The Financial Services Club's Blog

Are you taking the PSD?

Interesting article on the guide to all things Europe today, Euractiv, about the Payment Services Directive.

The Directive “has been transposed in all but 11 of the 31 EU/EEA countries”.

Hmmm ... that would be Cyprus, Estonia, Italy and Latvia (Jan); Norway (Feb); Belgium, Greece, Spain, Finland, Malta and Poland (Mar); whilst Sweden is last (Apr).

December 2009:                                          January 2010:

Note: the above are the official charts of the European Commission.  Is someone pulling the wool?

“Observers agree that it favours banks and card companies over the merchants, retailers and consumers who will be using the scheme.”

Hmmm ... would the banks agree? The banks that have spent eight years pulling SEPA together? The banks that have spent billions on change and lost billions of margin? The banks that have been arguing that there is no benefit to merchants, retailers and consumers being communicated by the Commission or public authorities?

“The directive may lead to more fragmentation.”

That’s the point isn’t it?

By introducing new payments institutions, it creates more competition which leads to lower prices which leads to better markets, is the contention of the legislators. This was the same view with the other Directive, the Markets in Financial Instruments Directive, that led to market fragmentation for investing with the rise of Chi-X, BATS and many dark pool investment vehicles, where things are traded outside the line of sight of the public market.

Markets do fragment thanks to these Directives.  Over time, they then consolidate. That is why Chi-X stands out as a clear leader in the post-MiFID trading world and, over time, the same will happen in the post-PSD payments world.

So fragmentation isn’t necessarily a long-term issue, but a short-term concern.

“The PSD's weaknesses lie in its opt-outs”.

Absolutely. Checkout our research if you want to know what they mean as derogations and opt-outs have created a truly uneven playing field for payments.

“Card companies argue that the EU's new rules do not address the issue of catching fraudulent transactions.”

In the words of an old Tina Turner song: “what’s fraud got to do with it?”

The card companies are right by the way. The PSD is purely concerned about moving towards a level playing field for payments in terms of the legal structures of cross-border transactions. The focus was primarily around direct debit and credit transfer operations, as this is where SEPA had focused and needed support. Cards were not centre of the radar for the legislation, nor was fraud. Watch out for the PSD II in 2012 however, when these things do move to centre stage.

Postnote:

At the end of the article is the line: “SEPA is being treated as a low-priority project in Sweden and Finland because their respective ministries of finance have limited resources to roll out the scheme, according to Elemar Tertak from the European Commission.”

I think the person who wrote this mistook PSD for SEPA.

If they want to know more about SEPA then come along to our meeting tomorrow night at the Club:

"Is SEPA happening and does it matter?" a panel discussion with:

• Gilbert Lichter, CEO, EBA
• Fred Bär, Managing Director Euro Services, VocaLink
• Paul Smee, CEO, the Payments Administration
• Simon Bailey, Director, Logica

Chaired by Bob Lyddon, Managing Director, IBOS Association.

Started in 2002, in response to the Lisbon Agenda and Regulations on fees for cross-border cash withdrawals, the Single Euro Payment Area (SEPA) has been in the planning for a long time. In fact, it has been discussed for so long by so many that, for a lot of people, it’s become as dull as dishwater.

This view may be wrong though as, after seven years of gestation, SEPA Direct Debits (SDDs) were finally born in November 2009 and the Payment Services Directive (PSD), which legally supports SDDs, was transposed and implemented in most European countries. So all is good is it not?

Or maybe it is not as, according to the survey the Financial Services Club performed during the Autumn, most nations and most banks are not supportive or implementing SEPA and the PSD correctly. What is the truth? Is SEPA here? Even if it is, does it actually matter?

If you would like to attend, click here.

 
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Twitter's Jack Dorsey reinvents US card payments

Everyone's getting real excited about Jack Dorsey, the co-founder of Twitter, and his new payments application for the iPhone called Square.

If you haven't seen it, here it is:

In a lengthy interview with Pymnts.com, Dorsey says: 

"We can provide a lot of things that I think have been missing in payments – specifically like around the receipt, for instance. We all get these receipts, these paper receipts, that most of the time people are just annoyed to receive because they're not really useful. So what if we could really turn the receipt into more of a publishing medium, into something that lives on and something that is actually clickable and useable, and something that just exposes the various end points of the transaction. That's exciting."

I agree and the full interview is worth a read / listen.

The thing is that Square is good for the American markets, but it is very last century because it focuses upon a card's magnetic stripe and signature for authentication.  That's the way Americans pay for things but other markets have moved away from this as it is so insecure.

For example, watching the video of how you might pay using Square, the idea of fraud pops into my head with big alert signs, probably because it would make it easy to access a person's credit card using Square.  In particular, a signature based upon scratching away with my fingernail ...

This is why so many other markets, most recently Canada, has moved over to a Chip and PIN world, leaving America languishing in the past.

That is why Square has a limited market.

Now then, if Mr. Dorsey can take the Xiring terminal and build that into Square, he could be onto something.  For example, here's Barclays guidance video for online secure payments (2:50 is critical point here, the Xiring terminal):

Or maybe it's just something as simple as combining Square with text message alerts to the credit card holder every time a Square payment is made.

Nothing like simple solutions to complex problems, aren't there?

The Card Awards 2010

Last year, I was a judge with the Card Awards.

This year I couldn't make it, but they have just announced the shortlist.

Here it is:

Best New Credit Card Product of the Year

Barclaycard - Barclaycard Goldfish Low Rate Product
Egg - Egg Money World MasterCard
Leeds United and LaSer UK - Leeds United MasterCard
National Australia Group - NAG Business Card
PayPal and Santander Cards - PayPal MasterCard
The Royal Bank of Scotland Group - Natwest Savings Accelerator

Best New Prepaid Card Product of the Year

E.Z. Pay and Newcastle Building Society - Escape Card
Hiten Cards and Newcastle Building Society - Hiten Card
O2 and The Royal Bank of Scotland Group - O2 Money Card Services
TUI and PrePay Solutions - TUI Travel Card Programme
White Eagle and Newcastle Building Society - Freedom Card

Best Card Design of the Year

Bank of America - MBNA Platinum Card Choice
Barclaycard - Simplifying Payments
Egg - Egg Money World MasterCard
Hiten Cards and Newcastle Building Society - Hiten Card
White Eagle and Newcastle Building Society - Freedom Card
WWF and Bank of America - WWF Credit Card

Best Credit Card Marketing Campaign of the Year

American Express - Platinum Cashback Credit Card
Bank of America - Football Season Ticket Acquisition
Barclaycard - Barclaycard Waterslide
Egg - Egg Money World MasterCard
Santander Cards - Alliance & Leicester Direct Mail Campaign
Virgin Money and Bank of America - Virgin Money Card

Best Prepaid Card Marketing Campaign of the Year

Debenhams and PrePay Solutions - Debenhams Beauty Club Reward Card
E.Z. Pay and Newcastle Building Society - Escape Card
Hiten Cards and Newcastle Building Society - Hiten Card
O2 and The Royal Bank of Scotland Group - O2 Money Card Services
Pizza Express and G-T-P Group - The Pizza Express Summer Pass
White Eagle and Newcastle Building Society - Freedom Card

Best Card Benefits Programme of the Year

American Express - Preferred Seating
Barclaycard - Barclaycard Unwind
Celtic Football Club and Bank of America - Celtic FC Credit Card
Egg - Egg Money World MasterCard
E.Z. Pay and Newcastle Building Society - Neon Card
The Royal Bank of Scotland Group - RBS Business One Premium

Best Card Cross-selling Programme of the Year

American Express - 'Back on Track'
Bank of America - Cross-sell Card Choice
Lloyds Banking Group - Lloyds TSB ID Aware
Marks & Spencer Money - M&S Premium Club, Something Special

Best Affinity or Co-branded Credit Card Programme

bmi and Bank of America - bmi Credit Card
Flybe and LaSer UK - Flybe MasterCard
Liverpool Football Club and Bank of America - Liverpool FC Partnership
Post Office and Bank of Ireland - Post Office Credit Card
Virgin Atlantic and Bank of America - Virgin Atlantic
Virgin Money and Bank of America - Virgin Money

Best Charity Credit Card Programme

Amnesty International and The Co-operative Financial Services - Amnesty International Credit Card
Breakthrough Breast Cancer and Bank of America - Breakthrough Breast Cancer Card
Cancer Research UK and Lloyds Banking Group - Halifax Cancer Research UK Charity Card Comes of Age
National Trust and Bank of America - National Trust

Best Business Card Programme

Bank of America - MBNA Business - Flying the Flag for Small Business
Becta and Barclaycard Commercial - Becta Home Access Card
HSBC Bank - HSBC Commercial Card
The Royal Bank of Scotland Group - RBS Business One
Travelodge and G-T-P Group - Travelodge Business Account Card
Tuxedo Money Solutions and Newcastle Building Society - Tuxedo Corporate MasterCard Prepaid Card

Best CRM Programme

American Express - Targeted Merchant Treatment
Bank of America - American Express Life Inserts
Bank of America - Department Store & Motoring Merchant Category Code Campaign
Bank of America - Football Card Spend Stimulation
Bhs and Barclaycard - Barclaycard & MasterCard SKU Analytical Tool
InterContinental Hotels Group and Barclaycard - Priority Club Rewards Visa Card life stage targeted emails

Best Corporate Social Responsibility Programme

Bank of America - Team Bank of America
Barclaycard - Barclaycard Horizons
Barclays Bank - Basic Bank Account Conversion

Best Industry Innovation of the Year

Barclaycard - Mobile Payments
Barclaycard Commercial - Visa CodeSure Card
Becta and Barclaycard Commercial - Becta Home Access Card
Ghana International Bank - Ghana International Bank Debit Card
The Royal Bank of Scotland Group - Natwest and RBS Savings Accelerator
The Royal Bank of Scotland Group - Open Contactless EMV Payments on Buses

Best Security or Anti-Fraud Development

Bank of America - MBNA Travel Flag
Barclaycard - Customer Fraud Alerting Service
Barclays Bank - Cardholder Travel Registration
The Co-operative Financial Services - Cutting Credit Card Fraud
Marks & Spencer Money - Focussed on Fraud, Committed to Cardholders
Nationwide Building Society - Fighting Debit Card Fraud with ACI Proactive Risk Manager

Best Technology Initiative of the Year

Bank of America - Enhanced IVR
Barclaycard - Mobile Payments
Barclaycard - MyBarclaycard
Bhs and Barclaycard - Bhs MasterCard Colleague Portal
Home Retail Group Financial Services - Argos and Homebase Cards – a heart and lung transplant
The Royal Bank of Scotland Group - Open Contactless EMV Payments on Buses

Best Achievement in Customer Service

American Express - Customer Service Centre 'Listen' Strategy
Barclaycard - MyBarclaycard
Barclaycard - Pre-application Checker
Home Retail Group Financial Services - Argos and Homebase Cards – a customer centric approach
Nationwide Building Society - Speed, Simplicity and Security

Best online initiative

American Express - Online Welcome Journey
American Express - Realising The Potential of Online Services
Bank of America - MBNA Personalised URLs
Barclaycard - Barclaycard Breathe
Barclaycard - MyBarclaycard
Barclaycard - Pre-application Checker

Most Responsible Credit Card Lending Practices

American Express - Transparency and Customer Advocacy
Bank of America - Mortgage Shock Initiative
Bank of America Ireland - Bank of America Ireland Credit Decisioning
HSBC Bank - Your Credit Card Through Good Times and Bad
Lloyds Banking Group - Helping Hands - Customer Support For The Journey
Nationwide Building Society - Working Together

End of the cheque: open outcry! (UPDATE)

The Daily Wail, Britain’s second largest daily newspaper after the Pun, has finally got wind of the imminent demise of the cheque, as discussed here the other week. This is because the banks vote soon as to whether 2018 is the year of its removal or not.

In their article, they have some good bits, such as these great factoids:

• The ancient Romans are believed to have used an early form of cheque known as praescriptiones in the first century BC
• The English word cheque comes from the Arabic sakk, which refers to a written note of credit used by Muslim merchants
• The predicted number of cheques written per day in the UK in 2018 is 1.6m
• The average value of a personal cheque payment is £227
• The amount of retail spending still paid for by cheque is 3.9%
• According to the Guinness Book of World Records, the largest ever oversized cheque was 12m by 25m (39 ft × 82 ft)

But then the main body of the article provides the usual unhelpful rubbish such as: "the move was criticised by consumer groups, business lobbyists and charities representing the elderly.  They raised fears that vulnerable people, who have relied on their chequebook all their lives, will be left confused."

This is even though the Payments Council's research proves this is not the case and, in reality, it is like reading an article calling for us to give up the internet and return to logarithmic tables.

No wonder the almost 300 comments from readers say things like:

"If so few cheques are now being written out then surely it isn't beyond the wit and capability of the banks to be able to deal with them?"

"Of course they want to abolish cheques, why spend a £1 to process them when they can charge us a couple of quid for a direct debit. This will be the start, what next a £50.00 charge to open an account?"

"Electronic financial transactions are not secure, and the banks put the onus on the customer to prove that they the customer are not the fraudster."

"Without a cheque book I will no longer want a bank account, I will have to revert to using cash everywhere, and go back to gettinng pension from the post office in 'real' money."

What these comments demonstrate is that cheques may be a paper-based piece of ancient history, but it is not one that can easily be replaced by alternative means.

When you need to send a payment by post or are managing cashflow in a small business, the cheque is still the main method of payment and even with online and mobile banking, cards, PayPal and more, the cheque still has a place.

Until the banks provide a clear alternative, the arguments about the removal of cheque payments will continue.

More commentary today in lead opinion column by Rowan Pelling in the Daily Telegraph:

"My bank is always offering me indescribably useless "benefits", such as insurance I don't need, to justify charges on an account that's almost always in credit; now it's threatening to withdraw the one thing I find indispensable ... I just wish someone would set up a bank that gave you what you wanted: no fees for those in credit, handsome chequebooks, like those you used to get from Coutts or Drummonds, and freedom to phone your branch's manager directly. There would be a stampede."

Plus top reader's letters:

SIR – Last week I found I had not received the new cheque-book that usually arrives, so that I always have one to hand (Letters, November 24).
I phoned Lloyds, and was informed that it no longer sends out cheque-books automatically, as many big firms were no longer accepting cheques. It was the first I had heard of the bank's new policy and I asked for an objection to be registered because:
1. Paying utility bills by cheque gives me control over the date of payment. Where I have been forced to pay by direct debit I find it difficult to keep a check on payments;
2. Cheques are the only way to make a safe means of payment by post;
3. Cheques save keeping large sums of cash in the house;
4. They are a simple way to send money to private individuals and small societies.
Over the past two months, 20 out of 25 cheques that I have written have been to private individuals and small societies.
Diana Morgan
Swanage, Dorset

SIR – I am very fond of my cheque-book but those troubled by their possible demise should take heart.
When I lived in Amsterdam, I discovered that banks in the Netherlands do not supply cheque-books. My initial consternation was won over by their simple system of everyone from utility companies to charities supplying tear off forms on bills and the like, which one sent directly to one's own bank, asking it to make a payment.
This saves the roundabout method of writing a cheque, sending it the payee, their sending it to their bank, that bank sending it to one's own bank and the payment being made. It also removes the grey area of clearing, when money is in limbo.
The banks could reject the payment directly if, as often in my case, sufficient funds were not in the account.
If British banks abolish the cheque, could we not adopt a similar system?
Christopher Leach
London W11

SIR – I suspect that many a one-man business and their customers are looking forward to the demise of cheques.
Just think of the income to be hidden and VAT evaded through payment in cash.
Patrick O'Hara
Arden, Warwickshire

 

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Mashup technologies in real-world banking

For quite a while, I've been trying to find some real-world examples of mashup technologies in banking.  I use these services extensively in other areas of my life - on this blog (the widget for search for example), my Facebook account (feeds and videos), my Twitter account and more.

However, I've never found a bank that is using these technologies in the real-world.

I have found some examples internally for services, and in some corporate to bank services but real-world with consumers?  No, although I suspect there are a few out there such as BBVA.

But I have found an IT provider who gave me a great example as to how this might work.

Here is their mashup mockup.

OK, imagine you're looking through your bank statement online and you spot a dodgy transaction (double-click the image to enlarge) ...

Mmmm ... don't like the look of that cash transaction at an ATM, let's have a look at my last few card transactions.

Here's the real reason I'm posting this.  Now we see the card transactions integrated with Google Maps, context based advertising and other services to make the card experience part of a mashup of my web experience.

In this case, I can now click to check that ATM transaction using Google maps:

 

and remind myself as to whether I was really there or not.

Love it!

And thanks to Toni Plana for the screenshots.

*

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Barclaycard contactless strikes again

Following on from their campaign using the waterslide to promote their contactless cards, Barclaycard strikes again.

This time it was a surprise that popped out as I was looking through the shelves of our local newspaper shop.

Eyeing the shelves, this week's Retail Week stood out. 

It's not a magazine I would normally buy, but there was a wrap around advert over the front page that caught my eye:

 

Mmmmm, methinks, what's this?

Aha, it's Barclaycard getting the contactless message out there again, this time targeting the key audience: merchants.

 

And it's all backed up by their website which makes it sound so easy:

How accepting contactless payments helps your business

This innovative card reader lets customers pay for products that cost £10 or less, like a coffee or newspaper, in less than a second. Using contactless technology, small value transactions are processed securely at phenomenal speed, so you no longer miss out on sales because customers don't have enough change.

The benefits of going contactless

…for your business

• Card payments of £10 and under, are processed in less than a second.
• No authorisation, signature or PIN is required, unless cardholder details need to be verified.*
• Reduced queues allow you to serve more customers.
• Become the preferred retailer for contactless card users.
• Higher spend from customers who aren't limited by the change in their pocket.
• It uses the same secure network as chip and PIN.

…for your customers

• They always have the correct 'change'.
• No need to worry about PIN numbers or signatures, unless their details need verification.
• Shorter queues as customers are served faster.
• No contact is required, speeding up the transaction.
• Contactless keeps a record of their spend.

A step-by-step guide to using a contactless terminal

Any debit or credit card with the Wave symbol can be used to pay for products worth £10 or less, in these simple steps:

1. Cardholders simply touch their card to the reader and the payment is made.
2. This contactless payment is processed through the same secure network as chip and PIN.
3. The whole transaction is complete in under a second.

How to start accepting contactless payments

To join the revolution, all you need is a contactless reader at your checkout. It simply plugs into your existing chip and PIN terminal, for instant installation.

When other banks launch contactless payment cards, our reader will be able to accept those too, with no need to upgrade or change your terminal.

Just after posting this, I notice the mainstream Barclays Bank were hit with the old Lebanese Loop trick. Maybe they could learn a thing or two from their innovative brother.

One step ahead of the card fraudsters

The UK Payments Administration released the latest fraud figures today (doubleclick to enlarge):

 

This shows general card fraud is down 23% to £232.8 million in the first half of 2009 although, of concern, will be the fact that online fraud is increasing at a rapid click (55%) year-on-year.  This rise in cardholder not present activity is probably due to cardholder present fraud declining rapidly thanks to Chip & PIN.

Mind you, even the rise in internet fraud isn't too bad when you think that losses from phone, internet and mail order shopping fraud overall have fallen for the first time ever and now stand at £134 million.

According to the Payments Association, this is because of the increasing use of sophisticated fraud screening detection tools by retailers and banks, as well as the continuing growth in the use of MasterCard SecureCode and Verified by Visa by both online retailers and cardholders.

It all sounds rosy ... but for users of such services, it is still proving challenging as card readers and Chip & PIN are still called into question.

Just this week, consumer groups are telling banks that they must not always assume the customer is to blame if a payment is made with a PIN for example.

PINs can be compromised.

All in all, it seems to show that the anti-fraud measures are just about keeping ahead of the fraudsters however ... except when it comes to online.

Mind you, with most email accounts compromised this week, it just shows how difficult this battle will be ... after all, if Google, Microsoft and company can be phished, who's next?

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The branch-based banking model is dead (UPDATE)

Here’s a summary of the presentation I gave at the conference this week.

The headline is that the traditional model of banking is dead, long live the new bank model.

The dead model is the one where 80% of costs of retailing are in stores (branches).

Branch based banking is dead.

Branches are not dead ... just the concept of branch-based banking per se.

UPDATE: the critical point here (which some are missing - see comments) is that branches are not dead.  You still need some for sales and relationships.  But about a tenth of the number that most banks have today as the majority are just administration or transaction outlets that can be automated.

For those who read the blog regularly , you’ll know what I mean but, just in case, the point is that 8 out of 10 branches were opened as administration centres to service the transaction needs of communities. Those needs are now being self-serviced so what are those transaction centres there for?

In particular, as 95% of customer contact is now being delivered remotely through technology channels, including corporate customers, this should mean that at least 80% of the cost goes into the staffing, processes and technology used in those channels.

In other words, 80% of the old bank operational costs for retailing were in branches. Today, it should be in technology channels.

But there’s more to it than that.

It’s about relationship and connections.

People get technology today not because it’s gadgets but because it is connecting their lives to the lives of countless friends and strangers.

This is why Facebook can go from nothing to a place with the population of the United States in under four years, and why Twitter can go from off-the-radar to on-everyone’s-radar in just under a year.

Last year, no-one mentioned Twitter.

Today, it’s an integral part of the show.

But it’s only integral because it helps people manage, share and organise their lives and loves.

And that’s what banks have to do if they are to reconnect. They must connect people to their money and finances in a simple and easy way.

The presentation draws on all the materials you can find in our directory of social finance, and is themed around the human connections that make up our lives.

This is why each point ends with human faces, as that’s what it’s all about, and empty branches, as that’s what it’s all about.

The Bank Model Is Dead (download)

View more documents from Chris Skinner.

By way of a little more explanation of the flow.

To start with, today’s kids see the computer and its operating system as a history lesson.

They don’t care how technology works, just as I don’t care how electricity works.

I just like what it can do, and that’s how kids see technology.

They also see banks as a history lesson.

Their grandparents went into branches, their parents used ATMs and they just think of money and banking as being like Mint, an internet service that organises their finances for them.

What’s a bank branch for therefore?

Equally, everyone keeps referring to the Facebook and Twitter generation, or the twitfaced generation as some might call them.

Who are the twitfaced generation?

They’re not the under 25’s.

They’re not the under 35’s.

They are the over 35’s.

Most Facebook and Twitter users are average age of 40.

So when we talk about social networks, we are not talking about the next generation of customers. We are talking about the current generation.

If anything, the new generation of customers should be called “the Mob”, as they are all about being mobile connected youth (the Mobile Youth website is brilliant if you want more on that).

So what we’re really saying is that you need to completely rethink the bank around social technologies and rethink the branch network by closing most of it down and reinvesting that saving into social finance.

If you don’t, you’re dead.

Give it less than a decade, and you’re dead.

I’m serious.

Mainstream media fought this battle ... and lost.

That’s why television and newspapers are shutting down by the bucket load as today’s media is created by me on YouTube and Typepad.

So stop fighting the lost bank cause of the branch network.

Rethink it.

Keep the branches you need for sales, and shut the rest down.

Replace them with ATMs.

Equally, start thinking about new ideas such as microtransactions.

A billion iPhone app downloads in nine months.

Charge 50 cents a download and you’ve generated $500 million.

That’s the future.

It’s the grains of sand that will build the future.

And some banks get this stuff.

eBank and Jibun Bank in Japan; Wells Fargo and Bank of America in the USA; BBVA, Caja Navarro and a few others in Europe; but these are few and far between.

By way of example, I’m still waiting for my bank to start a blog or anything ... instead I just have a locked out website with activation codes that don’t work (long story).

In summary, the bank of the future will connect with me intimately via my mobile lifestyle 24*7. They will not only be proactive, but predictive of my needs and will provide me with a connection not just to a payment or to my money, but to my financial lifestyle.

That’s what MINT is doing today and BBVA has delivered too, but it requires bravery to go down this route.

Being brave by shutting down transaction centres, opening hi-touch 21st century sales centres and pushing the rest down a common technology platform that supports access via mobile, laptop, music player, television, car ... any internet-enable device basically.

And this changes your business model as the old model would involve massive investment in the business case to launch new technology platforms.

Today, technology is free and disposable.

So get on with it.

Retail bankers of the world, unite.

Shut down the branches and bite the bullet.

Stop fighting the old fight and start focusing on the future.

Otherwise you’re just dead meat, and who are we all going to sell to then?

The mobile phone companies?

p.s. as mentioned, all the case studies supporting this can be found at our directory of social finance

Escape with Phones4U

Just got a really interesting note about a new MasterCard from Phones4U. 

It's called the 'Escape' Card and focuses upon migrant worker remittances. 

What's interesting is that it has been launched by the mobile phone shop Phones4U, a completely non-bank non-carrier operation that is just a pure retailer of mobile telephony.

Here's the shortened write-up:

The new Escape MasterCard Prepaid Card will change the way people get money to friends and family abroad.

It’s the cheapest way; in fact it’s completely free.

It’s one of the cheapest pay-as-you-go cards around because there are no usage and monthly fees plus it’s free to load with cash at Phones 4u (a UK mobile phone shop) ...

In 2007, a whopping £3.1 billion left the UK* for friends and family abroad.

Money saved in fees could mean that you are able to add more to the amount your family or friends receive.

The card will save time and money for the 400,000** people who regularly move money abroad to family and friends.

As well as no surplus charges, it can be done over phone, text or the internet 24 hours a day and it only takes 60 seconds for the money to reach the other side (of the world). Compared to the usual 48 hours and £20+ it can take with the Western Union, that’s a lot of time and money saved.

Ethnic minority groups are twice as likely to live on a low income*** which means the benefits of banking facilities aren’t always an option. 

*source: Developing Market Associates, 2007

**source: BME Remittance Survey 2006

***source: Joseph Rowntree Foundation, 2008

This proves interesting because we all know that remittances is a key market ripe for the picking ... and what is the most likely place a migrant worker will visit when settling in a new country?

The mobile phone shop?

And just in case the migrant worker hasn't worked that fact out, they even created a little video to explain how to open the card account:

*

Yowsa!

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Forget money, let's use sand

For years, I’ve played poker with matches and chips rather than coins and notes.

We accept that a match can be ten cents or a chip is a dollar or more.

We don’t need real money to know our exchange rates.

Now, this basic idea is being replicated in social networks.

Facebook, as many of us know, has made a bet on this with Facebook credits.

Twollars can do the same for Twitter.

And now, according to this Wall Street Journal report, everyone is trying to build virtual credits in social worlds:

To be honest, this idea is not new, as it is just an extension of complementary currencies as pioneered by Bernard Lietaer and Margrit Kennedy.

This has gained traction recently as communities try to encourage more local trade through currencies such as the Totnes and Lewes pound.

But the big deal is that social networks, with billions of users, can now take these concepts to new heights as money migrates to credits across social networks.

So the future looks like one where, as the WSJ video calls it, the world is built on sand.

Sand?

Sure, the world is full of rocks, pebbles and sand:

• rocks are the core currencies of nation states – the dollar, euro and renminbi;
• pebbles are corporate currencies, such as store credit cards; and
• sand are the little grains of value exchange made person-to-person, peer-to-peer, P2P.

The future built on sand?

Sure.

Sand makes glass and the gazillions of grains make up the coasts of all nations.

So why not build a world on sand ...

... oh yes, the house falls down on sand.  We need rocks for foundations as well.

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Postnote: this is actually Innovations in Retail Payments, Part 2

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What is innovation in payments?

I was asked to write about innovation in payments last week, and so here’s the first of three parts. The first part will focus upon retail payments innovation; the second, corporate payments; and the third, trade settlement.

A weekly non-exhaustive update so to speak.

First, what is innovation?

Let’s define it again (yes, I’ve blogged about this stuff before but, just in case) and, like most of us these days, I turn to Wikipedia as my starting point:

The term innovation refers to a new way of doing something. It may refer to incremental and emergent or radical and revolutionary changes in thinking, products, processes, or organizations. Following Schumpeter (1934), contributors to the scholarly literature on innovation typically distinguish between invention, an idea made manifest, and innovation, ideas applied successfully in practice. In many fields, something new must be substantially different to be innovative, not an insignificant change, e.g., in the arts, economics, business and government policy. In economics the change must increase value, customer value, or producer value. The goal of innovation is positive change, to make someone or something better. Innovation leading to increased productivity is the fundamental source of increasing wealth in an economy.

That’s pretty comprehensive actually, but I don’t like half-page elevator statements so my definition goes more like:

Innovation: the method of creating compelling new ways of doing things that open up new markets or radically disrupt existing markets.

Innovation does not have to be positive, increase value etc, as innovation could just as easily destroy things and eradicate value. The internet has destroyed the value of newspapers and television. It’s turned news and views into free access for all, as well as connecting individuals to individuals. It is not positive for the incumbents and may be positive for the customer, although some may say not. For example, how many of us would see the destruction of the BBC, CNN and NBC as being good? Can the blogosphere and YouTuber replace the value of good news reporting and media production?

These are questions we have yet to answer, so I’m on the fence a little about whether innovation has to be positive and create value.

What innovation really needs to do is to show something compelling.

Compelling means that people use it.

The reason YouTube works is that I can send my stuff there and share it.

The blogosphere has created news reporting in real-time from a potential 3.5 billion news reporters.

The access to news is more global and comprehensive than it has ever been ...

... but is the news believable?

The fact that Wikipedia has a small amount of misreporting is not a good thing is it? And when websites report celebrities as being dead when it’s blatantly untrue, you sit in a mass of confusion rather than truth.

Anyways, that’s a precursor to a debate about defining innovation and the value of the new web worlds, rather than innovation in payments. Nevertheless, it is important to get the definition right, so I come back to my definition of innovation as being a method of creating compelling new ways of doing things that open up new markets or radically disrupt existing markets, before discussing payments innovations.

So what compelling new payments markets are being created or disrupted in the retail payments world?

Certainly, mobile payments and prepaid, which were the focus of last week’s discussions, are innovating retail payments. They are opening up new markets for electronic services that displace cash. That is why they are good for the producers, the banks, as any cash displacement makes finance more efficient because it’s getting rid of paper. And paper accounts for six out of seven transactions today.

But mobile and prepaid have been trying to disrupt this space for half a decade. I first started talking about mobile as a payments mechanism back in 2004 when NTT DoCoMo started showing us the way.

Therefore, the fact that mobile is now mainstream is no longer innovative. The innovation has happened. A bit like online payments with PayPal happened. And prepaid is an innovation – creating new compelling markets based upon existing technologies – but it’s also happened.

These things are here.

That’s why I don’t call them innovations, as innovation is what I look for before it happens.

When you see Web 2.0, it’s too late.

When you see Facebook and wonder whether to compete with it, it’s too late.  It's already dominating.

When you see everyone talking about mobile payments, it’s too late.  They've taken off.

When you hear everyone discussing prepaid cards, it’s too late.  Everyone's got one.

The fact is that most banks are fast followers so they do wait until it’s too late. Then they launch their mobile and prepaid services. And they succeed. They succeed because a bank never finds it too late due to the protection of their markets from new entrants and the inertia of their customers to change provider.

That does not mean that banks should not innovate however.

So what is innovative today?

Wireless payments.

This is contactless, but it’s more than that.

It’s wireless, free-form payments built into objects, clothing, watches ... anything.

Wirelessly communicating electronic payment tools for consumers.

That’s innovative.

Let’s begin by looking at a really cool film ...

Nearness from timo on Vimeo.

What this film demonstrates is the notion of wireless communication by placing the receiver and emitter in near-field communication.  The receiver or emitter can be in any form of device.  A phone, a card or a watch or ear-ring.  Anything that can take an RFID chip (today) or some form of wireless chip (tomorrow).

The chips are really small, minute, tiny.  So tiny that you won't be able to see them with the human eye in some instances.

As a result, the chips can be weaved into cloth, placed in a tooth filling or embedded in bricks and tarmac.

Everything communicates.

Everything knows where everything else is.

So we think that's scary?

Well who thought the internet was scary when it started to take off?

Who rebutted mobile telephony as pure yuppiedom?

Things take off faster than you think and, by the time you see them, they are mainstream and it's too late.

So, the near future is wireless communications enabling wireless payments ... and a lot more.  And it will all be based upon geo-location and proximity.

Knowing that you are walking past the shoe shop, you get an advert for your favourite Geo shoes.

Knowing that you are near the O2 stadium, you get a promotion for tonight's concert as tickets are still available (must be a rubbish act).

And knowing that you need to sort out your overdraft, you get a request to visit with the bank manager as you near the branch (oh no!).

All of this is likely in the very near term.

How near?

Well, here's a picture from my Hong Kong cab last week:

Notice anything?

Sure, it's a poor quality picture, but second from left under the screen is a note saying: "GPS Based Advertising".

As the cab drives around Hong Kong, you get adverts tailored to the vicinity you are in.

Come and shop at Harbour City!  Visit Honeychurch Antiques in Central now!  Dive into the Computer Centre in Mongkok for very good deals!

As the taxi moves, everything changes ... advert by advert.

Now imagine this in the payments context.

You see the ad for Armani and wave at the screen ... the suit is in the post.

You walk past a billboard for Geo and bish, bash, bosh ... the shoes arrive tomorrow.

You get the promo for tonight's concert at the O2 and ding! the RFID code for your ticket entry is delivered to your phone.

This is not the future.

It is right here, right now.

And that's what I call innovation, along with a few other things that will come into the blog in the next two weeks.

p.s. if you want to see more about the Hong Kong cab experience, go to the website http://www.motionpower.com.hk/ for more.

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Is there any innovation here? Nope

After the innotribe stuff, it was off to a panel debate about “payments innovation”.

This session was described as follows:

“The crisis has put the emphasis back on traditional banking and sources of revenue, with payments coming to the fore again. Yet payments are also seen as a commoditised, legacy business where scale is everything. Into this business come a series of new market demands which might change this such as same day retail payments, e-payments, mobile payments, contactless cards and real-time finality. How will these new opportunities develop and will they be profitable new forms of business? Can banks afford to develop new channels individually or will they need to co-operate further? Will non-bank players use technology to challenge banks for their new payments service business?”

Bearing in mind that innotribe was all about innovation, it is obvious why this session was of interest to me.

This session was chaired by Robert Heisterborg, Global Head of Payments and Cash Management at ING, with a panel comprising:

• Rajesh Mehta, Managing Director, Head of Treasury and Trade Solutions, EMEA Global Transaction Services, Citi ;
• David Sear, Divisional Managing Director, Travelex Global Business Payments ;
• Marcus Treacher, Head of electronic banking and e-Commerce, Global Transaction Banking, HSBC; and
• Russ Waterhouse, Executive Vice President of Products and Development, The Clearing House.

Here's a summary of how it went:

Robert Heisterborg:

Who’s driving innovation?

Rajesh Mehta:

The innovation drivers I can see include:

• the miniaturisation of payments - especially as there’s more P2P taking place;
• government’s needs, especially in current economic climate;
• banks seeing payments as a product rather than looking at payments as a business in its own right, which is what non-banks do;
• regulatory change; and
• risk management.

Citi in particular is focusing upon prepaid cards and mobile as key new innovation areas.

Marcus Treacher:

Often the idea of the innovator is not the way it works in reality. My favourite example is the ATM which was introduced as an automated teller in branches and it failed. In desperation, the developers decided to try the machine outside the branch and it took off. That was an accident, but one that created success.

Russ Waterhouse:

As a market infrastructure we’re the last place people would normally look for innovation, but we have to do this because it is required, expected and needed amongst our clients and community. The challenge to do this is that many of us benefit from the inconsistencies in the markets, and we have to rethink our business models if we are to take advantage of creating innovation through more consistency.

David Sear:

When we refer to payments innovation, the only example normally mentioned is PayPal and I’m a little tired of hearing about PayPal. They’ve been around over ten years now, so get over it. PayPal have a billion dollars of revenue in Europe alone so their innovation has happened, they have achieved change and they’re here to stay.

Now, as a consumer, I may not want PayPal because I find it difficult to use. It’s clunky and doesn’t provide me with the security I want. For example, a recent US survey by Nielsen found that 81% of consumers would prefer a P2P payment instrument provided by their bank. So we have to do a little better particularly as there is a trillion dollars of ecommerce out there each year, and 20% of that is cross-border.

Prepaid cards are becoming a mainstream in the payments landscape, and that’s another key innovation we are tracking.

Equally, I’ve heard lots of people talking about convergence this week and I’d like to see that. In particular, I would like to see the end of the back street money transfer agent. Bank2Bank and Card2Card services, such as Visa money transfer cards, should mean that AML will go away into a different place.

Robert Heisterborg then asked the audience: “We have been here for a week, is there enough innovation at SIBOS?” and over 80% of the audience said ‘No’. Where were all of you when the innotribe sessions were running all week????

We then started looking forwards to the future of payments.

Rajesh Mehta:

The future landscape for payments will fall into three camps:

• Large global players with the advantage of scale;
• Niche specialist players with a vertical focused advantage, e.g. payment practitioners for the health industry or the pensions industry; and
• Hybrids who are capable of innovating themselves but acquire capability, distribution and technologies from partners who do this better than we do

Robert Heisterborg then referenced an ING trial in m-payments in Romania that found the average transaction value of a mobile payment to be €2.44. Therefore, is mobile the cash killer?

David Sear:

A decade ago we talked about micropayments killing cash on the internet and it hasn’t happened. For example, Google has announced a micropayment service for content recently but these sorts of developments are all about ‘if we build it, they will come’. It’s not what consumers want though. Consumers don’t want to pay for content and Google’s announcement of micropayments for content will therefore not necessarily work.

Rajesh Mehta:

How can you say that David when, in Africa you have four times the number of mobile telephones than bank accounts? How come you don’t think m-pay will happen?

David Sear:

Because consumers are asking for other forms of payment that are more traditional, such as prepaid cards in Africa rather than mobile.

Rajesh Mehta:

What will drive the mobile is banking the unbanked rather than the payment itself. However, once banked, then mobile payments will come.

The audience were then invited to ask questions and the first was about the fact that Nokia have 1.3 billion telephones out there and relations with all the carriers. The fact that they’ve partnered with Obopay should be seen as a threat should it not?

Rajesh Mehta:

No, as they are working with the banks on this. We’ve created a financial cloud at Citi for example, as a super settlement mechanism for the kind of needs of Nokia. It’s a settlement and clearing role and there’s always going to be collaboration with a bank on these things, so the question is really about the last mile. The last mile is all about who wants the connection for something as ubiquitous as a toothbrush, which is what the mobile is these days. For this, do I need to own the last mile? Do I need to compete with others there? Or do I enable that capability and collaborate? There’s always room for collaboration.

All in all, it was an interesting discussion but the fact that the panel talked mainly about prepaid and mobile, but no real discussion of SEPA innovations around einvoicing or contactless payments was an oversight, so I asked about contactless.

Of course, the panel said that it was not purposefully missed off the list, and that this is going to be embraced.

My take on this: for ING, Citi and HSBC, contactless technology is still off the radar or it would have been referred to more strongly. Would have been interesting to see Octopus or Barclaycard or Visa PayWave or others, as thee form factor of contactless mobile or contactless watches (forget cards) is far more innovative as a consumer payment service than a mobile payment using SMS or something (which is where most banks focus first).

Net:net, and being honest, there was no real discussion of innovations here but the panel talked more about stuff that has been bubbling away for years in the form of prepaid cards and mobile payments. Even if they had talked about SEPA einvoicing and contactless, it’s not really innovatory.

What would be truly innovatory would have been to discuss the next generation of payments using wireless technologies to pay without any physical devices involved.

Now, that is revolutionary and I’ve got a whole nine yards on that innovation.

Anyone wanna hear it?

Get out of credit cards quick

Back in the HKCEC (Hong Kong Conference and Exhibition Centre) and it’s walk, walk, walk.

I reckon I've already walked 12 kilmotres since arriving yesterday and probably will average 10k per day.

This is because the HKCEC is HUGE.

Three floors of exhibition space and, wall-to-wall, about a kilometre between entry and exit.

No wonder 5,000 people can seem to disappear the minute you walk in as, looking around the exhibiton areas, it’s not that busy. And yet it is. It’s just that everyone disappears inside this gargantuan centre onece they walk through the door.

After various meetings with exhibitors I just sat through the first session delivered by McKinsey.

McKinsey seem to be all over SIBOS this year, and maybe that's a reflection of their partnership with SWIFT ... or is that slicing and dicing?

Anyways, McKinsey confirmed that payments is still a good business.

I thought so!

According to McKinsey’s numbers, payments represent $900 billion of revenues for banks in 2007 and about $300 billion of profit. In other words, over a quarter of all bank revenue and a hefty chunk of their profits comes from the fee and interest income on current accounts and cards.

This does vary dramatically by region however, with the USA heavily dependent upon credit cards for their revenues. Over 40% of bank revenues in the USA are made from credit cards, or $128.6 billion of their $281.6 billion revenues.

In Europe by contrast, $145.11 billion of the $274.7 billion revenues are from income made on personal current accounts. Asia has similar numbers – $114.6 billion of $236.7 billion revenues – but these are from corporate current accounts.

The impact of the crisis has mainly been on consumer finance during 2007 through 2008 in Western Europe, excluding the UK, with revenues down 67%; Eastern Europe was down 178% and Africa 102%.

In the same timeframe, American corporate banking was hardest hit, down 61%, similarly with the UK (down 59%) and Japan (down 89%).

As a result, the UK was worst hit by the changing credit conditions in 2007 through 2008, with bank profitability down 92% overall and Japan a close second, declining 71%.

But that’s only half the story, as during 2008-2009 it’s far worse.

Consumer finance profits were down by 266% in the USA during 2008-09, down 328% in Western Europe (excluding the UK), 114% in Asia and 80% in Latin America. The total picture shows revenues from consumer finance down 444% worldwide between 2008 and 2009.

Similarly, corporate banking income reduced by 287% in USA, 138% in the UK, 183% in Western Europe, 141% in Eastern Europe, 55% in China and 51% in Latin America.

The USA and Eastern Europe were the worst territories hit by the crisis and dramatic tightening of fee and interest income overall.

Next year, it changes as there’s nothing to lose anymore. Hence, McKinsey predict that banks will regain $150 billion in lost profits as a result, with Western Europe having the best position in the comeback stakes.

What was really interesting is that McKinsey predict USA credit card losses to be about 10% or more this year and pre-tax Return On Assets for the issuers to be down from 3% 2008 to -1% in 2009.

This is because of a major move away from credit card usage in the USA to debit cards. As a result credit card profit per household will move from $160 in 2008 to -$143 in 2009, -$172 in 2010 and -$65 in 2011, before returning to breakeven in 2012 and a profitable line of business from 2013 onwards.

The key message therefore is that credit cards is not a good business to be in if you’re in the US markets right now.

I’m sure that Capital One, MBNA and their brethren are delighted to hear it.

PayPal's vision for the future of payments

Just got sent a link to PayPal's vision for the future of payments, used when they launched their flexible API in July:

Very nice too.

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More about mobile money

I'm on holiday and ignoring nearly everything ... almost everything ... but not quite.

Just found a couple more links about mobile money that are really interesting so couldn't help but post them.

First, Fast Company has just produced a really good review of all things to do with mobile money:

"Mobile payments system Boku just announced that it will work with a bevy of social networks and gaming sites. But competitor Zong, was recently chosen to pilot Facebook's virtual currency, called Credits. Both sites will face considerable opposition from Obopay, a seasoned startup that recently earned the backing of mobile phone giant Nokia for its Nokia Money payment system. Mobile payments are convenient, fast and easy--but which service should you use?"

They go on to look at PayPal and Amazon's TextPayMe, and their answer is that each has its own virtues dependent upon what you are trying to do, e.g. gaming, downloads, sending money, etc.

Well worth a view.

The other that caught my eye was the launch of Virgin Mobile's Zoompass in Canada:

Virgin Mobile Canada and EnStream LP announced that Virgin Mobile customers can now Zoom each other cash with Zoompass(TM), a groundbreaking new mobile money transfer and payment service.  Zoompass is a fast and easy way to send and receive money securely with a mobile phone.

Being on hols in a remote place with only a mobile and blackberry to keep in touch means that these things are proving to be of great value.

After all, how else am I going to pay that utility bill I left on the doormat that day I left?

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36 things credit card firms know about you

If you weren’t aware, credit card companies use rating firms Equifax, TransUnion and Experian to see how risky you are when they think about lending to you.

These firms rate you as to how bad you might be, and how likely (or unlikely) you are to pay back the debt.

They do this using 36 different things they know about you.

Here are 36 things they use in order of risk priority, e.g. the worse you are at the top of the table, the higher the interest or likelihood of being refused a loan:

1. Amount owed on accounts is too high
2. Level of delinquency on accounts
3. Too few bank revolving accounts (not TransUnion)
4. Too many bank or national revolving accounts (not TransUnion)
5. Too many accounts with balances
6. Too many consumer finance company accounts
7. Account payment history is too new to rate
8. Too many recent inquiries last 12 months
9. Too many accounts recently opened
10. Proportion of balances to credit limits is too high on bank revolving or other revolving accounts
11. Amount owed on revolving accounts is too high
12. Length of time revolving accounts have been established
13. Time since delinquency is too recent or unknown
14. Length of time accounts have been established
15. Lack of recent bank revolving information
16. Lack of recent revolving account information
17. No recent non-mortgage balance information
18. Number of accounts with delinquency
19. Date of last inquiry too recent (TransUnion only)
20. Too few accounts currently paid as agreed (#27 with TransUnion)
21. Length of time since derogatory public record or collection is too short
22. Amount past due on accounts
23. Serious delinquency, derogatory public record or collection filed
24. Number of bank or national revolving accounts with balances (not TransUnion)
25. No recent revolving balances
26. Number of revolving accounts (not TransUnion)
27. Number of established accounts
28. No recent bankcard balances (not Equifax)
29. Time since most recent account opening too short
30. Too few accounts with recent payment information (not TransUnion)
31. Lack of recent installment loan information (#4 for TransUnion)
32. Proportion of loan balances to loan amounts is too high (#3 for TransUnion)
33. Amount owed on delinquent accounts (#31 for TransUnion)
34. Serious delinquency and public record or collection filed
35. Serious delinquency
36. Derogatory public record or collection filed

Hat-tip to Bargaineering.

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First O2-RBS Visa Cards, now Nokia Obopay Money

A year ago, I blogged about Royal Bank of Scotland (RBS) announcing the intention to become an MVBO - a Mobile Virtual Banking Operator.

The idea is to offer the mechanism for anyone to process mobile payments through the RBS payments system.

The first result of this strategy is the announcement of O2, the mobile carrier, partnering with RBS to offer Visa payment cards in the UK.  From small acorns ...

This is not to say that m-payments is just an MVBO space, as the European Payments Council is actively working with the GSM Association to develop standards in this space and other infrastructures, such as Monitise, creating joint ventures with Visa.

But  Nokia's press release yesterday annoucning that they are working with PayPal is intriguing, to say the least.  Here's what it says:

Nokia today introduced Nokia Money, a new mobile financial service offering consumers with mobile device access to basic financial services. For many consumers, this will be the first time they have had any access to such financial services.

Nokia Money has been designed to be as simple and convenient as making a voice call or sending an SMS. It will enable consumers to send money to another person just by using the person's mobile phone number, as well as to pay merchants for goods and services, pay their utility bills, or recharge their prepaid SIM cards (SIM top-up).

The services can be accessed 24 hours a day from anywhere, meaning savings in travel costs and time ...

Nokia is building a wide network of Nokia Money agents, where consumers can deposit money in or withdraw cash from their accounts. The Nokia Money service will be operated in cooperation with Obopay, a leader in developing global mobile payment solutions, which Nokia invested in earlier this year. The service is based on Obopay's mobile payment platform, with unique and newly developed mobile elements. Nokia intends the service to be open and interoperable with other payment services as well ..

The Nokia Money service will be shown for the first time at Nokia World on the 2nd and 3rd of September 2009 in Stuttgart, Germany, and it is planned to be rolled out gradually to selected markets, beginning in early 2010.

There's a great quote in there as well, from Mary McDowell, EVP and Chief Development Officer, Nokia:

"With more than 4 billion mobile phone users and only 1.6 billion bank accounts, global demand for access to financial services presents a strong opportunity to combine mobile devices with simple but powerful financial services such as Nokia Money."

It just makes me wonder whether this means all the handset manufacturers create m-payment systems with Sony Money, iPhone Money (MoBank), and more; and then all the mobile carriers have theirs too with O2 Money, Vodafone Money, T-Mobile Money and more.

If so, there's too many and eventually someone will win out to be the eventual PayPal for Mobile Payments.  That's a thought, what are PayPal doing?

Not enough from all I can see.  Launched as first mover in 2006, PayPal Mobile has been relatively quiet ever since.  Some would say, in fact, that it's going nowhere because they lack a mobile merchant acquirer and the current merchant processing fees are too high for mobile.  But don't discount PayPal too fast as they definitely have the brand for this space ... if only they can get the business model to go with it.

Dontcha just love this mobile stuff ...

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Numbers Part 16: Cards, Cards, Cards

Just stumbled across a web page on CreditCards.com that's fantastic.  Full of stats and numbers. 

Here's a sample of the most interesting:

• There were 984 million bank-issued Visa and MasterCard credit card and debit card accounts in the U.S in 2006. (Sources: Visa USA, MasterCard International)

• The top 10 credit card issuers controlled approximately 88 percent of the credit card market at the end of 2006, based on credit card receivables outstanding. (Source: FDIC)

• U.S. Visa cardholders alone conduct more than $1 trillion in annual volume. (Source: Visa USA internal statistics, 4th quarter 2006)

• Consumers carry more than 1 billion Visa cards worldwide. More than 450 million of those cards are in the United States. (Source: Visa USA internal statistics, 4th quarter 2006)

• There were 159 million credit cardholders in the USA in 2000, 173 million in 2006, and that a projected 181 million by 2010 (Source: Census Bureau)

• 78% of American households -- about 91.1 million -- had one or more credit cards at the end of 2008 (Source: Nilson Report, April 2009)

• In the fourth quarter of 2008, consumers had an average of 5.4 cards (Source: Experian, March 2009)

• In 2006, there were nearly 1.5 billion credit cards in use in the USA – if you stacked all of those credit cards on top of each other they would reach more than 70 miles into space and be almost as tall as 13 Mount Everests (Source: NY Times, February 2009)

• The top 10 U.S. credit card issuers hold an 87.55% market share, up from 84.7% in 2007 (Source: Nilson Report, April 2009)

• At the end of 2008, Americans' credit card debt reached $972.73 billion, up 1.12% from 2007 (Source: Nilson Report, April 2009)

• The average outstanding credit card debt was $10,679 at the end of 2008. One year earlier, that average was $10,637 (Source: Nilson Report, April 2009)

• As of March 2009, America’s revolving consumer debt was about $950 billion and, in Q4 2008, 13.9% of consumer disposable income went to service this debt (Source: U.S. Congress' Joint Economic Committee, May 2009)

• In 2007, 14.7% of U.S. families had debt exceeding 40% of their income (Source: U.S. Congress' Joint Economic Committee, May 2009)

• In 2008, 72% of consumers indicated they used a debit card in the past year; in 2007, that number was 65% (Source: Javelin study, March 2009)

• In 2008, JPMorgan Chase was the largest issuer of small business credit cards with $34.5 billion in total card volume; Bank of America is second with $26.31 billion and Capital One is third with $20.7 billion (Source: Nilson Report)

Mind you, this list was a little more bitter sweet:

Ranking of U.S. banks' reputations

1. Washington Mutual -- 64.04
2. SunTrust Banks -- 63.56
3. Wachovia -- 61.22
4. National City -- 58.83
5. Wells Fargo -- 57.38
6. US Bancorp -- 54.18
7. Bank of America -- 50.94

Rankings were part of a survey of 600 of the world's largest companies.
(Source: Reputation Institute Global Pulse survey, June 2008)

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Visualising economics

There are more and more sites that are using visual tools to illustrate banks, the credit crisis and other trends.

Mint is particularly good at doing this, and there is also a nice little video about the credit crisis that makes it simple to understand. 

And then today, I stumbled across Visual Economics, a great little website that shows you exactly how the average American consumer spends their paycheck(doubleclick to see larger picture):

Or how credit card companies are not always serving the interests of their customers:

There are quite a few others in there as well.

Intriguing ...

PSD and SEPA research

It’s July 1st and we are pleased to announce that, during the summer, the Financial Services Club is running an in-depth analysis and research project about the country-level plans for the transposition of the Payment Services Directive (PSD) on 1st November 2009 and the implementation of SEPA Direct Debits (SDD) on 2nd November.

The research will be released the week before SIBOS in Hong Kong in September and, as part of this, we have an online 25 question survey which all readers of the Finanser are invited to complete.

If you participate in the survey you will automatically receive a copy of the final research report in September and, for those who enter their email address, three winners will get a copy of the book: “the Future of Finance after SEPA” and one lucky person will be given an honorarium to the Financial Services Club to be able to attend any of our meetings in the future for free!

Now there’s an offer you can’t refuse.

If you would like to participate, then just complete our survey, which should take you less than ten minutes, by clicking here.

  

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