SOCIAL SERVICE - VISA AND MASTERCARD LEAD THE WAY IN CUSTOMER ENGAGEMENT
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ww w.cardsi nternati onal .com Issue 555 / may 2018 SOCIAL SERVICE VISA AND MASTERCARD LEAD THE WAY IN CUSTOMER ENGAGEMENT ANALYSIS FEATURE SECURITY Complaints rise by 2% for Revolut and its ambitions The push for an industry- credit cards, but fall for to develop the UK as a wide standard in the current accounts cashless society e-commerce space CI May 2018 555.indd 1 27/04/2018 10:15:41
contents this month COVER STORY NEWS 05 / EDITOR’S LETTER 06 / DIGEST • BJ’s Wholesale Club adds Masterpass as payment option • Billon to integrate Igoria cards with blockchain technology • OCBC first in Singapore to offer instant issuance and Apple Pay • Equinox Payments to support JCB contactless cards in the US • Tesco Bank divests Irish credit card portfolio to Avantcard • Amex and Marriott unveil co- branded credit cards • Ingenico launches new biometric POS terminal • Google Pay integrates virtual Hop Fastpass transit card 16 • HomeStreet Bank unveils on-off SOCIAL MEDIA cards to prevent fraud • iZettle launches e-commerce marketplace for small businesses • JCB and Idemia launch biometric Editor: Douglas Blakey Group Editorial Director: Director of Events: Ray Giddings card pilot in Japan +44 (0)20 7406 6523 Ana Gyorkos +44 (0)20 3096 2585 • Credit card customer sues JPMorgan douglas.blakey@verdict.co.uk +44 (0)20 7406 6707 ray.giddings@compelo.com ana.gyorkos@globaldata.com • Mastercard to hire 175 in Dublin Senior Reporter: Head of Subscriptions: Patrick Brusnahan Sub-editor: Nick Midgley Alex Aubrey +44 (0)20 7406 6526 +44 (0)161 359 5829 +44 (0)20 3096 2603 patrick.brusnahan@verdict.co.uk nick.midgley@uk.timetric.com alex.aubrey@verdict.co.uk Junior Reporter: Briony Richter Publishing Assistant: Sales Executive: Jamie Baker +44 (0)20 7406 6701 Joe Pickard +44 203 096 2622 briony.richter@verdict.co.uk +44 (0)20 7406 6592 jamie.baker@verdict.co.uk joe.pickard@verdict.co.uk 08 Customer Services: +44 (0)20 3096 2603 or +44 (0)20 3096 2636, briefings@verdict.co.uk Financial News Publishing, 2012. Registered in the UK No 6931627. ISSN 0956-5558 Unauthorised photocopying is illegal. The contents of this publication, either in whole or part, may not be reproduced, stored in a data retrieval system or transmitted by any form or means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. For more information on Verdict, visit our website at www.verdict.co.uk. As a subscriber you are automatically entitled to online access to Cards International. For more information, please telephone +44 (0)20 7406 6536 or email briefings@verdict.co.uk. London Office: 71-73 Carter Lane, London, EC4V 5EQ Asia Office: 1 Finlayson Green, #09-01, Singapore 049246 Tel: +65 6383 4688, Fax: +65 6383 5433 Email: asiapacific@sg.timetric.com follow CI on twitter @Payments_News 2 | May 2018 | Cards International CI May 2018 555.indd 2 27/04/2018 10:16:04
contents may 2018 s to talk about cracking China, disrupting 20 COUNTRY SNAPSHOTS SWIFT, and leveraging WeCha 16 / CHILE Payment card transactions are gradually replacing cash in Chile, mainly as a result of government and bank initiatives such as a financial inclusion programme and infrastructure modernisation 18 / NIGERIA The use of cash for consumer payments remains highly prevalent among Nigerians, especially for those in rural areas. However, the Central Bank of Nigeria has taken a number of steps to improve this situation 20 / THE PHILIPPINES Cash’s dominance in the Philippines is mainly a result of the country’s high unbanked population, inadequate banking infrastructure, limited public awareness of cards, and low levels of card acceptance ANALYSIS FEATURES 10 / COMPLAINTS 12 / SOCIAL MEDIA Credit card complaints rose by 2% in the With social media ever-present in everyday life, second half of 2017 while current account the opportunities to engage with customers are complaints fell. Overall, a total of 3.76 million numerous. Visa and Mastercard consistently complaints were received in the six months to outrank banks in terms of social media end-2017, reports Douglas Blakey outreach, but why? Patrick Brusnahan writes 11 14 / REVOLUT Revolut believes the UK could become fully cashless in just 10 years, and wants to be at the forefront of the revolution. CTO and co-founder Vlad Yatsenko tells Briony Richter why this vision is close to becoming reality 16 SECURITY PRODUCTS INDUSTRY INSIGHT 11 / E-COMMERCE 15 / VIRGIN ATLANTIC 22 / MYPOS Shifting from magnetic stripes to chips in Two new credit cards are the first products to From the casual dining crunch to major high cards has been a long process; however, it was be launched from the partnership between street retailers facing financial troubles, there is needed to improve security at the point of sale. Virgin Atlantic and Virgin Money, facilitated little doubt that we are facing a difficult retail Now, the biggest firms want a similar shift in by Mastercard. Briony Richter takes a looks at environment. However, this also represents an e-commerce. Patrick Brusnahan reports the cards’ primary features and benefits opportunity, writes Ambreen Khasru www.cardsinternational.com | 3 CI May 2018 555.indd 3 27/04/2018 10:16:26
HEAR ∤ NETWORK ∤ DISCOVER ∤ CELEBRATE LEASING LIFE CONFERENCE & AWARDS 2018 15th November 2018 ∤ Tallinn, Estonia For its 14th edition Leasing Life Conference and Awards 2018 moves to the Baltic Region to bring together asset finance professionals and industry disruptors in an active discussion of the key issues facing the leasing industry. This year’s Leasing Life conference explores how Europe’s leasing industry is responding to the value chain opportunity - the operational, and strategic, implications of the paradigm shift, and the role that technology must play in transforming the industry so that it thrives in the digital age. . Event highlights: ∤ Re-defining asset ownership for a digital generation · The Baltic Approach: Regulatory arbitrage in the digital era · GDPR and its implications for reporting, asset management and marketing · Funding strategies for a lean world · Re-defining sales and distribution channels for the digital era · Harnessing the power of agile: Assessing the transformative potential of digital · Embracing the circular value chain approach to lease delivery & design · Taking the right risks for the rewards: Strategic implications of the era of asset ownership · Using data and analytics to drive performance, deliver value Headline Sponsor: Gold Sponsor: Silver Sponsors: Brand Sponsor: Exhibitor: Badge and Lanyard Sponsor: Table Hosts: For more details please contact: Page 1 Vicki Greenwood on vicki.greenwood@compelo.com or call +44 (0) 20 30W96 2580
editor’s letter Tinkoff remains the Russian cards player to watch Douglas Blakey, Editor L aunched only 11 years ago by serial entrepreneur Sberbank, with more than 3.5 million customers. But debit card Oleg Tinkov, Russia’s number one direct bank can customer numbers are catching up fast, as Tinkoff ended 2017 already claim to be the world’s largest fully online with more than three million customers. bank by customer base. Hughes tells me Tinkoff is now attracting 120,000 new debit It is generally regarded as punching above its weight in terms card customers every month; he says that the day is not far of credit cards, but is now repeating the trick with a successful away when current account customers will exceed credit card range of debit cards. customer numbers. The list of growing Tinkoff innovations is impressive: Hill, whom I have known and admired since his Commerce • The first organisation in Russia to roll out facial Bank days in the US, is fond of asking banking journalists just biometric recognition to identify and verify customers how many online-only banks have really made a success of in 2016; their business with sustained profitability. Tinkoff can claim • The first in Russia to implement real-time voice- such a success: in fiscal 2017 Tinkoff posted net income of authentication technology in 2014; RUB19bn ($300m). • With around 4,600 operators, Tinkoff has the largest Hughes says Tinkoff is on track to report a net profit for cloud-based Home Call Centre powered by proprietary fiscal 2018 of at least RUB24bn, and will hit its target of a net software in Russia; income increase for the next two years of 20-40% per annum. • 20% of all incoming electronic messages are The upcoming launch by Tinkoff of a premium Tinkoff automatically handled by bots, and Black product line and associated concierge service to target • Tinkoff was among the first to launch Apple Pay, the mass affluent segment and the lower end of the private Android and Samsung Pay services in 2016. banking sector makes perfect business sense. It is just one of a number of new product lines in the Tinkoff pipeline likely to Tinkoff is now transitioning to become an online financial ensure that Tinkoff will hit its next business targets. < marketplace: Tinkoff.ru offers a full range of both own-brand and partner retail financial services via mobile and desktop. By chance, as CI was preparing to go to press, I spoke with market shares Oliver Hughes, president and CEO of Tinkoff just minutes after Russia: leading credit card issuers, 2017 speaking with Metro Bank chair and founder Vernon Hill as Metro Bank released its first-quarter earnings. There are shades of Hill’s background, success and charisma in the background of Tinkoff’s founder. While Hill made his Others first fortune in fast food as part-owner of a group of Burger 27.7% Kings, Tinkoff has, in his time, owned a network of restaurants, frozen food factories and brewing firms before concentrating Sberbank on financial services. 45.5% There the similarities end, as while Hill and his UK and US VTB banks, Metro and Republic respectively, are focused on the 6.9% store, Tinkoff has no branches and has acquired and services Alfa 8.3% Tinkoff all of its seven million-plus and growing customers via online channels and its call centre. 11.6% Tinkoff’s share of the credit card market has almost doubled in the past five years to more than 11.5%, second only behind Source: Tinkoff Get in touch with the editor at: douglas.blakey@verdict.co.uk www.cardsinternational.com | 5 CI May 2018 555.indd 5 27/04/2018 10:16:35
News | Digest news digest BJ’s Wholesale Club adds OCBC first in singapore Masterpass as payment option to offer instant digital issuance and Apple Pay be entered. It can be used with various devic- es and channels. OCBC has become the first bank in Mastercard’s executive VP for US mer- Singapore to enable customers to transact chants and acceptance, Linda Kirkpatrick, at merchants that accept Apple Pay within said: “We are thrilled to partner with BJ’s minutes of applying for a Visa credit or Wholesale Club to enhance its one-stop debit card. shopping experience with our latest and OCBC customers no longer need to wait US-based warehouse chain BJ’s Wholesale safest digital technology. for a physical card to arrive – they can now Club has added Masterpass, Mastercard’s “With Masterpass as a payment option, add a digital card to Apple Pay instantly via digital contactless payment service, as a BJ’s members are just a click away from a the OCBC Mobile Banking app. payment option for its customers. seamless and secure checkout.” According to OCBC, Visa cards make up The integration will enable BJ customers BJ’s Wholesale Club CFO Bob Eddy said: almost 80% of OCBC Bank cards currently to pay for purchases without taking out cards “As we continue to grow our Omnichannel linked to Apple Pay. Instant provisioning or sharing credentials. capabilities, we’re focused on delivering a of cards for use with Apple Pay has been Masterpass securely stores sensitive pay- seamless experience for our members. Add- enabled for OCBC Bank Visa credit ment information such as card and shipping ing Masterpass as a payment option on BJs. cards – including the 365, Frank, Voyage, details, and payment preferences, and does com offers our members another convenient Robinsons Group, Plus! Visa and NTUC not require all of a customer’s credentials to way to shop with us.” < Plus! cards and the Yes! debit card. Aditya Gupta, OCBC Bank’s head of Billon to integrate Igoria cards e-business Singapore, said: “This is the new digital – instant, embedded and frictionless with blockchain technology access to banking products and services. Our customers can now receive their new card digitally and provision it to their Apple and provide a digital system to manage Wallet to start paying with it straight away limits and payment histories, and facilitate – all from within our mobile banking app currency exchange. and within a few minutes. Igoria cards will be stored in electronic “We believe this is a huge level-up in form on Billon’s blockchain platform. customer experience, and will accelerate Payments made using the cards will be our digital card applications and cashless funded through e-money present on the payments market leadership drive.” platform. One in every two Visa contactless Billon CEO and founder Andrzej transactions in Singapore, including Apple Horoszczak said: “The partnership with Pay, are made with an OCBC Bank card. Igoria is the start of a relationship that Monthly mobile wallet payments have could see us fully commercialise our doubled since 2016, while the number of UK-based blockchain services provider distributed ledger technology and move credit cards provisioned to mobile wallets Billon has partnered with Polish business from existing individual deployments to a has increased sevenfold. Igoria Trade to allow digital use of the much broader transformation of payments Around 60% of OCBC Bank cards linked multi-currency IgoriaCard in 150 countries and the banking system.” to mobile wallets are on Apple Pay. Mobile through blockchain technology. Igoria Trade CEO Wojciech Kuliński wallets are particularly popular for lifestyle Billon uses a blockchain ledger to store added: “The move to integrate Billon’s transactions including groceries, hire cars, and transfer real, regulated currencies and distributed ledger technology with food deliveries and fast food. smart data. The collaboration will allow IgoriaCard is truly exciting. Vincent Tan, OCBC Bank’s head of Billon customers to use Igoria cards for “We’re committed to staying at the credit cards, said: “With our instant digital transactions in physical stores as well as cutting edge of technology and believe card issuance, customers can immediately online purchases at low exchange rates. the partnership with Billon is the perfect provision their new cards to Apple Pay via Available in plastic and virtual forms, opportunity for us to take the next leap our mobile banking app, and start to enjoy the cards run on the Mastercard network, forward.” < our cards’ rewards and rebates.” < 6 | May 2018 | Cards International CI May 2018 555.indd 6 27/04/2018 10:17:02
News | digest Equinox Payments to support JCB AmEx and Marriott contactless cards in the US unveil co-branded Payment terminals provider Equinox Payments is set to upgrade its terminal lines JCB EMV liability shift that takes effect next year. Once completed, all Equinox payment credit cards to support contactless transactions on JCB terminals will be automatically enabled to cards in the US. support JCB Contactless at the factory prior Equinox plans to integrate its Apollo, to release.” L5000 and Luxe terminal lines with contact- Equinox also added JCB support to its less chip technology. The business said an L5300 terminal, which is used at various upgrade path will be provided for mer- high-volume retailers, and the Apollo stand- chants with these terminals over the coming alone terminal. months, enabling acceptance of contactless JCB’s VP of emerging technologies, Linda payments through JCB cards and Apple Pay. Horwath, said: “This relationship under- American Express and Marriott Commenting on the move, Equinox scores the partner-friendly approach that International have unveiled new the Payments VP Rob Hayhow said: “Merchants Equinox brings to the table. Marriott Rewards Premier Plus credit that adopt these solutions can improve the “We are excited to extend the speed and card and the Starwood Preferred Guest checkout experience for JCB card members, convenience of contactless payments to our American Express Luxury card, along with and make sure their business is ready for the valuable card members visiting the US.” < the refreshed Starwood Preferred Guest Consumer and Business credit cards. Tesco Bank divests Irish credit Set to be available from May this year, the Rewards Premier Plus credit card is card portfolio to Avantcard part of Marriott’s loyalty programme and will feature a new 100,000-point limited- time offer for new card members, with a variety of other benefits such as reward points on purchases. Both the new and refreshed cards under the Starwood Preferred Guest programme will be available from August this year. They will provide travel benefits and rewards that can be access at around 6,500 hotels in 127 countries. The American Express Luxury card is designed for premium customers and features complimentary Gold Elite Status, additional cards at no charge, and a chance to earn Platinum Elite Status, among others. The Consumer and Business cards will offer new benefits such as points on purchases at select SPG and Marriott Rewards hotels, Annual Night Award and automatic Silver Elite Status. The UK’s Tesco Bank has agreed to sell its Fee card does not charge a fee for balance The Business cards will also offer Irish credit card portfolio to Spain-based transfers, the Premium card focuses on additional ways for small merchants to consumer finance company Avantcard. reward points, and the Foundation card earn points when they make common As a result, around 27,000 credit card allows its holders to improve their credit purchases, including dining, gas, wireless accounts are set to be transferred from ratings. bills and shipping. Tesco Bank to Avantcard. The deal follows Tesco Bank’s decision to American Express’s senior VP of US Cardholders will be able to continue cease accepting applications for its credit commercial cards, Courtney Kelso, said: using existing cards until they receive card services from Irish customers in May “We know our card members love to stay a new card, which also applies to Tesco last year. at Marriott hotels when they travel the Clubcard reward points, The Irish Times Avantcard MD Chris Paul said: globe. With our expanded card offerings, reported. “Avantcard’s strategy is to be a leading soon they will get access to even more Tesco offers a variety of credit cards, consumer finance provider in Ireland by benefits to enhance their hotel stays and each with different features. Its Purchases 2020, and this will be achieved through their entire travel experience – all while card offers interest-free payments for 28 ongoing product innovation, continuing giving them more ways to earn the points months, while the No Balance Transfer investment and strategic partnerships.” < we know they love.” < www.cardsinternational.com | 7 CI May 2018 555.indd 7 27/04/2018 10:17:12
News | Digest Ingenico launches new HomeStreet Bank biometric POS terminal unveils on-off cards Payment solutions provider Ingenico Group VP of Ingenico’s marketing of banks and to prevent fraud has launched a new portable mobile point- acquirers business unit, Frédéric Lepeintre, of-sale terminal, the Move/2500 B, with said: “We are pleased to introduce the biometric capability. Move/2500 B, our third-generation The new product is intended to meet biometric POS, designed to support standard financial inclusion requirements financial inclusion scenarios as well as for the unbanked population and innovative payment schemes in mature government schemes. According to the markets. company, India will soon require these “The launch of the Move/2500 B systems for fingerprint authentication, and illustrates Ingenico Group’s commitment Mexican banks can use them to verify a towards reaching the two billion people loan recipient’s identity. Ingenico noted excluded from financial services. that the EMVco certification of fingerprint “It also demonstrates our ability to authentication may initiate new global adapt to new regulatory frameworks schemes. and consumer demand for fingerprint Promoted as secure and cost-efficient, authentication.” the Move/2500 B supports all types The company plans to introduce its new of payment methods, and can match biometric POS in India in June this year, fingerprints in a fraction of a second. and subsequently into the Middle East. < US-based HomeStreet Bank has Google Pay integrates virtual introduced a new mobile security feature, Card Controls, to give clients greater Hop Fastpass transit card control over their debit cards. The new feature aims to prevent fraud and improve the security of debit cards. Available through the bank’s mobile app, the new capability allows customers to turn cards on and off, and enable usage alerts. It also enables cardholders to track spending, and manage expense limits, merchant types and geographic locations. HomeStreet Bank CEO and president Mark Mason said: “Protecting our customers from fraud is one of our top priorities, which is why we continue to roll out security features like Card Controls. “Through Card Controls, customers have total control over their debit card right at Init, TriMet and moovel have collaborated beginning of a new era in the fare-collection their fingertips, giving them peace of mind to integrate the virtual Hop Fastpass card for world. that their banking information is secure. Google Pay users in the Portland, Oregon “The vision of a secure transit payment Mason added: “We’re committed to region. solution without carrying a card has now our customers, and we’re looking forward Cardholders using TriMet, C-Tran and finally been realised.” to rolling out more features that make Portland Streetcar rides in the Portland-Van- When the virtual card is used by riders, a their banking experience safer and more couver region will now be able to use a back-office management tool, Mobile-var- convenient.” virtual smart card to pay transit fares. io by Init, will estimate the fare, verify the The Card Controls feature follows a The card can be loaded through the Hop transaction and provide the fare-validation series of digital upgrades such as Cardless Fastpass mobile app available at the Google result in real time. Cash, Apple, Samsung and Android Pay Play store. It is said to be the first regional TriMet general manager Doug Kelsey said: launched by the bank over the past account-based virtual transit fare card, and “The combination of Hop and Google Pay few months to enhance the customer can be used at any of the 1,200 Init fare puts transit riders in the Portland-Vancouver experience. validators. region on the cutting edge of technology, The bank also plans to roll out the Zelle Init project engineer Thomas Schaich said: while truly getting the best value with daily person-to-person payment network in the “The use of virtual transit cards marks the and monthly fare caps as they ride.” < near future. < 8 | May 2018 | Cards International CI May 2018 555.indd 8 27/04/2018 10:17:40
News | Digest iZettle launches e-commerce JCB and Idemia launch marketplace for small businesses biometric card pilot Japanese card issuer JCB has partnered with Idemia, an augmented identity business, to trial its first biometric chip card aimed at enabling faster checkouts. The payment card integrates Idemia’s F.Code technology designed to replace PIN with fingerprint authentication to allow easy and secure transactions. Customers can use a smartphone or tablet app to initially record their fingerprints, which will be stored in the card. At the time of purchase, they can make a payment by simply touching a fingerprint sensor embedded on the card. An Idemia Jacob de Geer, iZettle algorithm then validates the identification by cross-checking with the stored data. iZettle, the Swedish fintech business that to maximise sales and improve the customer The pilot is set to be conducted in serves small businesses in Europe and Latin experience. alliance with card-personalisation partner America, has launched a new e-commerce iZettle CEO and co-founder Jacob de Toppan Printing, and will see issuance of platform that allows merchants to sell in- Geer stated: “This is iZettle’s biggest product cards to JCB employees in Japan. store, online and on mobile devices. launch since 2011, and it is a huge moment Executive VP of JCB’s brand The platform will enable small busi- for us. infrastructure and technologies ness owners to set up and customise new “Today’s consumers expect businesses department, Tac Watanabe, said: “This webshops and start selling products through to be present both offline and online. Half pilot programme, through our strong multiple online channels, including social of iZettle’s users currently don’t have an partnership with Idemia, is to demonstrate media, blogs and existing websites. online shop, and the other half struggle with a use case of how JCB intends to provide The iZettle E-commerce platform is different complex online systems. iZettle customers with a secure and smooth way available in the UK as part of the iZettle E-commerce solves these problems, helping of making payments in the future.” Go Plus full-feature package that costs £29 small businesses find new customers and sell Executive VP of Idemia’s financial ($42) per month. Small businesses that take more – all from one place.” institutions business unit, Pierre Barrial, up the offer will benefit from a full overview The online platform processes all major added: “F.Code is a unique technology that of in-store and online sales in one place. credit cards and online payments, and sup- provides highly secured authentication and Inventories are automatically updated after ports PayPal. The launch is part of iZettle’s we are eager to implement it for the first each sale. strategy to extend its commerce platform by time in Japan.” < The platform will also enhance data pro- offering a wider range of affordable tools to ductivity, enabling merchants to harness data small businesses. < Mastercard to hire 175 Credit card customer sues JPMorgan to drive innovation Mastercard has announced plans to JPMorgan Chase has been sued by a credit The bank reportedly charged $143.30 bolster its footprint in Ireland by hiring card customer in Idaho over high interest in fees and $20.61 in interest for five 175 new technical staff at its facility in rates and fees for buying cryptocurrency cryptocurrency transactions made between Leopardstown, Dublin. using a credit card. 27 January and 2 February, and refused a The company will hire software According to reports, Brady Tucker has request for their removal. Tucker, who is engineers, blockchain and cloud filed a lawsuit against the banking giant in now seeking actual and statutory damages infrastructure specialists, data scientists, the federal court in Manhattan, claiming of $1m, said he used a credit card because analysts, project managers, information JPMorgan considered the cryptocurrency it was the only means to make an instant security experts and product designers. purchases as cash advances and levied cryptocurrency purchase on Coinbase. Mastercard said the new employees will higher charges than usual. Reuters quoted Chase spokesperson primarily focus on expanding innovation in JPMorgan banned the use of its credit Mary Jane Rogers as saying the payments and security solutions. cards for buying cryptcurrencies in bank ceased processing credit card Mastercard Ireland country manager February this year, but Tucker’s lawsuit cryptocurrency purchases in February Sonya Geelon said: “At our Dublin office, claims the bank did not issue any notice because of the credit risk involved, but we’re working on innovations that will that the purchases will be treated as cash that customers can use debit cards without shape the future of payments not just in advances. incurring cash-advance charges. < Ireland, but all around the world.” < www.cardsinternational.com | 9 CI May 2018 555.indd 9 27/04/2018 10:17:52
ANALYSIS | COMPLAINTS in the six months to the end of March, and CREDIT CARD expected to receive another 110,000 by the complaints deadline set for August 2019. Excluding PPI, the number of complaints COMPLAINTS received by firms was 2.21 million – around 13,000 fewer than the previous six months. After PPI, the next most complained-about products are current accounts with 509,047 INCH UP IN UK complaints, and credit cards with 314,586 complaints. These products have a higher proportion of complaints closed within three days (see table). The amount of redress paid out in total Credit card complaints rose by 2% in the second half during the second half of 2017 was £2.36bn, up 19% year on year. This was driven by of 2017 while current account complaints fell. Overall, an increase in redress payments for PPI a total of 3.76 million complaints were received in the complaints, which rose by 26% to £2.05bn. six months to end-2017, up 13% year on year, as PPI Redress per upheld complaint fell in the second half of 2017 for all product groups (see continues to haunt UK banks, reports Douglas Blakey chart), with the average banking and credit card payment falling from £270 to £253. F CLAIMS HANDLING irst off: the positives. Take a bow, Christopher Woolard, executive director Nationwide. Of the major UK banks of strategy and competition at the FCA, said: and building societies, Nationwide The latest FCA complaints data suggests that “Having set a deadline for PPI complaints, we attracted the least complaints in the second banks’ internal complaints-handling processes are encouraging consumers to decide whether half of 2017, with only 1.44 complaints per remain a work in progress. they want to claim, and if they do, to make 100,000 accounts for banking and credit A whopping seven in ten (70.1%) of their complaint as soon as possible, as many cards. banking and card customer complaints against already have. Skipton Building Society and Yorkshire Lloyds were upheld by the FCA. Sister brand “We are continuing to monitor and also scored well with only 1.57 and 1.92 Bank of Scotland (60.2%) also scored poorly challenge all firms to ensure they maintain the complaints per 100,000 accounts respectively. by this measure. By contrast, less than one- expected standards and are delivering on their At the other end of the scale, HSBC is the half of all complaints against Bank of Ireland commitments to make it easy for people to most complained-about major retail banking UK (43.0%), Allied Irish Banks UK (43.4%), complain about PPI,” Woolard added. brand with 6.88 complaints per 100,000 Santander (43.5%), Tesco (49.0%) and Metro “When PPI is taken out of the mix, the banking and credit card accounts, just ahead Bank (49.3%) were upheld. numbers of complaints firms are receiving has of RBS with 6.69 and Barclays with 6.51. Complaints about PPI rose by 40% to remained stable. Firms should be doing all Of the other major brands, Santander 1.55 million in the second half of 2017, the they can to reduce complaints and ensure they (5.26) and Lloyds (5.23) continue to attract highest level of complaints about PPI for more are treating customers fairly.” < more complaints per 100,000 accounts than four years. In January, firms paid out than challenger brands such as TSB (4.35) £416m ($581m) in PPI compensation, the and Metro Bank (4.18). Co-operative Bank highest figure since March 2016. The total for compensation and Virgin Money, on only 3.09 and 2.68 compensation payments since January 2011 is Redress per upheld complaint, 2017 respectively, performed strongly. now £30bn. RBS’s private banking brand, Coutts, is £ Banks continue to add to their PPI 3,000 H1 2017 H2 2017 among the worst overall performers (10.22); provisions, with Clydesdale Bank setting sister RBS brands NatWest and Ulster Bank, aside a further £350m for PPI claims in April. 2,500 on 5.48 and 4.25 respectively, fared better. Clydesdale said it received 59,000 claims 2,000 UK – MOST COMPLAINED-ABOUT PRODUCTS, 2017 1,500 % closed within 1,000 H1 2017 H2 2017 change % 3 days, H2 2017 PPI 1,112,043 1,551,897 40 9 500 Current accounts 518,608 509,047 -2 70 0 ts ce ) e ns I Credit cards 309,875 314,586 2 70 en nd s PP an PI Homnce nsio g aard st m s ur l. P n a e i n c Motor and transport 241,319 230,146 -5 56 ve In exc fi P nk it In ( Bacred Packaged accounts 203,509 206,089 1 25 Source: FCA Source: FCA 10 | May 2018 | Cards International CI May 2018 555.indd 10 27/04/2018 10:17:54
security | e-commerce will a new standard revolutionise e-commerce? Shifting from magnetic stripes to chips in cards has been a long, almost everlasting, process; however, it was needed to improve security for consumers at the point of sale. Now, the biggest firms want a similar shift in e-commerce. Patrick Brusnahan reports S tandardisation is not a new thing in common checkout button.” As a result, the where we have the more traditional players. In payments. Europay, Mastercard and checkout experience would be more consistent the e-commerce world, we also have gateways, Visa combined their efforts to create for consumers. In addition, it would reduce shopping cart providers, people who build the EMV standard, now run by EMVCo. the amount of steps consumers need to take part of the user experience. This introduced the ‘smart’ payment card, at different sites, as well as making it easier for “Many of these parties will have to make or the chip card, to increase security at the merchants to implement. changes in order for these new standards to be POS. Now, companies are coming together Cowen says: “The security side is very adopted.” again to re-enact this process for online important but it’s also about trying to purchases. standardise the user experience as much as HOW LONG? possible. It’s about making it simple and SUCCESSFUL TRANSITION consistent for consumers. Mastercard is not the only firm pushing for “There is a proliferation of different ways to standardisation. Visa and American Express Mike Cowen, VP of digital payments at pay online, and even when you’re paying the have also displayed their support, and more Mastercard UK, tells CI: “It’s about trying to same way, there are proliferations of different are set to follow. With the amount of large achieve something similar in the online world user experiences that enable card transactions companies backing the move, how long will it to what has been achieved in the physical to happen. This is potentially confusing take to implement? world at the point of sale. for people. It certainly reduces confidence, Cowen says: “This is not something that “We’ve all seen the very successful transition because if you’re asked to do something Mastercard is trying to do on its own. It is from magnetic stripe as a technology for different every time, that ability to build up very much a call to the industry to adopt payments being increasingly replaced by chip. familiarity and comfort is reduced.” this new standard. It’s intended to be for the One of the key benefits is driving security, and benefit of everyone. A better and more secure reducing fraud, at the point of sale. Now we THREE MAIN AREAS payment experience should help everybody.” want to do something similar in the online “In terms of timing, it’s not going to be world.” Cowen continues: “These are the three main overnight,” Cowen warns. “This is the start This comes in the form of the EMVCo areas where we see this development helping: of a journey and that is the right way to talk Secure Remote Commerce (SRC) framework, security, standardisation and simplicity.” about this. which aims to give consumers the same One solution is tokenisation. Utilising “We’re talking months or maybe even one simple, secure and convenient payment tokens to protect sensitive data can aid or two years. It’s not going to take anything experience across every browser and device. security as well as bring a standard to all as long as the journey from magnetic stripe to “We now feel it’s the right time to increase payment processes. chip, which is not yet complete and it started security in the online world,” Cowen explains. “Our ecosystem is a massively distributed 20 years ago.” “We want to do it in a similar way to what one,” Cowen explains. “We’re talking billions Cowen concludes: “The improvement in we did with POS, and that is standardisation. of consumers, tens or hundreds of thousands security should attract everybody, and that That’s where the SRC standard comes in. This of banks and tonnes of players in between.” is an area we will push. We want to get to a defines a secure framework in which online He adds: “The ecosystem is highly point where every online or remote payment transactions can take place.” fragmented and people have different roles is at least as secure as a payment at POS. That In a blog post from Mastercard, the firm within the ecosystem and the value chain. This means using the secure technologies we have states: “SRC can be implemented as one, doesn’t take into account the physical world, available to us.” < www.cardsinternational.com | 11 CI May 2018 555.indd 11 27/04/2018 10:17:54
Feature | social media mastercard and visa: the experts in social media Financial companies strive to relate to their customers, and vice versa. Branding can be crucial in this objective, and with social media being ever-present in day-to-day life, there are many opportunities to achieve it. Visa and Mastercard consistently outrank banks in their social media outreach, but why? Patrick Brusnahan writes F or the last four years, Visa and Mastercard have outranked “We would use social media as one of the many channels that form banks in terms of social media, and placed in the top two. our marketing campaigns across the year. I think we find it quite a According to CI’s rankings, Visa has 22,378,077 Facebook useful channel to have a dialogue with cardholders and consumers in likes, an increase of 4% from 21,420,012 in 2017. Mastercard also the space of their everyday life. It’s a mutual channel where we are able saw a rise in the same time frame, from 14,950,982 to 15,974,241, to talk to them about their passions, their interests, and hopefully take a growth of 6%. State Bank of India is the closest bank in terms of them on a journey of understanding on how Mastercard can help them Facebook likes, but it still falls behind Mastercard by more than four enable that.” million at 10,615,876. Farina adds: “Social media has become part of our DNA over the Clearly, ‘fans’ are engaging with both Visa and Mastercard’s brands past five years and, from a marketing perspective, ever-more important on social media, but what are they doing to create this interaction? facebook likes INTEGRAL TO OPERATIONS millions Adrian Farina, senior VP, marketing, at Visa Europe, tells CI: “Visa uses 25.0 Visa Mastercard social media in a variety of ways, and it has became integral to many 20.0 of our team’s operations – be it marketing, corporate communications, 15.0 customer services or recruitment. 10.0 “We see digital and social media as great tool to help us achieve our corporate vision of being the best way to pay and be paid, for everyone, 5.0 everywhere.” 0 Kirsty Redfearn, head of consumer and digital marketing, UK and 15 16 17 18 20 20 20 20 Ireland at Mastercard, has a similar opinion. Speaking to CI, she says: “Social media forms part of our integrated marketing mix. Source: Cards International 12 | May 2018 | Cards International CI May 2018 555.indd 12 27/04/2018 10:17:56
Feature | social media as part of our media mix. Social media is extremely versatile and provides us with the means to position our brand with our clients, engage consumers around the benefits of Visa products, highlight recent distinctive campaigns elements of our corporate narrative, such as our focus on innovation Kirsty Redfearn, Mastercard: and security, and operate promotions and competitions.” “We’ve been sponsoring the Brit Awards for 20 years, and Of course, the days where there were a handful of social media channels are long gone; Facebook, Twitter, Instagram, Pinterest, this year was quite an occasion. We’ve been trying hard Snapchat – the list goes on. this year to build an integrated campaign that connected Redfearn continues: “We use the majority of channels in some form some of the dots in the Brits ecosystem, such as the Brit or another, depending on the objective of the campaign. Don’t get school and the charities that the Brits works with. We me wrong, we would probably prioritise Facebook and Twitter as our worked with David Arnold, a famous composer, who main core channels. Most brands will tell you that the majority of their composed a track for us which we could then illustrate and audience is in that space, so it makes sense for us to understand those channels and use them appropriately.” create an experience where music brings people together. “That is not to say we don’t use other channels. We have an “We’ve had some wonderful responses, and it even had Instagram channel; we have also been on Tumblr, where we saw some around 99% sentiment response; for most brands, that’s an amazing creativity in our [music award show] Brits campaign. We have been on Snapchat as well. It’s not been haphazard; it’s all decision- unheard-of space.” based,” Redfearn explains. adrian farina, visa: 24/7 “Generally we use our sponsorships as a backdrop for the benefits that Visa brings to consumers – an approach that Social media is not static. There is content posted constantly, so it can we took during our recent contactless campaign around be hard to stand out in an ever-changing field. the Winter Olympics. “Interaction rates have changed a lot recently, particularly on Facebook as they changed their algorithm again,” Redfearn notes. “This “This global campaign was fully integrated across our year, the organic reach is dropping considerably. This means we are social and digital channels and saw us working closely more careful and more thoughtful on how we bring messages to life. with our Team Visa athletes [individual Visa-sponsored We need to make them effective and enter a dialogue with consumers.” “We put in a great deal of effort into ensuring that we are up to athletes from a range of national teams] who were able to speed with the latest developments in how social media platforms amplify our campaign through their personal social media prioritise content and reach consumers through their advertising channels. formats,” Farina explains. “This means working closely with our partners – either agencies or “Our cross-border campaign last summer consisted of a the platforms themselves – to ensure that our marketing investments series of short videos designed to encourage travellers to are allocated appropriately and that the right content reaches the right consider the benefits of using their card abroad instead people at the right time. of cash. We were able to use our social media channels “As we shift our marketing investments from traditional to digital to deliver these videos to travellers journeying between media, we aim to be at the cutting edge of creativity and targeting best Europe and America, serving the right message to the right practices. Ultimately, it comes down to reaching people wherever they choose to spend their time, whether online or offline.” traveller when he or she was most receptive.” < Redfearn adds: “We have an always-on team, a wonderful agency network and a wonderful agency team. It’s an always running thing.” Banks are regulated and constantly monitored; they cannot post whatever they want. Companies such as Mastercard are similar, but the KEY STATISTICS, 2018 restrictions they face are not as strenuous. “We have slightly different positioning as we are able to be a B2B2C visa mastercard company rather than a bank,” Redfearn says. “That gives us the position Twitter followers 368,464 473,058 where we can utilise the channels as part of our brand, rather than just being a customer care portal – not that we don’t open ourselves up to answer queries. Our average response time is 24 hours, so we’re Facebook likes 22,378,077 15,974,241 pretty real-time in getting back to our consumers. That’s high up in our priorities, but at the same, [we aim] to make sure it’s part of our Instagram followers 27,141 91,655 integrated marketing mix, whatever channel it is. Redfearn continues: “I think we’ve gone from the days where social Youtube subscribers 39,751 31,958 media was a separate channel on its own. It’s very much at the centre of our thinking as we plan campaigns. It’s become quite integral to us Youtube views 334,538 62,580,808 understanding our consumers and their passions. We spend a lot of time and energy making sure that we’re relevant and adding value.” < Source: Cards International www.cardsinternational.com | 13 CI May 2018 555.indd 13 27/04/2018 10:17:56
Feature | revolut Cashless technology can be tricky to cashless society: integrate into places in the UK that are rural and more difficult to reach. Many worry that a cashless society could further marginalise the leading the elderly and lower-income citizens. Whether you are for or against increased surveillance, a cashless society will significantly increase the level of insight governments and revolut-ion banks have into individuals’ lives. In a world without cash, every payment is traceable. Today, Facebook profiles reveal a public persona that an individual can tweak and control, but in payments, consumers put their money where their mouth is. Revolut believes the UK could become fully cashless in just Many argue, correctly, that digitising all 10 years, and wants to be at the forefront of the revolution. payments will reduce levels of financial crime, such as extortion, corruption and burglary. CTO and co-founder Vlad Yatsenko explains to Briony That said, it also opens the doors to different Richter why this vision is close to becoming reality types of financial crime. Companies and consumers will still be vulnerable to security risks such as online fraud and cyberattacks. R evolut has been breaking down If all transactions are digital, a well-executed barriers in the banking industry cyberattack could lead to massive losses. since its launch. Furthermore, by adding more financial details According to GlobalData research, the online, along with the personal data that is number of Revolut users sat at around 1.5 already accessible, crimes like identity theft million in 32 countries, as of April 2018. will increase. There is no denying that the vast majority Revolut believes that, overall, a cashless of consumers enjoy and benefit from a range society has more positives than negatives, and of digital payment methods. The simplicity of wants to lead the way in creating a thriving conducting banking tasks is one of the biggest and secure one. Yatsenko states: “Revolut is motivators to go digital. Carrying wallets and enhancing the accessibility and ease of cashless numerous cards has become an annoyance. societies with its mobile and contactless Vlad Yatsenko, Revolut Speaking to EPI, CTO and co-founder, payments services. Vlad Yatsenko details what the UK needs to “Unfortunately, UK infrastructure lags behind “Revolut’s latest feature, disposable virtual do to become cashless: “If the UK aspires to countries like Sweden, and our relatively large cards, includes card details that automatically be fully cashless within the next 10 years, we population isn’t an ideal test-bed for cashless change after every transaction, protecting need to continue to innovate and encourage innovation. customers against account fraud, cybersecurity the use of financial technology. Britons still “We’ve still got a long way to go until threats and runaway subscription fees. have a very strong emotional connection to lumbering traditional banks fully adopt “We believe that digital-only banks are cash, even if they aren’t using it as much, so cashless technology, and even then not all beginning to be recognised by the majority it’s best to slowly make the transition into consumers tend to trust the big banks or of the public, driving significant numbers becoming a fully cashless society.” institutions with their information.” of customers to change banks, and building Across the world, cash transactions awareness and trust,” Yatsenko notes. are continually and significantly falling. WIPING OUT CASH “Digital-only banks are offering powerfully According to the 2017 World Payments Report attractive alternatives and improvements (WPR), non-cash transactions will increase at Sweden is wiping out cash at a rapid on how people handle their finances, and a CAGR of 10.9% between 2015 and 2020. rate. According to the WPR, 36% of the increasingly convincing consumers they can So should the UK accelerate its cashless population in Sweden claim they never use be trusted by delivering on their promises for efforts? Yatsenko certainly thinks so: “The cash, compared with 17% of Brits. security, reliability and privacy.” advantages of a cashless society are an increase SEB, one of Sweden’s largest banks, only Technological innovation is pushing in ease, convenience and security. Cashless handles cash in seven of a total of 118 countries towards a cashless environment. transactions speed up services and reduce the branches, and the bank has stated in the Looking at London in particular, where risk of crime – specifically robberies. Digital past that its new focus will be on providing contactless technology was successfully rolled transactions are easier to track.” digital tools in branches that are designed to out by Transport for London, it is clear there The idea of a cashless economy can appear encourage customers to complete banking is scope for such innovation to thrive in the utopian, and yet in Sweden, it is within tasks on their own. ‘No cash accepted’ signs UK. Whether it takes 10 years or longer, touching distance. Yatsenko explains that are increasingly becoming a common sight Revolut is set to make breakthroughs in the UK is behind due to infrastructure. across Sweden. developing more cashless initiatives. < 14 | May 2018 | Cards International CI May 2018 555.indd 14 27/04/2018 10:18:01
products | virgin atlantic • Free access to over 1 million global hotspots via Boingo Wi-Fi, and virgin atlantic: • An annual fee of £160. flying higher with Both cards offer double miles when bookings are made directly with Virgin Atlantic Virgin Holidays as well as access to Virgin Money lounges across the country. new credit cards Simon Hall, senior public relations manager at Virgin Money, tells CI: “Successful partnerships are a key part of Virgin Money’s strategy and we’re delighted to be working with Virgin Atlantic to offer customers exciting products supported by Two new credit cards are the first products to be launched excellent customer service. from the partnership between Virgin Atlantic and Virgin “Choice in the airline rewards credit card market has reduced significantly compared Money, facilitated by Mastercard. Briony Richter takes a with recent years, so we’re delighted to offer looks at the cards’ primary features and benefits new and attractive options for customers looking to earn miles. “The Reward and Reward+ cards give T he Virgin Atlantic Reward and • If £20,000 is spent in a year, customers customers an easy way to earn Virgin Virgin Atlantic Reward+ credit can choose a credit card reward, and Atlantic Flying Club miles when they use cards will enable customers to earn • No annual fee attached. their card for everyday spending, which can Flying Club miles when using their card. be redeemed for flights and ticket upgrades, Their bold and eye-catching designs, The features of the Virgin Atlantic Reward+ and customers can also receive companion created by Virgin, reinforce the Virgin card differ slightly: seats and Clubhouse access.” Atlantic ethos of standing out from the • Earn 1.5 Flying Club miles for every £1 However, users must be careful to play crowd with strong statements. spent; by the rules with these credit cards, or Miles earned on the cards can be • Earn 15,000 bonus Flying Club miles they could face some hefty penalties. For exchanged for the full range of Flying with the first card purchase – within the example, the representative APR on the Club rewards including flights and cabin first 90 days of the account opening; Reward Plus card is 63.9% and on the upgrades. Customers will also have free • If £10,000 is spent on this credit card a Reward card 22.9%. access to Virgin Money lounges and several year, customers can choose from a range Furthermore, the purchase rate is 22.9% offers from the Virgin Group. of credit card rewards; and while there is a 0% balance transfer Depending on spend, customers using the offer for the first six months, it comes with Reward and Reward+ credit cards can access a 3% fee. These charges are high and can eat a range of credit card rewards. into any potential rewards offered. Red Flying Club members can choose Oliver Byers, senior VP of sales and a free premium upgrade when flying customer loyalty at Virgin Atlantic, economy, or an economy reward companion concludes: “We are incredibly excited to seat which enables them to take a launch our new credit cards. With our companion for no additional miles. cards, customers can earn miles on their Silver members have access to the same everyday spend to redeem for flights and options, as well as a premium reward upgrades and more. On top of that, we’re companion seat or a pass for a Virgin offering our most valuable customers even Atlantic Clubhouse. Gold members can more choice of rewards so that they can choose two Clubhouse passes, an economy, create the Virgin Atlantic experience that premium or upper-class reward companion suits them best.’’ seat. They can also choose a free premium Customers have access to Virgin Money upgrade. lounges, as well as free refreshments, use Key features of the Virgin Atlantic of iPads and Wi-Fi. Offers from the Virgin Reward card include: Group include discounts on train tickets, • Earn 5,000 bonus Flying Club miles holidays and experience days. with the first card purchase – this only Virgin Money believes the new credit applies within the first 90 days of the cards meet the demands of travel-hungry account opening; consumers, and will allow them to accrue • Earn 0.75 Flying Club miles for every £1 holiday benefits no matter where they are in ($1.50) spent; the world. < www.cardsinternational.com | 15 CI May 2018 555.indd 15 27/04/2018 10:18:02
country snapshot | chile E CHIL country snapshot: chile Changing lifestyles and new facilities boost card uptake and use C ash remains the preferred method However, payment card transactions inclusion programme and infrastructure of consumer payment in Chile, are gradually replacing cash in Chile, modernisation. accounting for 73% of the total mainly as a result account of government Furthermore, government efforts payment transaction volume in 2017. and bank initiatives such as a financial to provide basic banking and financial value of credit tRanSfers value of cheque payments value of payment cards $bn $bn $bn 10,000 600 80 70 500 8,000 60 400 6,000 50 300 40 4,000 30 200 20 2,000 100 10 0 0 0 f 13 16 7e 21 13 16 7e 1f 13 16 e 21 f 20 20 1 20 20 20 1 2 20 20 17 20 20 20 20 20 Source: SBIF, CCA, GlobalData Source: SBIF, CCA, GlobalData Source: SBIF, CCA, GlobalData 16 | May 2018 | Cards International CI May 2018 555.indd 16 27/04/2018 10:18:20
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