAY LATER CARDS MARKET SHARE BY ISSUERS (%), 2015

UBS20.7%Others

45.6%

Viseca 20.1%

Credit Suisse 20.2%

Source: Timetric

n SWITZERLAND’S PAY LATER CARDS MARKET SHARE BY SCHEMES (%), 2015

MasterCard54.3%

Others6.7%

Visa 39.0%

Source: Timetric

CI 537.indd 17 17/11/2016 13:22:55


COUNTRY SURVEY: THE UAE

mWallets and growing financial inclusion boost UAE card growth

Cash remains the dominant payment method, but card payments are increasing in popularity in the UAE. In particular, they are being boosted by government financial inclusion programmes, promotional campaigns by banks, the adoption of EMV, and a growing contactless infrastructure

n VALUE OF CHEQUE PAYMENTS ($BN) IN THE UAE, 2011–2015

0

100

200

300

400

500

20112012

20142015

2013

Source: Central Bank of the UAE and Timetric

n VALUE OF PAYMENT CARDS ($BN) IN THE UAE, 2011–2015

0

10

20

30

40

50

20112012

20142015

2013

Source: Central Bank of the UAE and Timetric

Cash remained the predominant pay-ment instrument between 2011 and 2015, accounting for 88.7% the country’s payments transaction vol-

ume in 2015. This was primarily because consumers in the UAE view cash as a quick and safe payment option, over which they have control.

According to a survey by Network Inter-national in August 2015, cash was the most popular payment method among Emirati

consumers in 10 of 12 purchase categories. The survey found that only 12% of con-sumers use debit cards four or more times a week, 15% two to three times a week, and more than 50% only use a debit card once or less than once a week.

Consumers were more inclined to use cred-it cards, with 16% use them four or more times a week, 17% using them two to three times a week, and 37% using them once a week or less.

Card payments are gradually increasing in prominence, supported by government financial inclusion programmes, promo-tional campaigns by financial institutions and the adoption of EMV and contactless. The frequency of use of payment cards in the UAE stood at 47.6 in 2015 – higher than peers such as Lebanon (31.6), Oman (23.1) and Bahrain (16.9).

To promote cashless payments, 16 equi-ty partner banks – NBAD, ADCB, ADIB, Mashreq Bank, Dubai Islamic Bank, CBD, Rakbank, UNB, Al Hilal Bank, SIB, Al Mas-raf, Bank of Sharjah, Invest Bank, UAB, NBF and NBQ – agreed to implement a mWallet platform in August 2016.

This platform is regulated by the central bank and developed under the supervision of the UAE Banks Federation – a body which aims to promote and improve the UAE’s banking sector. The platform aims to provide the unbanked population with access to basic financial services.

Financial inclusion initiatives Improving financial inclusion has driven the adoption of debit cards in the UAE. The gov-ernment introduced the Wages Protection System (WPS) in January 2009, requiring the payment of salaries through banks or other financial institutions.

It is an electronic wage transfer system that offers transparency to both domestic and foreign workers, and addresses delayed

Cards International

CI 537.indd 18 17/11/2016 13:22:58

Cards International


payments or non-payments. All institutions registered with the Ministry of Labour come under the purview of the WPS.

As of October 2015, there were 4.6 million foreign workers registered with the Ministry of Labour, of which 3.5 million were enrolled in the WPS.

The percentage of the population aged 15 or above with a bank account rose from 59.7% in 2011 to 87.5% in 2015, according to the World Bank’s Global Findex survey.

Immigrant population The UAE is home to numerous immigrants. In 2015, there were 4.5 million expatriate workers, accounting for nearly half of the total population. The immigrant population accounted for 88.4% of the resident popula-tion in 2015, according to the International

Organisation for Migration. Many expatri-ate workers use prepaid cards to remit funds to their home countries.

In February 2016, UnionPay International collaborated with banks in the UAE to issue an EMV prepaid salary card. The card is compliant with the WPS and enables banks to offer a secure form of wage payment to workers. The prepaid card transaction value more than doubled from 2011 to reach $10.6bn in 2015.

Alternative payment solutionsThe uptake of alternative payments among the Emiratis is gaining traction with the intro-duction and availability of various solutions. In August 2016, Emirates NBD launched the Emirates NBD Pay mobile contactless pay-ment solution in the UAE. The app enables

bank Visa cardholders to instantly pay for in-store purchases with an Android handset.

PayPal, Visa Checkout, MasterPass and Network Online (NeO) all have presences in the country. MasterCard partnered with Rakbank, Mashreq Bank and Emirates NBD to launch the MasterPass digital wallet in the UAE in November 2014.

MasterPass allows consumers to store pay-ment, shipping and billing address details in one place, and use any payment card to make online and in-store payments.

Following the launch of MasterPass, Visa launched Visa Checkout in April 2015. In October 2015, Network International, launched NeO, an online payment gateway that can be used to make online payments using a Visa, MasterCard, American Express, Diners Club, Discover or Mercury card.<

November 2016 y 19

COUNTRY SURVEY: THE UAE

n THE UAE’S DEBIT CARD MARKET SHARES BY ISSUER (%), 2015

Emirates NBD23.1%

DubaiIslamicBank12.7%

National Bank ofAbu Dhabi23.1%

Others41.1%

Source: Timetric

n THE UAE’S DEBIT CARD MARKET SHARES BY SCHEME (%), 2015

Visa70.0%

MasterCard30.0%

Source: Timetric

n THE UAE’S PAY LATER CARD MARKET SHARES BY ISSUER (%), 2015

EmiratesNBD 17.2%

Others56.3%

MashreqBank 12.7%

Abu DhabiCommercialBank 13.8%

Source: Timetric

n THE UAE’S PAY LATER CARD MARKET SHARES BY SCHEME (%), 2015

Mastercard31.9% Visa

61.4%

Others6.3%

Source: Timetric

On the road tocard adoption

CI 537.indd 19 17/11/2016 13:23:05


Cards International

20 y November 2016

GUEST COMMENT: EQUIFAX

How to combat the fraud industryWith some unwanted finding regarding fraud, as well as major breaches in cyber security, a stronger strategy towards security is needed now more than ever. John Marsden, head of ID and fraud at Equifax, gives an overview of the main risks and the measures that businesses should look to implement

ONS figures show banking and credit fraud is up 13% in the year ending June 2016Companies have stepped up fraud protection with multiple layered fraud defences, but this often moves criminal activity to channels that are less well protected.

Fraud is a surprisingly professional indus-try. The number of cases continues to rise as criminals find new ways to access informa-tion, often fuelled by a deep understanding of their target’s identity. Underlying this is the sharing of knowledge and consumers’ per-sonal information on dark web marketplaces.

Consumers must take steps to protect themselves from falling prey to fraudulent behaviour. People are without doubt con-fused about where to store and share confi-dential information like their bank account number, sort code and even date of birth.

As consumers seek the convenience and speed offered by digital correspondence, they expose themselves to fraudsters who will steal this information to gain access to accounts and financially exploit individuals.

Data shared on the dark web cannot be treated as a one-time event; the data never truly vanishes and can spread globally in a short time, enabling criminals to fraudulently take over accounts and identities.

To reduce the risks and damage associated with fraudulent activity, more needs to be done to educate the public and give them a stronger chance of protecting themselves.

The advice is very clear: Remain vigilant, only share your details when you are sure the channel is secure, and keep the follow-ing guidelines in mind when handling your personal information:

• Do not do online banking in public places and definitely do not use public Wi-Fi; criminals set up bogus public Wi-Fi hot-spots to access devices and information;

• Never respond to unprompted banking messages unless you are absolutely certain the request is genuine, for example you have spoken with your bank to confirm;

• Be very aware of domain names online

and the security signs visible in a browser. Be sure to log on to a banking website at a web address you know, not via a link;

• Never provide any banking details to a third party you do not know or are unsure about, in part or as a whole, and

• Avoid unnecessarily sharing details such as name, address and date of birth.

The latest FFA UK report reveals a 25% year-on-year rise in financial fraud losses for the first half of 2016 to £399.5m Cyber and ID fraud dominate the fraud land-scape, and online scams and attacks contin-ue to rise. E-commerce is growing, and is a tempting prospect for fraudsters looking to use identity and payment data such as credit and debit card information they have gained via the vast carders markets.

Fraudsters are sophisticated and can easily gather information which can then be used to open accounts and make purchases online fraudulently. This situation is exacerbated by an increasing frequency of data breaches by hackers who can then sell this data on to other criminals.

In addition, a frightening number of con-sumers are also still being tricked into hand-ing over personal data. This usually occurs when a criminal is able to convince an indi-vidual that they are emailing or calling from a legitimate organisation and need to verify their personal details.

Using this information the criminal fraud networks can create high-quality ID data to sell via the dark web.

The financial services industry has to work together, educating consumers and sharing information to help collectively tackle crimi-nal activity.

The focus must be two-fold: It is vital that any organisation holding personal data con-tinuously evolves the systems and processes in place to keep that information safe. Equal-ly, any business handling financial transac-tions has to take every possible step to ensure the customer they are dealing with is genuine.

It is clear that passwords alone are no

longer enough, fraudsters are wise to our thinking when we create a password, mak-ing them all too easy to crack. This is why businesses need to invest in new technology like biometrics and device recognition creat-ing multiple layers of defence.

The criminals do not stand still, and busi-nesses of all sizes need to work hard to stay ahead.

500 million Yahoo passwords and usernames have been stolen since 2014Passwords are continuing to topple like dominos, and the rate of major breaches is increasing at an alarming rate.

The Yahoo breach is a super-sized domino that is going to have huge effects on people for years to come. This is a game changer in the online fraud world; aside from Gmail being cracked, there is no other single event that could happen that will cause more fraud and damage over the next five years.

The breach has been a major blow to Yahoo, with personal details of around 0.5 billion users now up for sale on the dark web. This information will spread quickly and globally, with no chance of recovery.

There will be a long-lasting impact for con-sumers and businesses as hackers attempt to use the breached data to access other online accounts.

We urge businesses to be on high alert for any customer contacting them from a Yahoo email address, as there is a high chance that their details have been comprised.

One particular area to watch are requests to reset passwords: Sending a ‘click here to reset password’ link to a Yahoo address is not advisable given the size of the breach.

Passwords are no longer effective as a stand-alone measure, and companies must act to improve their online security.

The normal advice of complex password, numbers and numerals no longer works in a world where there are now billions of cracked passwords; companies should instead introduce a second layer of authenti-cation processing, such as device recognition, to help build the necessary barriers to keep data safe.<

CI 537.indd 20 17/11/2016 13:23:11

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