Card issuance growth
increased credit card issuance in 2008
Chinese banks issued 300.4 million
new cards in 2008, of which 142.3 million were credit cards,
according to data from the central bank, the People’s Bank of China
(PBoC). The growth rate for credit card issuance was 57.7 percent
higher than in 2007. Also, the PBoC stated that there are now 640
million records now stored in the country’s credit database, up 40
million from 2007.
Bank card transactions reached CNY127.2
trillion ($18.6 trillion), up 14.1 percent from 2007, while the
number of POS terminals and ATMs increased by 663,900 and 39,900
respectively to total 1.85 million and 167,500.
Separately, China’s credit card delinquency
rate, measuring card debt that is more than 60 days late, remained
at 2 percent, according to data from the China Banking Regulatory
Commission. However, the Commission recommended that new rules be
established regarding credit card charge-offs, which are currently
dealt with in the same way as bad loan write-offs.
Taiwan urged to accept Chinese credit cards
Merchants in Taiwan are urging the
government to allow the use of credit cards issued by Chinese banks
in order to encourage spending by Chinese tourists visiting Taiwan.
The number of Chinese tourists visiting Taiwan has risen rapidly
since the beginning of the year following the removal of some
travel restrictions, but Taiwanese merchants claim that spending
has not risen as China UnionPay cards are not accepted in
According to merchants, China UnionPay cards
charge less for currency exchange fees and surcharges on foreign
transactions, making them more popular than Visa or
MasterCard-branded cards. China UnionPay cards are not accepted in
Taiwan because there is no clearance and settlement mechanism for
credit cards between Taiwan and China, making it impossible for
Taiwan banks to cover charges made on China UnionPay cards.
Taiwan’s Mainland Affairs Council claims that
the issue is purely a technical one and that Taiwan and China may
sign a memorandum of understanding in the future to enable
Citibank launches premium credit card in South Korea
Citibank Korea has launched the Citi
PremierMiles credit card, a premium mileage and travel card which
leverages Citi’s partnerships with several airlines around the
world. The card is a Visa Signature-branded card, the latest
offering in Visa’s premium card range aimed at high net worth
customers, and offers high-end travel-related rewards.
Customers can accumulate loyalty points, known
as PremierMiles which have no expiry date, for daily spending and
can also convert earned PremierMiles into different frequent flyer
programmes, or alternatively receive cashback.
The card will be available in two versions:
PremierMiles Asiana and PremierMiles Korean Air. Citi PremierMiles
cardholders will receive an accumulation rate of one PremierMile
for every KRW1,000 ($0.70) in retail spending on their cards.
Cardholders will also receive a first-year
activation bonus of 5,000 PremierMiles, as well as an annual
spending bonus of 5,000 PremierMiles for spending between KRW20
million and KRW40 million per year, 8,000 PremierMiles for spending
over KRW40 million per year, and 50,000 PremierMiles for spending
over KRW100 million per year.
Customers may continue accumulating Citi
PremierMiles and keep them centralised until they wish to convert
them into frequent flyer programme miles. The annual fee for the
PremierMiles Card is KRW120,000. The product has already been
introduced in several markets in the Asia-Pacific region, including
Singapore, the Philippines, Hong Kong, and Taiwan.
Standard Chartered partners with Vietnam’s ACB for credit card
launch and ATM sharing
Standard Chartered Bank and Asia
Commercial Bank (ACB), have teamed up to issue a co-branded credit
card and open up their ATM networks in Vietnam to allow customers
of each bank free access to both banks’ ATMs, which combined number
around 270 across Vietnam.
ACB, one of the largest commercial banks in
Vietnam, will issue Visa-branded gold cards that can also be used
at Standard Chartered ATMs, merchants, and other transaction points
around the world.
Standard Chartered has held a stake in ACB
since 2005, identifying Vietnam as a key growth market, and gained
a licence to incorporate its Vietnam unit in April 2008.
In March 2009, the World Bank said that
Vietnam’s economic growth would slow to 5.5 percent this year,
having initially forecast a growth rate of 6.5 percent in November
2008. Vietnam’s economy grew 6.23 percent in 2008.
India’s ICICI Bank mulling ATM spin-off
ICICI Bank, India’s largest
commercial bank by assets, is considering spinning off its ATMs and
POS terminal networks. The bank is seeking bids from technology
companies and private equity companies to participate in a new
entity that will manage the business. According to press reports,
payment network Visa, payment processors TSYS and First Data, and a
joint venture between private equity player Blackstone and CMS
Computers have shown interest in partnering with the bank.
ICICI Bank has around 4,000 ATMs and over
200,000 POS terminals across India. The rationale for the move is
believed to be an industry consensus that separate units which can
specialise in installing and managing ATMs will be able to deploy
new ATMs and improve overall efficiency. Should the initiative
prove successful, it could lead to similar outsourcing initiatives
from other Indian banks.
Kiwibank launches Visa debit card
Kiwibank is to become the second
bank in New Zealand after Westpac to offer a Visa debit card.
Kiwibank will charge a A$10 ($6.95) annual fee for the card.
According to Visa, 53 percent of Visa cards
globally are debit cards, and banks in the country are planning to
roll out Visa debit cards in the next few months as consumers in
the country are more favourable towards cards that can be used
internationally. The national debit card system, EFTPOS, is for
domestic use only. Issuers are also hoping to capitalise on the
shift away from credit card usage.
According to the Reserve Bank of New Zealand,
credit card outstanding balances grew by just 4.2 percent in
January 2009, compared to 7.1 percent in the year-ago period.
EUROPE, MIDDLE EAST,
S2P joins forces with Oberthur Technologies
French data security firm Oberthur
Technologies is to supply S2P, the banking subsidiary of global
hypermarket chain Carrefour, with contactless payment cards.
The Chrysalis Fly dual interface payment card
will be used by S2P as part of its “Universal Payment Card”
project, the first of its kind in France and one of the largest
contactless projects in Europe. The card combines the security of
an EMV chip interface with contactless applications, offering an
accelerated transaction time of up to twice the speed of other
“Contactless cards represent the future of the
payment card,” said Eric Duforest, managing director of Europe for
the card systems division at Oberthur Technologies. “With millions
of contactless cards already delivered, and the launch of
innovative contactless projects like S2P, Oberthur Technologies has
confirmed its leadership in this strategic market.”
Monitise and Made in Africa launch mobile money
Mobile banking specialist Monitise
has announced a joint venture with Made in Africa, the organisation
which is helping drive East African economic growth, to provide
mobile banking in Uganda.
The new company, Monitise East Africa, is
structured as a 50/50 joint venture between Monitise and Made in
Africa and has already been awarded $1.5 million by the Africa
Enterprise Challenge Fund, which is part-funded by the UK’s
Department for International Development (DFID), to help roll out
the service. The venture will attempt to create a mobile money
‘ecosystem’ across the region, by bringing together multiple banks,
mobile operators and service providers to deliver services that
meet the needs of all consumers, both banked and unbanked, while
still giving them a choice of mobile operator and financial
Chris Cleverly, director and founder of Made
in Africa, said: “It has been clear for some time that the lack of
access to financial services has inhibited social and financial
mobility across the region.
“Monitise’s mobile money services in the UK
and North America have already demonstrated that the ecosystem
model has the potential to bring together banks, operators and
service providers to roll out a service that benefits the
mass-market of consumers.”
Services will include account management,
money transfers to other people and payments to merchants or
service providers. The service will launch initially in Uganda,
followed by Rwanda, Tanzania, Burundi, Democratic Republic of
Congo, Ethiopia, Kenya and Zambia.
2008 fraud figures announced by APACS
Card identity theft in the UK has
risen by almost 40 percent, according to a survey released by UK
payments association APACS.
The report reveals card identify theft has
risen from £34.1 million ($49.7 million) in 2007 to £47.4 million
by the end of 2008. Online banking fraud losses were also up; 132
percent compared to last year, while fraud on lost or stolen cards
actually fell by 4 percent, from £56.2 million to £54.1 million,
possibly as a result of the widespread introduction of the chip and
PIN security measure.
The two main areas of fraud were on
transactions not protected by chip and PIN: specifically internet,
phone and mail order fraud, or card-not-present fraud; and fraud
abroad – committed by criminals using stolen UK card details in
countries yet to upgrade to chip and PIN – which has nearly doubled
in two years.
Elite Infinite card launched for first time in Africa
Nigeria’s sixth-largest bank, Access
Bank, has launched the first ever Visa Infinite credit card in the
The Black card is offered by invitation only
and is the highest in the range of Visa card products in the
African market, targeted at a select group of high net worth
individuals such as CEOs of large corporations, entrepreneurs and
The card offers services such as ticket
exchange, concierge service, airport lounge access, purchase
protection, emergency medical and legal referral and collision
damage waiver. Further services include emergency transportation
assistance and bespoke special event invitation.
Ajman Bank to market e-Dirham cards in UAE
Ajman Bank of the United Arab
Emirates (UAE) has signed a deal with the Ministry of Finance of
the Ajman emirate to market and sell e-Dirham prepaid cards in
Ajman Bank, an Islamic commercial bank that
officially launched operations in February 2009, will offer the
cards to public and private sector clients, facilitating payments
and revenue collection through the Ministry of Finance’s central
The UAE-wide e-Dirham system was launched in
2001, replacing previous revenue collection systems such as
governmental stamps or receipts, and eliminating the need for
direct cash handling.
MasterCard issues 50 millionth PayPass device
Payment network MasterCard revealed
it issued its 50 millionth PayPass device at the end of 2008, a
doubling of the amount of contactless devices in circulation in
just 12 months.
MasterCard claims strong support for the
technology, with a benchmark survey conducted last year finding
that 77 percent of consumers with a PayPass-enabled card use it as
their primary form of payment.
Cathleen Conforti, global PayPass product
manager at MasterCard Worldwide, said: “PayPass is the payment
innovation that is displacing cash while making transactions
faster, easier and more secure in a way that creates a more
efficient system of global commerce for consumers, merchants and
Lloyds TSB Middle East in partnership with Network
Middle East, part of Lloyds Banking Group of the UK, is to use
Network International of the United Arab Emirates (UAE) to provide
its card processing services. Network International, the UAE’s largest
third-party processing vendor, will provide Lloyds TSB Middle East
with smart chip-certified solutions as Lloyds TSB Middle East
migrates to chip and PIN functionality for all cards.
In addition, Lloyds TSB Middle East
customers will be able to use EmiratesNBD and Emirates Islamic Bank
ATMs for free, as well as the existing network of Lloyds TSB Middle
Prepaid joint venture established in Peru
Latin American prepaid card service
provider and programme manager NovoPayment has established a joint
venture with Peruvian industry conglomerate Interbank Group to
develop prepaid card programmes nationally, including prepaid
electronic benefit transfer (EBT) schemes and food vouchers,
general-purpose reloadable cards, cash management and remittances
The venture, named Tebca Peru, will
initially launch a prepaid food voucher programme under the brand
Provis Alimentación, aimed at electronically managing social
benefit payments for companies and entities throughout the country.
The company expects to issue as many as 200,000 cards in the first
“We are very pleased to be partnering
with such a prestigious, innovative group and to lead the
development of this important payment category,” said Anabel Perez,
co-founder and CEO of NovoPayment. “Prepaid technology will
significantly lower distribution and administrative costs,
simplifying management for local private and public organisations,
and providing end users with access to modern tools that facilitate
their management of cash and benefits.”
NovoPayment’s portfolio includes more
than 960,000 branded active cards, representing more than 30
million transactions and approximately $600 million annually.
Chile’s BCI to install 300 new ATMs in 2009
Chilean bank BCI plans to install
around 300 new ATMs during 2009, having closed 2008 with 998 ATMs
in operation. BCI is expanding its ATM network, having identified
the channel as a tool to improve customer service and which helps
to reduce costs. BCI is expanding the ATM network to include
multi-functional machines that can perform functions beyond cash
S&P raises credit rating for Unibanco
Credit ratings agency Standard &
Poor’s has raised its long-term ratings on Brazil’s Unibanco to
‘BBB’ from ‘BBB-’, and removed the ratings from CreditWatch, where
they had been placed with positive implications in November 2008.
The short-term counterparty credit rating was affirmed at
S&P said the upgrade reflects the
equalisation of ratings on Unibanco with those on Banco
Itaú(BBB/Stable/A-3) after the Brazilian Central Bank formally
approved the merger of the two banks. Itaú and Unibanco have begun
integrating their operations and defining a new organisational
structure and key personnel.
The ‘BBB’ rating reflects the
consolidated bank’s dominant market position in the Brazilian
banking industry and the benefits of significant scale gains and
the strengthening of its retail franchise, which support access to
more stable sources of funding and a diversified revenue mix.
S&P said that these factors should help the newly-merged entity
weather the risks of challenging economic conditions facing the
Brazilian and global banking industries in 2009.
Security and fraud
HSBC Bank Paraguay goes online
HSBC Bank in Paraguay has rolled out
Digipass technology and Vacman Controller authentication software
from software security specialist Vasco Data Security International
for its retail and corporate customers.
HSBC Bank Paraguay is the first bank in
the country to offer both its retail and corporate online customers
two-factor authentication and is the only bank in Paraguay to roll
out Digipass 2-factor authentication devices for retail customers.
Digipass allows HSBC’s customers to securely log on to the bank’s
e-banking application to consult their account information, make
money transfers and manage their banking accounts online.
Mexico’s Banamex launches business credit card
Citigroup’s Mexican unit Banamex has
launched the ‘Business Drive’ credit card, aimed at small and
medium-sized enterprises (SMEs) in the country. The card includes
insurance against fraud, and additional cards can be obtained with
an individual limit per related card and separate statements of
activity. A loyalty programme is also on offer, with discounts
available at around 1,500 locations around the country. Banamex is
aiming to double financing to the SME sector in Mexico in 2009 to
amount to MXP23 billion ($1.6 billion) by the end of the year.
Separately, Banamex has launched a
restriction-free programme, ‘Tasa Baja Banamex’, for current and
prospective Banamex cardholders in Mexico. Different plans are
available to suit various types of customers. Tasa Baja Banamex
will provide personalised payment schemes to suit cardholders’
needs, based on a detailed analysis of cardholder behaviour. To
date, Banamex has a total of 7 million cardholders.
US Bank offers Air Miles in Mexico
US Bank, North America’s sixth-largest
commercial bank, has joined with Mexico’s largest airline
AeroMexico in a new credit card venture designed to provide
customers with travel rewards as they spend.
The cards, AeroMexico Visa and
AeroMexico Visa Signature, offer customers the opportunity to earn
AeroMexico Club Premier Miles with all their purchases. The cards
are aimed at both residents and business travellers making frequent
trips to Mexico.
AeroMexico Visa Signature cardholders
will be rewarded with 20,000 bonus miles upon enrolment, while both
cards receive a companion ticket as well as discounted airfare
purchases and double miles on AeroMexico tickets purchased using
Pat Coll, executive vice-president of
US Bank Retail Payment Solutions, said: “With US Bank’s experience
as a leading credit card issuer and AeroMexico’s status as the
largest airline in Mexico, this partnership is an ideal match. The
new AeroMexico Visa card brings the airline’s mileage rewards
programme to a new US-based audience with significant growth
opportunities in key markets.”
Brazilian margins rise as lending rate falls
Brazilian banks are likely to see a
rise in net interest margins as the central bank’s overnight
lending rate (SELIC) drops, according to analysts at Swiss
financial services provider Credit Suisse.
SELIC is expected to drop to 9.25
percent by the end of 2009, following the largest reduction in five
years as it fell to 11.25 percent in March.
As the banks’ rate-linked liabilities
outweigh their rate-linked assets, a drop in the borrowing rate
will have a positive effect on some of Brazil’s largest financial
institutions including Banco do Brasil, Uniao de Bancos
Brasileiros, Banco Bradesco and the newly formed Itaú Unibanco
According to Credit Suisse, net
interest margins in 2009 will likely increase by an average of 60
basis points, or 0.6 percentage point, from the fourth quarter.
More US adults turning to e-banking
Nearly half of all US adults who use
the internet also actively use online banking to conduct most, if
not all of their banking, up from 23 percent in early 2007 to 49
percent today, according to a survey by HSBC.
Online banking usage was as high as 62
percent among the 21- to 34-year-old age group, and stood at 40
percent for those aged between 45 and 69.
“People are increasingly turning to
internet banking because of the increased convenience, independence
and typically better value that it offers,” said Kevin Martin,
executive vice-president of personal financial services at HSBC
In separate research done by research
consultancy Forrester, the number of US households banking online
by 2011 could rise to 92 million, or 76 percent of US
These results run contrary to a study
by comScore that recorded a fall in banking sites’ traffic in the
third quarter of 2008, with a fall of 12 percent for Wachovia and
eight percent for JPMorgan Chase.
PayPal in loyalty and m-banking launch
Online payment platform PayPal is
launching into two big ventures – interoperability across payment
platforms for smart cards, and a loyalty programme in collaboration
with its owner, eBay.
The card-free online payment processor
has become a member of GlobalPlatform, an international
specification body for smart card infrastructure.
PayPal will become a participating
member and a significant stakeholder in GlobalPlatform’s task
force, sharing its own best practice and technical knowledge in the
payments field with other members from the global online and mobile
“The latest amendment to our
specifications aims to align smart card technology with web
services.” said Kevin Gillick, executive director of
“As such, we welcome PayPal as a world
leader in web-enabled payments and look forward to its valued input
that, alongside the work of other members, will help us achieve our
priorities in 2009 and beyond.”
eBay is also conducting a survey among
PayPal users as it is considering setting up a loyalty programme
for its top buyers among avid PayPal users.
US credit card defaults hit 20 year-high
US credit card issuers are seeing the
worst levels of defaults in the last 20 years.
The news comes as the US Labour
Department announced that unemployment had soared to a 25-year
American Express – the largest issuer
by sales volume – said its net charge-off rate in February rose to
8.7 percent from 8.3 percent in January.
Citigroup saw a worse than expected
default rate rise to 9.33 percent from 6.95 percent in the same
period. Capital One and JPMorgan Chase, while both reporting bigger
credit card losses, still performed better than analysts
Capital One reported an increase in
both delinquencies and charge-offs and said its charge-off rate
rose to 8.06 percent in February from 7.82 percent in January. The
rate of card loans at least 30 days delinquent also increased to
5.1 percent from 5.02 percent.
However, Capital One said that its US
default rate was below American Express’ 8.29 percent in January
but above JPMorgan Chase’s 6.35 percent in February.
To combat the rising tide of defaults,
banks are increasingly hiking fees and charges to make up lost
This is expected to boost income on
penalty fees to $20.5 billion this year from $19 billion last
New cashback card available for Canadians
Scotiabank is to offer Canadian credit
cardholders an inducement of 2 percent cashback on their daily
purchases with the recently launched Scotia Momentum Visa credit
The incentive comes after a survey by
the Canadian Bankers’ Association (CBA) revealed loyalty programmes
could induce credit-averse Canadians to use their credit cards more
Nearly half (48 percent) of those
surveyed said they would use credit cards more if they were awarded
a 2 percent cash rebate on daily purchases – which is exactly what
the bank is offering.
The CBA said that 73 percent of
Canadians do not carry a balance and so do not pay interest
charges, while a third who do carry a balance pay up before
interest charges start racking up.
Online Citi card bills to begin carrying ads
Citibank has launched an affiliate
marketing programme with merchants who will pay the bank a
commission based on how many people they refer to their online
There will also be an element of direct
marketing at play where a customer, who may have visited a spa for
example, may see an online offer for a luxury cut-price bath.
The statement ads are targeted based on
merchant or product category, and may be also based on the
customer’s payment history.
On board are merchants like Sony who
offer merchant discounts or promotions and supplemental financial
services offerings either directly or through affiliate marketing
programmes with other retail partners. The ad format in its online
form is called “onsert” – a play on “insert” which is standard
promotional material sent with paper bills.
US Treasury selects JPMorgan Chase for debit card
The US Department of the Treasury’s
Financial Management Service (FMS) has renewed its designation of
JPMorgan Chase as its financial agent to support FMS’s US debit
card programme, which provides prepaid debit card services to
federal agencies. The three-year contract is part of the Treasury
Department’s strategic plan to reduce the number of paper cheques
issued by the federal government.
Two types of debit cards will be
offered: single deposit cards and multiple deposit cards. Single
deposit cards can be used by agencies to pay a cardholder an
incentive, bonus, one-time stipend, per diem or other
similar one-time payment type.
Multiple deposit cards can be used by
agencies to make multiple payments to a debit card for emergencies,
stipends, payroll, certain types of benefits or other similar
recurring payment types. Both types of cards can be used at point
of sale for purchases or at ATMs to withdraw cash.
Cardholders also will have the ability
to pay bills via a secure website or to transfer money from the
card to another account via an interactive voice response