Towards a World beyond cash in Kosovo - bqk-kos.org · Towards a World beyond cash in Kosovo 19th September 2012 ... Key elements Page 4 February 2012 . 3. Salary cards, Social cards

©2012 MasterCard. Proprietary and Confidential

Towards a World beyond cash in Kosovo

19th September 2012

Cyril Ghanem & Golnaz Amininejad


1. Introduction

2. Key elements

3. Salary cards, Social cards & Prepaid cards

4. Bill Payment

5. Implementation

6. Reducing cash in Kosovo

7. Next steps

8. Q & A

Agenda

February 2012 Page 2


3

1. Introduction MasterCard’s business is focused on three activities

Franchisor

Processor Advisor

Franchisor

MasterCard relies on 25.000 issuers to support and sell the brand and opens the door to commerce at millions of merchant locations around the world

Processor

Our network of advanced technology enables transactions on a global scale

Advisor

MasterCard provides strategic and operational insights and solutions that advance commerce


MasterCard understood that high level of cash transaction raises

concerns to all stakeholders in the payment chain (Utilities, commercial

banks, central bank). These concerns are related to the costs

associated with handling cash and inefficiency produced by too high

level of unused liquidities.

In order to reduce cash transactions in Kosovo, the Government has

the power to undertake several legal and administrative initiatives (law

amendment) and distribute cards to all citizens in the country.

The main purpose of this Regulation will be:

a. the reduction of cash transaction by creating disincentives for cash

use; combined with

b. the increase of non-cash transactions by creating incentives for the

customers and merchants to use cards, alternative to cash.

2. Key elements

Page 4 February 2012

3. Salary cards, Social cards & Prepaid cards


Card payments add value to bill payments in 3 areas- for Kosovo face to face payments are the most relevant

Face-to-face at POS

Reduce cost and increase

convenience when paying

bills at post offices, biller

shops and kiosks

Online/E-billing

Increase payment and e-

billing convenience (Single

Click payments) and

simplify their

implementation

Direct Debit

Reduce cost of rejected

payments and simplify

set-up of recurring

payments


1. First stage of the transfer from cash to card is to identify a suitable product for the

payments to be made in a POS environment. MasterCard can offer 3 product

opportunities, the social card, the salary card & the prepaid card.

2. 2nd Stage to then move POS card transactions into the online space as the technology is

developed in market

©2012 MasterCard. Proprietary and Confidential Page 7

February 2012

QUICK FACTS

MasterCard Salary Card is an efficient and convenient solution for businesses to disburse salaries to their employees, as an alternative to

more costly methods like cash or cheque. Salary cards are typically offered through banks/issuers Corporate Bank Account Manager who

have Corporate banking relationship with medium to large Employers. Their typical contacts will be HR or Finance Manager. These will in turn

organize the distributions of cards to employees.

MasterCard is continuously analysing the key drivers for all parties in

the specific salary Card value chain, and tailors full packages for each.

Toolkits for bank sales staff:

- Sales presentation

- Motivation program

- Educational Video

- B2B employers incentive program

Toolkits for card usage:

- Welcome packs

- Pre-approved card designs

- Portfolio activation strategy

- B2C incentive program

• A Salary card is often the first card of cardholder and the first

(indirect) relationship with a bank

• Typically over 80% of transactions on Salary cards are

conducted at the issuer’s ATMs, often installed on Employer

premises

• Over 35 million MC branded cards currently in issue in Europe

(as of Q4 2011).*

• Primarily offered in Europe (Russia, Ukraine currently)

• May be issued on all our brands, and thus leverage their ability

to meet specific needs (Maestro, MasterCard)

• Can be issued as Debit or Prepaid cards

• Tailored economics available

* Source RBR 2011

Salary Cards

COMPETITIVE DIFFERENTIATORS

Issuer benefits:

• Source of significant numbers of new financial

relationships

• Revenue from Card usage

• Easy implementation (pre-approved card

designs,…)

• Flexibility – issued as Maestro or MasterCard

• Turn-key usage & activation toolkits

• Separate product code available to track

Cardholder benefits:

• Safer and more convenient than cash

• Universal cards that’s works not just at ATM’s

but also at POS, for e-commerce,…

• Financial inclusion: it is often the first bank

relationship and account

• Benefits and discounts from MasterCard turnkey

B2C programs (e.g. on supermarket purchases)


February 2012

QUICK FACTS

Social cards allow citizens to receive entitlements of social benefits (pension, transportation, health,…). Our MCHIP -4 technology allows to: identify the

individual (and check things like age,…), authenticate the entitlement, recalculate the payment and make the payment (or payment is waived). It stores

benefits using Secure Data Storage on the EMV M-Chip/4 and offers added functionality at the Point of Interaction. The card allows the citizen, for

instance, to obtain box number 8 of paracetamol of the 10 he is entitled to on a year basis, making sure that the counter on the card and on the health

service servers are up to date.

• M-Chip/4 technology established as standard for social cards in

Russia, even though Visa is competing in this space with VSDC

• Easy to integrate in current card systems as it relies on the same

basic processes the issuer already masters

• Fully integrates with PayPass

• Ready made and approved data and technical specifications, Software

Development Toolkit (SDK) easy to deploy

• Largest experience with Social cards in Europe, by far

• Long list of social entitlements templates available (Medical , Transport,

Pension, Taxes, Utilities,…)

• Over 15 million MC branded cards currently in issue in Europe

(as of Q4 2011).

• Primarily offered in Russia, Czech republic, & Italy

• Being developed and productized toward H2 2012 for pan-

Europe coverage

• May be issued on all our brands, and thus leverage their ability

to meet specific needs (Maestro, MasterCard)

• Can be issued as Debit (Russia,…) or Prepaid cards (Italy,…)

• Tailored economics available

Social Cards

COMPETITIVE DIFFERENTIATORS

5 4 5 2 1 2 3 4

5 6 7 8 9 1 2 3

Issuer benefits:

• Source of significant numbers of new customers

• Revenue from Card usage

• Easy implementation (MasterCard Software

Development Kit)

• Flexibility – issued as Maestro or MasterCard

• Separate product code available to track

• Image as Socially responsible issuer

Cardholder benefits:

• Safer and more convenient than cash or paper based

systems

• Financial inclusion: it is often the first financial products

received

• Complete accuracy of benefits calculation, easy and fair

access to benefits

• Multiple uses: in addition to social benefits, payments,

loyalty, ID card, social security card,…


9

“Carta Acquisti” – Poste Italiane (Italy)

• Social Card program, with restricted acceptance to

food merchant MCC and utility bills. No ATM access

• Allows to deliver targeted aid, avoiding misuse of funds

• Distributed through post offices to low income citizens

• 80 EUR loaded each two months

• Launched 1st December 2008, 500K cards distributed

in the first two months

• Planned distribution of 1.3 million cards within 2009

• The initiative had extremely high visibility on media

Italian Minister of Finance, Mr.

Giulio Tremonti, showing the social

card to journalists


Social Card of Bashkortostan Republic • Full-scale project implemented throughout Bashkortostan

• 9 social applications

• More than 200,000 social cards issued as of end 2010

• About 700,000 new social cards will be issued in 2011.

Launched in Bashkortostan; now being rolled out to other regions in Russia

10

Ural Sib Social Card Products

Citizen Card of Ivanovo Oblast’ • Full-scale project implemented throughout Ivanovo Oblast’. • 3 social applications • More than 160,000 cards issued as of end 2010, • 2 more applications in 2011 (pension and tax applications).

Citizen Card of Krasnodar Region • Under implementation in Krasnodar city and in Sochi. • 11 applications • About 50,000 cards issued as of end 2010

• About 120,000 new cards will be issued in 2011.

©2012 MasterCard. Proprietary and Confidential 11

The Evolution of Payment Cards

Buy later Prepaid

Cards Pay first

Buy now

Pay Now

Debit

Cards

Pay over time Credit

Cards Buy now

Pay within

30 days Charge

Cards Buy now


February 2012

QUICK FACTS

A prepaid card is a stand-alone payment card that can be loaded with money by you, another person,

company or institution. They look and function just like any other debit or credit card except you can only

spend the money loaded on the card. They are available to almost everyone without the need for a credit

check. They are not directly attached to an individual current account or line of credit. Funds loaded are

typically held in a pooled account.

Prepaid Cards

Governments


13

• Prepaid payment

solutions for

everyday purchases

• Safer and more

convenient than

carrying cash

• Multiple card options

as a means of

segmenting cash for

specific purposes

• Teaches the youth

market about electronic

payment and money

management

• Parental controls ensure

only certain products

can be purchased from

specific retailers

• Check your balance

online

• Provides a safer and

more convenient

alternative to

traveller’s cheques

• Allows cardholders

to take out cash

when abroad

• Perfect for saving up

for holiday money

• Allows cardholders to

segment their income

for easy budgeting

• Helps consumers take

back control of their

spending and improve

their credit score in the

process

• Promotes financial

inclusion

• For those consumers

who want a prepaid

account without the

need for a physical card

• Ideal for secure internet

shopping or for making

payments over the

phone

• Quickly and easily

opened online and

reloaded anytime

General

purpose for

everyday

spending

Electronic payment

solutions for the

Youth market

Foreign currency

cards for holiday

money and

foreign exchange

Safe and secure

payments when

shopping online

An innovative

way to budget

and improve

your credit

Prepaid Application - Consumers


14

• Reduces payroll

costs

• Simplifies pay

distribution to

temporary and

unbanked workers

• Increases

employee

satisfaction

• Increases control

and visibility of

spending

• More cost-effective

than cheques

• Can be issued and

loaded as needed

• MasterCard

inControl

• Reduces cost of

managing incentive

programs

• Increases

employee

satisfaction

• Helps to track and

control travel

expenses

• Gives employees

without corporate

cards access to

travel funds

• Can be issued and

used in multiple

currencies

• Increases employee

participation in pretax

healthcare plans

• Restricts spending to

providers of medical

goods and services

• Increases employee

satisfaction with

employer and health

plan

Makes paying

employees

easier and

less expensive

An innovative

way to reward

employees and

thank clients

Makes purchasing

supplies and

services easier

than ever before

A ticket to

hassle-free

travel

management

A convenient way for employees to access their

health benefits

Prepaid Application - Corporates


15

• Reduces payroll

costs

• Simplifies pay

distribution to

temporary and

unbanked workers

• Increases

employee

satisfaction

• Drives cash out of

system

• More cost effective,

secure and

convenient that

traditional vouchers

• Reduces need for

paper trail

• Reduces cost of

social benefits

distribution

• More cost effective

than cheques

• Reduces the

administrative

burden and speed

of payments

• Simplifying the

purchasing of supplies

and services for the

public sector

• Increases control and

visibility of public sector

spending

• Instant access to

emergency funds for

victims of natural

disasters

• Specially designed to

waive ATM fees and

loading charges

Makes paying

public sector

employees

easier and

less expensive

A cost-effective

method of

distributing

welfare benefits

Speedy access

to disaster relief

funds for those

most in need

Making

Government

purchasing more

transparent

The perfect

replacement for

luncheon

vouchers

Prepaid Application – Public Sector


4. Bill Payment


February 2012

Bill Payment Aggregator

Page 17 March 7, 2012

Acquirer

(traditional

services)

Utility

Aggregator

OR

- Utility 1

- Utility 2

- Utility 3

- …

Invoice to user

- ATM

- POS

- Branch

- Wire transfer

- Online

Direct Debit - From card

- From current

account

Management of exceptions!

Preregistered

card details


5. Implementation


Bill Payments Implementation The main stages

Production

Set-up

and

Post-implementation

services

Card

Production

Network

interface

Validation

Connectivity MasterCard

programs

Franchise and

Licensing

The main stages of an implementation project with MasterCard are:

• Project opened with MasterCard

• The project is initiated and allocated within the implementation team at

MasterCard

• Required testing with MasterCard.

• Agreed live date with MasterCard

• MasterCard makes the required changes to its systems to allow

operations in production

• Move into production operations on the agreed date and MasterCard

monitors production traffic

Project management



Benefits Challenges

Consumer - World beyond cash

- Loyalty schemes (discounts, cash

back, …)

- International payment tool, e-

commerce, ...

Heavy education process

Issuers - Float

- LT customer loyalty

- New revenue streams

- Tapping into unbanked segment

- From ATM to POS

- New marketing channel

- Low card selling price

- Slow card usage take-off

- Consumer education

Acquirers - Economies of scale

- Deployment of acceptance network

- New revenue streams

- Lower merchant fees for utilities

- Potential fraud

Utilities - Faster collection

- Reduction of cash handling

- Simplified administrative work

Operating cost (merchant fee,

aggregator commission)

Central Bank - Transparency

- Solution for social benefits

- Wider acceptance

- Law enforcement

- Consumer & merchants education

6. Reducing cash in Kosovo

7. Next steps


February 2012

5. Resume

Documents

Towards a World beyond cash in Kosovo - bqk-kos.org · Towards a World beyond cash in Kosovo 19th September 2012 ... Key elements Page 4 February 2012 . 3. Salary cards, Social cards