3-Digit CVC/CVV Checkout for eCommerceThree payment service providers (PSPs) supporting online merchants based in Scandinavia and the Baltics are offering expedited checkout to consumers who register their credit and

Visa Fights Stolen Contactless Cards in EuropeVisa is taking action to prevent fraud on stolen credit and debit cards that are capable of initiating contactless payments. The problem exists in all countries where contactless card payments

U.S. Card Spending at MerchantsConsumer and commercial credit, debit, and prepaid general purpose cards issued in the United States generated $5.648 trillion in purchase volume at merchants in 2016, up 7.0% over

Latin America General Purpose Cards

Credit, debit, and prepaid global general purpose cards carrying American Express, Diners Club/Discover, Mastercard, and Visa brands issued in Latin America and the Caribbean (LA&C) generated $599.27 billion in purchase volume of goods and services at merchants in 2016, an increase of 14.0%.

Purchase transactions for goods and services reached 18.77 billion, up 11.1%. Combined Mastercard and Visa purchase transactions totaled 18.25 billion and accounted for 97.22% of the LA&C total.

BioCatch and Behavioral Biometrics

Account takeover fraud and new account fraud generate bogus credit card accounts that fuel the growing problems of payment card chargebacks, fraud losses at merchants and issuers, and

Payoneer Working Capital for eCommerce SellersSupply chain financing, factoring, trade finance, and merchant cash advances are various ways sellers gain access to working capital before buyers make their payments. Cross-border payment

U.S. Bank Upscale Visa CardU.S. Bank Altitude Reserve Visa Infinite Card, available from the 6th largest U.S. credit card issuer based on purchase volume in 2016, is a $400 annual fee card that aims to be competitive with

Vantiv Will Buy Paymetric B2B ProcessingThe top acquirer of merchant card transactions in the U.S. wants to buy a top U.S. processor of business-to-business card payments. Vantiv expects to complete the purchase of Paymetric this quarter.

‘15‘16 6.95

6.43

‘15‘16 42.14

37.99

‘15‘16 196.22

169.59

‘15‘16 353.96

311.58

Diners/Discover

Amex

Mastercard

Visa•

•

•

•

1%7%33%59%

Visa–64 bps

Mastercard+143 bps

Amex–88 bps

Diners/Disc.+8 bps

Latin America

© 2017 The Nilson Report

MARKET SHARESOF PURCHASE VOLUME

2016

PURCHASE VOLUME ($BIL.) 2015 VS. 2016

> see p. 5

> see p. 9

> see p. 6

> see p. 12

> see p. 6

> see p. 6

> see p. 5

> see p. 8

8 Latin American General Purpose Cards 2016 vs. 2015

9 Purchases at Merchants on U.S. General Purpose Cards

10 – 11 Purchase Volume at Merchants 2016 — General Purpose Credit, Debit, and Prepaid Cards Issued in the U.S.

2 – 4 Fast Facts 7 Verifone JV for

Gas Station Video

INSIDE CHARTS

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FOR 46 YEARS, THE LEADING PUBLICATION COVERING PAYMENT SYSTEMS WORLDWIDE APRIL 2017 / ISSUE 1108

© 2017 HSN Consultants, Inc. THE NILSON REPORT

Conferences & Seminars

2nd Emerging Asia FinTech & Agent Banking Summit 2017: May 29-30, 2017. The Parkroyal Hotel, Yangon, Myanmar. Estimated at-tendance: 100. Cost for the two-day conference ranges from $999 to $1,999. Subscribers to The Nilson Report will receive a 15% dis-count. (Use code TNR-JC.) To register, contact Jose Carpio at Magenta Global, (65) 6846-2366, jose@magenta-global.com.sg. View website at http://www.magentaglobalevents.com/2nd-emerging-asia-fintech-ecommerce-summit/.

Digital PayExpo 2017 (formerly called CBN Cashless CardExpo Africa 2017): June 13-15, 2017. The Eko Hotels & Suites, Victoria Island, Lagos, Nigeria. Estimated attendance: 5,000. There is no cost for the three-day conference. Contact Davida at Intermarc Consulting, 234 (803) 439-4845, davida@intermarc-ng.com. Register at www.cardatmandmobilexpo.com.

NBPCA’s Power of Prepaid 2017: June 21-23, 2017. The Mayflower Hotel, Washington, D.C. Estimated attendance: 150+. Cost for the three-day conference is $495 to $1,695 depending on registration category. Subscribers to The Nilson Report will receive a $200 discount. (Use code NILSON.) Contact Albert Britton at SourceMedia, (212) 803-8387, albert.britton@sourcemedia.com. Register at http://bit.ly/NILSONPoP.

i2c and BENTO FOR BUSINESS are partners on a prepaid debit card for owners and employees of small businesses. Bento provides expense management software products for small businesses. i2c’s Agile Processing payment platform delivers account processing as well as features including integrated alerts, card-level restrictions, and digital dashboards that provide visibility and real-time control over employee spending. Amir Wain is CEO at i2c, (650) 480-5282, awain@i2cinc.com, www.i2cinc.com. Farhan Ahmed is CEO at Bento for Business, (415) 887-2028, farhan@bentoforbusiness.com, www.bentoforbusiness.com.

TRANSACTIS, which offers BillerIQ, an electronic billing and payment product, has formed a strategic relationship with Walletron, provider of a SaaS platform that automates brands’ presence in mobile wallets like Apple Pay and Android Pay. Walletron’s moBills now lets businesses present notifications, bill statements, and a streamlined payment experience in smartphones without downloading an app. Joe Proto is CEO at Transactis, (212) 392-4731, jproto@transactis.com, www.transactis.com. Garrett Baird is CEO at Walletron, (862) 812-4624, garrett@walletron.com, www.walletron.com.

USA TECHNOLOGIES (USAT), a top provider of card and mobile payment transaction support in the vending, kiosk, parking, and other self-serve retail industries, will offer its customers Ingenico’s iUC285 PCI-certified, EMV and NFC/contactless unattended payment device. In turn, Ingenico will offer its customers USAT’s Quick Connect or ePort Connect platform with the iUC285. Michael Lawlor is Chief Services Officer at USA Technologies, (610) 989-0340 x111, mlawlor@usatech.com, www.usatech.com. Bruce Rasmussen is Director of Sales, Strategic Verticals at Ingenico, (630) 258-5482, bruce.rasmussen@ingenico.com, www.ingenico.us.

VERIFI, a provider of payment and risk management support to card-not-present merchants, has launched Order Insight, a platform that enables order details to be shared in near real time between cardholders, merchants, and issuers. Order Insight legitimizes a sale at the time of a billing inquiry or when a dispute arises, avoiding false fraud claims, unnecessary chargebacks, and lost sales and profits. Matthew Katz is CEO, (323) 655-5789, matthew.katz@ verifi.com, www.verifi.com.

TRANSACTION NETWORK SERVICES’ Global Wireless Access product offers processors, ISOs, and device manufacturers in the U.S. and Canada a PCI-DSS certified infrastructure to deliver a multicarrier, roaming SIM service optimized for wireless payment devices. Lisa Shipley is EVP and Managing Director, (703) 453-8300, lshipley@tnsi.com, www.tnsi.com.

U.S. DISTRICT COURT OF NORTH DAKOTA on March 17 granted payment processor Intercept’s motion to dismiss a complaint by the Consumer Financial Protection Bureau. The complaint alleged that Intercept knew, or should have known, that transactions it was processing were fraudulent. The complaint was filed in June 2016.

ZELLE NETWORK financial institutions processed 170 million person-to-person payments totaling $55 billion in 2016. Early Warning Services operates the Zelle Network, which is built on the foundation of the clearXchange Network. Members include 21 U.S. banks and credit unions, reaching an estimated 85 million consumers. “Send Money with Zelle” features will be live in bank apps in mid-2017. Lou Anne Alexander is Group President, Payments at Early Warning Services, (480) 656-6880, louanne.alexander@earlywarning.com, www.earlywarning.com.

FAST

FACT

S

Order Back Issues / Preview Upcoming Conferences / View Newsletter ArchiveVISIT US ONLINE AT WWW.NILSONREPORT.COM1

APRIL 2017 ISSUE 1108

No paid advertising.

No sponsored content of any kind. Ever.

It is never permissible for subscribers to forward or print this issue. Doing so violates copyright laws.

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CO-OP FINANCIAL SERVICES is the nation’s largest credit union service organization based on the number of credit unions (3,500 institutions) and members (60 million account holders) served. Its 1,200 shareholding institu-tions are eligible for dividends (patronage). For fiscal year 2016 the total patronage pool was $26.1 million. Todd Clark is CEO, (909) 948-2500, todd.clark@co-opfs.org, www.co-opfs.org.

APRIVA has received EMV certifications for Verifone terminals connecting through the Apriva gateway to First Data’s Omaha platform as well as quick chip certification to the TSYS Acquiring Solutions platform. Certifications include the wireless VX680 and dial/IP VX520 models, and covers Visa, Mastercard, American Express, Discover, and U.S. Common Debit transactions. Stacey Finley Tappin is SVP of Sales and Marketing at Apriva, (480) 421-1210, stappin@apriva.com, www.apriva.com.

ROSEN HOTELS, which suffered a data breach over an 18-month period from late 2014 through 2016, has been fined $1 million by both Visa and Mastercard, and another $129,000 by American Express. The hotel’s insurance company, St. Paul Fire & Marine, refuses to reimburse for those fines and other related costs, saying that the hotel did not have a commercial liability policy that covered a data breach. It claims a general liability policy does not provide that protection. St. Paul Fire & Marine has asked a federal court in Orlando, Florida, for a ruling.

CARDCONNECT, a payment processing and technology company with 67,000 customers, has formed a partnership with Billtrust, provider of pay-ment cycle management services. The partners want to improve efficiency and add security to the invoice-to-cash process for their shared customers. Mitchell Rose is SVP Partner Solutions at Billtrust, (609) 235-1010, mrose@billtrust.com, www.billtrust.com. Mark Passifione is SVP of Enterprise Sales at CardConnect, (484) 654-9662, mpassifione@cardconnect.com, www.cardconnect.com.

CORRECTION: In issue #1107 we misspelled Mathew Kardell’s name. He can be reached at (909) 948-2500, matt.kardell@co-opfs.org.

Q-CARD can provide Level 1 contactless testing of American Express payment products in addition to Amex-Enabled accreditation for physical card testing. Jeff Myers is Director of Sales and Marketing at Q-Card, (570) 286-7447, j.myers@brush-qcard.com, www.brushindustries.com.

U.S. BANK’S virtual payment products will be offered to travel agency customers of Amadeus, a provider of technology for the global travel industry. Amadeus plans to launch a Mastercard-branded Amadeus B2B Wallet in the U.S. Nicole Tackett is Head of Strategy, Specialty Verticals and Partnerships at U.S. Bank Payment Systems, (612) 436-6472, nicole.tackett@usbank.com, www.usbpayment.com.

CATHAY PACIFIC and SYNCHRONY FINANCIAL are offering a Visa Signature credit card to U.S. travelers. The airline operates more than 100 flights each week from 6 U.S. cities, including Boston, Chicago, Los Angeles, New York, and San Francisco. Eric Odone is VP Sales and Marketing, Americas at Cathay Pacific, (415) 982-3242, eric_odone@cathaypacific.com, www.cathaypacific.com. Tom Quindlen is EVP at Synchrony, (203) 585-6244, tom.quindlen@synchronyfinancial.com, www.synchronyfinancial.com.

THE EUROPEAN COMMISSION has given conditional approval to the acquisition of France-based Morpho by private equity firm Advent Interna-tional. Morpho and Advent have agreed to divest Morpho’s CPS subsidiary in France, which produces Cartes Bancaires (CB) payment cards. The buyer must agree to operate a CB-certified card personalization plant. Advent already owns Oberthur, which is also a France-based payment card manufacturer.

INVAPAY, a U.K.-based provider of a PCI DSS-certified payment processing platform, has received an Australian Financial Services license. The company focuses on business-to-business transactions. Sarah Vasili is Director of Operations at Invapay, 44 (199) 250-0589, sarah.vasili@invapay.com, www.invapay.com.

ENFUCE FINANCIAL SERVICES based in Finland has signed a PRIME software license and services agreement with TSYS. It will use PRIME to handle issuing and acquiring for its businesses in the Nordic countries. Enfuce will operate PRIME in the Amazon Web Services cloud environment. Monika Liikamaa is CEO at Enfuce Financial Services, 358 (50) 306-5213, monika.liikamaa@enfuce.com, www.enfuce.com. Rene Kruse is COO and Group Executive for PRIME Business Solutions at TSYS, 357 (22) 8827-255725, renekruse@tsys.com, www.tsys.com.

© HSN Consultants, Inc. 2015 THE NILSON REPORT 2APRIL 2017 / ISSUE 1108 / THE NILSON REPORT

in

Asia-Pacific, United States, Europe, Latin America, Middle East-Africa, and Canada

1,073 Card Issuersfrom 114 countries in all world regions

282 Merchant Acquirersfrom 78 countries in all world regions

Figures include cardsincirculationandspending for

credit & debit

Order Todaywww.nilsonreport.com/specialreport

© 2017 HSN Consultants, Inc. THE NILSON REPORT 3APRIL 2017 / ISSUE 1108 / THE NILSON REPORT

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DIGITAL BANKING SUMMIT 2017

Three-Day ConferenceJune 12-14, 2017The Hilton Austin, Austin, Texas

Topics include: digital dominance: the keys to addictive apps, banks & VCS partner on fintech strategy, disruption through digital innovation, best practices for making your website stand out, practical uses of non-bot artificial intelligence, how biometric selfies are enabling the cashless economy, why fintech and banks need each other for best-in-class mobile payment experiences, and open banking: the future and reality of open data. Speakers represent: Citi, TD Bank, Bank of the West, Regions, RBC, Personetics, Fifth Third, HSBC, SunTrust Bank, American Express, Mastercard, Wells Fargo, Alipay, Banco do Brasil, BBVA Compass, JPMorgan Chase, Bank of America, Fidor, US Bank, and more. Cost is $1,495. (Use code NILSON300.) Contact Sasha Burgansky at Source Media, (212) 803-6097, alexandra.burgansky@sourcemedia.com. Register at www.americanbanker.com/conferences/digitalbanking/.

Featured Conference

Subscribers to The Nilson Report will receive a $300 discount. $300

SAVE

CORREOS, Spain’s state-owned postal company, offers merchants in the country an ecommerce platform called Comandia. It also provides payment acceptance for online purchases at its more than 2,300 post offices and about 9,000 ecommerce and digital service point outlets. Paysafe’s Skrill Quick CheckOut service, which includes the Skrill and Neteller digital wallets and Rapid Transfer instant bank transfer service, have become available to Comandia merchants. Lorenzo Pellegrino is CEO at Paysafe Digital Wallets, (305) 902-3461, lorenzo.pellegrino@paysafe.com, www.paysafe.com. Carlos Millán Ruiz is Commercial & Marketing Director at Correos, 34 (90) 219-7197, tuopinion@correos.com, www.correos.com.

SHOPIFY, a cloud-based, multichannel commerce platform for small and medium-sized businesses, offers a free EMV-compliant chip and mag-stripe card reader for in-person selling in the U.S. The card reader connects with a seller’s Shopify store, eliminating the need for multiple systems. Craig Miller is Chief Product Officer, (416) 238-6705, craig.miller@shopify.com, www.shopify.com.

HANDPOINT, a provider of card terminals and remote terminal management on a platform-as-a-service (PaaS) basis, now offers ISOs, ISVs, and VARs an Analytics Dashboard. It gives real-time details on the kind of transactions, the location of the transactions, transaction volumes, and other data. Jody Muehlegger is COO, (617) 803-7204, jmuehlegger@handpoint.com, www.handpoint.com.

PAYFIRMA’S PayHZ payment platform for in-store, online, and on mobile device credit and debit card acceptance will be white labeled for CWB Financial Group in Canada. Stephen Murphy is EVP, Banking at CWB Financial Group, (780) 423-8888, www.cwbank.com. Michael Gokturk is CEO at Payfirma, (604) 200-2245, michael.gokturk@payfirma.com, www.payfirma.com.

GLOBAL PAYMENTS is offering large and midsized businesses in Canada mobile optimization and digital wallet support, consolidated payment accep-tance (online, phone, email, mobile), batch and recurring payment processing, fraud tools, and analytics through its Realex ecommerce technology. Jeffrey Burke is President, Worldwide Ecommerce at Global Payments, (650) 396-7378, jeffrey.burke@globalpay.com, www.globalpaymentsinc.com.

SEAMLESS DISTRIBUTION SYSTEMS (SDS) is one of the world’s top suppliers of digital distribution systems for mobile airtime. It handles more than 5.3 billion transactions annually through 675,000 active sales outlets in 28 markets. The company’s newest service is airtime credit for resellers of mobile airtime. The service enables airtime top-up even when resellers do not have adequate stock of prepaid airtime available. SDS bears all the credit risk and associated costs, and acts as a virtual distributor for the mobile network operator. Tommy Eriksson is CEO, 46 (70) 568-4786, tommy.eriksson@ seamless.se, www.seamless.se.

GHL SYSTEMS, a payment service provider to merchants in Malaysia, the Philippines, Thailand, Indonesia, and Australia, has received an acquiring license from Mastercard for Malaysia. The agreement will simplify the online registration process for the approximately 500,000 Tier 4 merchants in the country. Danny Leong is CEO at GHL, (603) 6286-3388, dannyleong@ghl.com, www.ghl.com. Perry Ong is Country Manager, Malaysia at Mastercard, 60 (3) 6209-9222, perry.ong@mastercard.com, www.mastercard.com.

INGENICO JAPAN is the new name of Ingenico Group’s Lyudia subsidiary, which provides a full range of payment terminals and services, including soft-ware development, certification, logistics, and maintenance. John Tait is SVP, Asia-Pacific, 65 (2) 6345-7022, john.tait@ingenico.com, www.ingenico.com.

Peg Johnson, formerly at First Data, has been appointed Executive Vice President of Global Client Success at i2c, (650) 481-0170, pjohnson@i2cinc.com. Kristjan Gjura has been appointed Vice President of Business Development at Chargebacks911, 49 (17) 3202-0001, k.gjura@chargebacks911.com. Ken Hayes has been appointed Senior Vice President of Strategic Solutions at Strategic Resource Management (SRM), (901) 681-0204, khayes@srmcorp.com. William Zielke has been appointed Chief Marketing Officer at INGO Money, (678) 592-7106, bill.zielke@ingomoney.com. Krista Tedder, formerly at Mastercard, has been appointed Vice President of Product Strategy at Verifi, (323) 655-5789, krista.tedder@verifi.com. Tim Thurman has been appointed Chief Digital Officer at Paysafe, (514) 380 2778, tim.thurman@paysafe.com.

Management Changes

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American Express Platinum, Chase Sapphire Reserve, and Citi Prestige products. It will be available initially only to existing U.S. Bank customers.

New cardholders will receive 50,000 bonus points if they spend $4,500 within 90 days of signing up. When redeemed for travel credits they are worth $750. On top of that, cardholders receive a $325 annual travel credit, which is redeemed

when they make $325 in purchases for air travel, hotels, car rentals, taxis and limousines, trains, and cruises.

The U.S. Bank Altitude Reserve Visa Infinite card will reward triple points on all purchases cardholders make with their mobile wallet including Apple Pay, Samsung Pay, Android Pay, and Microsoft Wallet. Points can be redeemed instantly for most purchases

when cardholders use U.S. Bank’s Real-time Mobile Rewards Redemption service.

Cardholders earn 3 points for every $1 dollar spent on eligible travel-related purchases. They can redeem 30,000 points for $450 in airfare, hotel stays, and car rentals. The card provides a complimentary 12-month Priority Pass Select membership, which provides access to more than 1,000 airport lounges. There is a $100 statement credit reimbursement when cardholders pay application fees for the TSA Pre or Global Entry airline programs using the card.

Upscale features include redemption of points for NetJets private aviation travel, discounts up to 30% for Silvercar (Audi A4) car rentals, and 15% discounts for GroundLink Black Car limousine service.John Steward is President, Retail Payment Solutions at

U.S. Bancorp in Denver, Colorado, (303) 809-2199,

john.steward@usbank.com, www.usbank.com.

Prior issues: 1105, 1094

Terms were not disclosed. Paymetric has been owned by private equity firm Francisco

Partners since 2013. Vantiv shares trade on the New York Stock Exchange.

Integrating card payments into the work flow of enterprise resource planning (ERP) software and customer relationship management (CRM) software has been the focus of Paymetric since 1998. It facilitates more than 100 million transactions annually valued in the $40-billion range. Those transactions originate over the counter, from a mobile device, at a website, kiosk, or call center. Integration with SAP, Oracle, Salesforce, Hybris, AS400, and other ERP and CRM software is

handled by Paymetric’s XiPay On-Demand software.

Most transactions are also tokenized before moving into a client’s ERP and general ledger. Tokenization is handled by Paymetric’s PCI-compliant XiIntercept point-to-point encryption software.

Earlier this year the company launched Paymetric BillPay, which provides cloud-based management of electronic invoice presentment and payments. It works with any ERP or invoice database.

Paymetric operates on a software-as-a-service model. It charges customers a fixed monthly subscription fee that varies based on the dollar value of payments handled. Its B2B network connects more than eight million buyers and sellers.

To minimize interchange fee payments Paymetric can provide three levels of processing support. Value-added features on its platform include fraud management, end-to-end reconciliation, and automatically clearing open invoices.

Paymetric maintains partnerships with Accertify, Adyen, American Express,

Bank of America, Cardinal Commerce, Chase, Cielo, Citibank, CyberSource, Digital River, Elavon, First Data, Global Payments, Vantiv, Worldpay, and other acquiring processors and payment service providers. Asif Ramji is CEO at Paymetric Inc.

in Atlanta, Georgia, (404) 247-3413,

aramji@paymetric.com,

www.paymetric.com.

Integrating card payments into the work flow of ERP & CRM software.

U.S. Bank Upscale Visa Card from page 1...

Vantiv Will Buy Paymetric B2B Processing from page 1

© 2017 HSN Consultants, Inc. THE NILSON REPORT 5APRIL 2017 / ISSUE 1108 / THE NILSON REPORT

processor Payoneer has launched a service it calls Early Payments to give working capital to mostly smaller ecommerce merchants.

Typical accounts receivable terms call for payment to be received within 30 to 60

days. Sellers using the Early Payments service will receive up to 80% of their accounts receivable at least a month earlier. Payoneer lets merchants select exactly how much to receive early.

Payoneer has knowledge of both buyers and sellers within

its core mass payout services business, which is API-based. Every month it sees millions of

transactions between buyers and sellers in 200 markets worldwide. Leveraging that information will enable low-cost acquisition of customers for Early Payments. It also helps Payoneer create

proprietary underwriting models for the working capital service.

Investors will hold most Early Payments receivables.

Payoneer will earn revenue from a discount paid by

the seller. Technology including digital

marketplaces are creating new opportunities for smaller businesses to engage in global ecommerce. Early Payments has launched on wish.com, a social ecommerce marketplace. Chinese sellers on that platform are the first to be offered Early Payments. Scott Galit is CEO at Payoneer in

New York, (646) 308-1300, scott@

payoneer.com, www.payoneer.com.

debit card account details. Dibs, Netaxept, and Paytrail are the PSPs. They are owned by Nets, the largest merchant acquirer in the region.

Cardholders are prompted to store their account data when they check out at 26,000 mostly small

and midsized web merchants connected to the PSPs. Large merchants are also expected to participate. Once

cardholders opt-in to have their card details stored by Nets, they can check out at any participating merchant using only the 3-digit CVC/CVV security code found on the back of their credit or debit cards. Nets recognizes returning computers, tablets, and smartphones, and it prompts participating cardholders for their 3-digit code.

For cardholders, 3-digit checkout at these merchants compares to other merchants where they must enter their 16-digit account number, the 4 digits

that identify the card’s expiration date, and the 3-digit CVC/CVV. By expediting the checkout process, Nets reduces the risk of cardholders abandoning their purchases, particularly from the growing number of transactions initiated by a mobile device.

The expedited checkout service, which was launched in November 2015, now has more than 1.3 million participating cardholders, and Nets is adding more than 90,000 cardholders a week. Those cardholders can register more than one account. Data is stored at Nets, which is also a cardholder account processor for card issuers in the region.

Asger Hattel is Group Executive VP at Nets in

Copenhagen, Denmark, 45 (44) 897-422,

asger.hattel@nets.eu, www.nets.eu.

consumer dissatisfaction with efforts to secure online and mobile payments. Feeding account

takeover and new account fraud is the huge amount of stolen personal information available

for sale on the dark web. Legacy fraud detection systems have value in fighting account takeover,

Sellers will receive up to 80% of their accounts receivable.

Nets is adding more than 90,000 cardholders a week.

3-Digit CVC/CVV Checkout for eCommerce from page 1...

Payoneer Working Capital for eCommerce Sellers from page 1...

BioCatch and Behavioral Biometrics from page 1...

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Verifone, the largest POS terminal supplier in the U.S. market, dominates hardware (terminals and site controllers) and software for card payments at U.S. gas stations. It was also a pioneer in bringing video advertising to self-service pumps. Verifone will

combine assets and operations of its Pump Media division with those of Gas Station TV (GSTV), the largest provider of video

programs for self-service pumps. The 50%-50% joint venture will operate under the GSTV brand. Advertisers will have access to 75 million unique viewers every month. This group includes 1 in

3 people who are 18 years and older including nearly 31 million millennials.

GSTV will operate at more than 18,000 locations in all 50 states. That is more U.S. locations than either Starbucks or McDonald’s.

It can be viewed at Speedway, Circle K, Tesoro, Sunoco, BP, Chevron, ConocoPhillips, Gulf, Arco, Marathon, ExxonMobil, Shell, and Murphy USA stations.David Leider is CEO at Gas Station

TV in Detroit, Michigan,

(248) 581-3000, david@gstv.com,

www.gstv.com.

Joe Mach is President at Verifone

North America in Atlanta, Georgia,

(651) 308-9755, joe_m5@verifone.

com, www.verifone.com.

new account, and digital transaction fraud, but not without unwanted side effects. To fight the 2% to 3% of transactions that are actual fraud, up to 30% of transactions can be denied or designated

for additional review. Increasingly, lenders are turning to behavioral biometrics to fight these fraud problems. Behavioral biometric systems are effective, and importantly, they do not create friction with consumers.

BioCatch offers behavioral biometrics capable of distinguishing between an honest individual and a fraudster when both input valid information into an application for a new account.

Criminals behave differently. They are overly familiar with the data entry process and tend to move too quickly through it. This is particularly evident when fraudsters use computer programs. They give themselves away with how they handle function keys and when they take keyboard shortcuts.

Often they can be identified by their lack of familiarity with the stolen data, which presents itself in anomalies in data entry patterns.

In addition to analyzing these behavioral and cognitive actions, BioCatch also introduces invisible challenges to applicants to require engagement with

the keyboard and cursor in unexpected ways. That behavior is also analyzed.

BioCatch is headquartered in Tel Aviv, Israel, and has direct customer relationships with large banks and ecommerce providers in several countries in Latin America and Europe. It has partners in the U.S. including Early Warning, Nuance, and Experian. Customers pay on a per-transaction/session basis or per-user basis, which depends on the use case. BioCatch can also be used to protect against account takeover fraud.

Experian recently added BioCatch to its CrossCore open fraud fighting platform, a collection of intelligence data products and data sources available globally on a software-as-a-service basis, along with work flow and strategy design capabilities.

Data products include Experian-owned technology as well as technologies available from select third parties such as BioCatch. Products can be bundled for users who access CrossCore through a single API. David Britton is VP Global Fraud and Identity Industry

Solutions at Experian in Scottsdale, Arizona, (480) 776-

5502, david.britton@experian.com, www.experian.com.

Frances Zelazny is VP Marketing at BioCatch in New

York, (917) 862-1373, frances.zelazny@biocatch.com,

www.biocatch.com.

... 1 in 3 people 18 years and older and nearly 31 million millennials.

Criminals give themselves away with how they handle function keys.

Verifone JV for Gas Station Video

© 2017 HSN Consultants, Inc. THE NILSON REPORT 7APRIL 2017 / ISSUE 1108 / THE NILSON REPORT

The other 2.78% or 0.48 billion purchase transactions were generated by American Express and Diners Club/Discover.

Visa’s market share of purchase transactions was 62.88%, down 62 basis points from 63.50% in 2015. Mastercard’s market share was 34.34%, an increase of 70 basis points from 33.64%.

American Express’s share of purchase transactions at 2.36% was down 5 basis points from 2.42%. Diners Club/Discover’s share at 0.42% was down 2 basis points from 0.44%.

Visa’s market share of purchase volume at 59.07% slipped 64 basis points from the prior year. The change in market share for purchase volume is based on 2015’s reported purchase volume. It was not adjusted to accommodate local currency percent change.

Some countries in Latin America have significant swings in inflation and currency devaluation from year to year. In addition, some countries include mostly Visa issuers and others mostly Mastercard issuers. This affects the local percent change.

Mastercard’s share of purchase volume grew 143 basis points to 32.74% in 2016. American Express’s share at 7.03% dropped 88 basis points. Diners Club/Discover’s share was 1.16%, up 8 basis points.

Total volume, which is the combination of purchase volume at merchants and cash advanced against lines of credit or withdrawn from funds on deposit, reached $1.291 trillion in 2016, up 10.9%.

Credit and debit cash volume combined reached $692.13 billion, equal to 53.60% of total volume in LA&C, down from 54.86% in 2015.

Visa’s total volume was 61.25% cash, which was down from 62.57%. Mastercard’s cash volume was 39.63% of its total volume, down from 40.24%. Cash equaled 7.00% of total American Express volume and 8.42% of total Diners Club/Discover volume.

American Express, Diners/Discover, Mastercard, and Visa cards in circulation reached 638.1 million at the end of 2016, up 3.5% over 2015. Visa and Mastercard cards combined totaled 623.2 million and accounted for 97.67% of all general purpose cards in LA&C. Amex and Diners/Discover cards totaled 14.9 million and accounted for the region’s remaining 2.33%.

The average amount of a general purpose card purchase transaction was $31.92, up 2.6% from 2015. Visa had the largest percentage increase, up 3.3% to $29.98.

Purchase volume per card averaged $939, up 10.1%. Mastercard had the largest percentage increase, up 10.8% to $1,160. Visa’s purchase volume per card was $780, up 10.1%, American Express’s was $3,292, up 7.4%, and Diners/Discover was $3,316, up 5.2%.

Prior issues: 1086, 1063, 1040, 1020, 995, 972, 952, 927,

902, 883, 861

Mastercard’s share of purchase volume grew 143 bps to 32.74%.

Volume (bil.) Transactions (mil.) Cards Brand Total Chg. Purchases Chg. Cash Chg. Total Chg. Purchases Chg. (mil.) Chg.

Visa $913.45 9.7% $353.96 13.6% $559.49 7.4% 16,389.0 8.3% 11,805.0 10.0% 454.0 3.2%

Mastercard $325.05 14.5% $196.22 15.7% $128.83 12.8% 7,451.0 12.8% 6,447.0 13.4% 169.2 4.4%

Amer. Express $45.31 10.4% $42.14 10.9% $3.17 4.0% 477.8 8.0% 443.4 8.6% 12.8 3.2%

Diners/Discover $7.59 7.4% $6.95 8.0% $0.64 0.9% 86.0 4.9% 78.9 5.2% 2.1 2.7%

Totals $1,291.40 10.9% $599.27 14.0% $692.13 8.3% 24,403.8 9.6% 18,774.3 11.1% 638.1 3.5%

Includes all general purpose consumer and commercial credit, debit, and prepaid cards. Currency fi gures are in U.S. dollars. Change fi gures are based on local currency. Some prior year fi gures have been restated. Visa includes Electron but excludes Plus. Mastercard excludes Maestro & Cirrus. © 2017 The Nilson Report

Latin America General Purpose Cards 2016 vs. 2015

Visa 62.9% –62

Mastercard 34.3% +70

Amex 2.4% –5

Diners/Disc. 0.4% –2

Chg. in Brand Share Basis Pts.

Market Shares of PurchaseTransactions by Brand

18.77bil.

© 2017 The Nilson Report

Latin America General Purpose Cards from page 1

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2015. American Express, Discover, Mastercard, and Visa credit cards generated a combined $3.059 trillion, up 8.0%.

Debit and prepaid cards with those brands as well as the brands of EFT networks Star, Pulse, Nyce, Interlink, Accel, and others combined to generate $2.589 trillion in purchase volume, up 5.8%.Credit cards increased their market share of purchase volume over debit and prepaid cards to 54.16%, up from 53.64% in 2015. It was the fifth year in a row in which credit cards gained market share.

Among the 10 largest issuers 6 gained share. JPMorgan Chase combined consumer and commercial credit, debit (including EFT network), and prepaid cards generated $861.30 billion in purchase volume last year, remaining the top issuer, a position it has held since 2008. Its market share increased by 31 basis points to 15.25%.

Wells Fargo, the 4th largest issuer, had a share increase of 3 basis points to 7.53%. Citibank, the 5th largest issuer, had a share increase of 76 basis points to 5.62%, while Capital One, the 6th largest issuer, had a share increase of 27 basis points to 4.79%. U.S. Bank, the 7th largest, increased 11 basis points to 3.26%, and PNC Bank, the 9th largest, increased 3 basis points to 1.68%.

The other 4 issuers in the top 10 had market share declines. American Express fell 114 basis points, even as it remained the 2nd largest issuer overall with a

11.94% share of the market. Bank of America, the 3rd largest, fell 32 basis points to 10.80%. Discover, the 8th largest, was down 9 basis

points to 2.15%, and USAA, the 10th largest, was down 1 basis point to 1.60%.

Among issuers ranked 11th through 20th, ICBA Bancard moved up 3 spots to 14th, and The Bancorp Bank moved up 1 spot to 17th.

BofI Federal Bank moved up 39 spots to 48th from 87th.

Of the top 100 issuers, 35 had double-digit increases in card purchase volume.

Those with the largest percentage increases were due to acquisitions: BofI Federal Bank included the H&R Block prepaid portfolio, KeyBank included the acquisition of First Niagara, and

Huntington National included the acquisition of FirstMerit Bank.

Others with large double-digit increases included Webster Bank, due to its prepaid card portfolio nearly doubling, and Alliance Data, Credit One Bank, and Merrick Bank, which only issue credit cards.

American Express remained the largest issuer based on credit card purchase volume.

Wells Fargo overtook Bank of America to become the largest issuer based on combined debit and prepaid purchase volume. It remained the largest issuer based on signature debit purchase volume, and overtook Bank of America to become the largest based on PIN debit purchase volume.

The Bancorp Bank remained the largest based on prepaid purchase volume.

Credit card market share grew to 54.16%, up from 53.64% in 2015.

‘11 ‘13‘12 ‘14 ‘15 ‘16 ‘11 ‘13‘12 ‘14 ‘15 ‘16‘11 ‘13‘12 ‘14 ‘15 ‘16

Prepaid

5%

Debit 41%

Credit 54%

3,000

2,500

2,000

1,500

1,000

500

Purchases at Merchantson U.S. General Purpose Cards

MARKET SHARES IN 2016

VOLUME ($BIL) 2011–2016

© 2017 The Nilson Report

U.S. Card Spending at Merchants from page 1...

© 2017 HSN Consultants, Inc. THE NILSON REPORT 9APRIL 2017 / ISSUE 1108 / THE NILSON REPORT

Rank TOTAL Credit Signature Debit PIN Debit Prepaid Issuer 2016 2015 (bil.) Chg. 2016 2015 (bil.) 2016 2015 (bil.) 2016 2015 (bil.) 2016 2015 (bil.)

JPMorgan Chase 1 1 $861.30 9.2% 2 2 $588.83 3 3 $158.24 3 3 $98.35 5 5 $15.87 American Express 1 2 2 $674.67 –2.3% 1 1 $674.67 — — — — — — — — — Bank of America 3 3 $610.22 3.9% 3 3 $311.29 2 2 $179.43 2 1 $112.25 6 6 $7.25 Wells Fargo 4 4 $425.50 7.5% 8 7 $118.68 1 1 $188.46 1 2 $116.32 12 11 $2.05 Citibank 5 5 $317.22 23.7% 4 4 $288.57 15 14 $17.34 13 13 $8.01 11 12 $3.31 Capital One 6 6 $270.74 13.4% 5 5 $240.85 9 9 $21.94 14 14 $7.95 — — — U.S. Bank 7 7 $184.18 10.9% 6 8 $122.45 5 5 $37.71 6 7 $19.09 8 8 $4.94 Discover 1 8 8 $121.42 2.5% 7 6 $121.42 — — — — — — — — — PNC Bank 9 9 $94.76 8.7% 12 12 $31.05 4 4 $41.65 5 4 $20.90 15 16 $1.16 USAA 10 10 $90.39 6.1% 11 11 $41.50 6 6 $30.17 7 6 $18.64 28 26 $0.09 Barclays Bank 11 11 $70.51 7.8% 9 9 $70.51 — — — — — — — — — TD Bank 12 12 $55.21 17.1% 17 18 $16.16 7 7 $25.66 10 9 $13.18 24 24 $0.21 Navy FCU 13 13 $51.29 16.5% 16 17 $16.44 8 10 $22.92 12 12 $11.79 25 25 $0.14 ICBA Bancard 2 14 17 $47.70 18.6% 27 25 $6.20 14 15 $18.19 4 5 $23.31 — — — Synchrony Financial 15 14 $47.45 12.4% 10 10 $47.45 — — — — — — — — — Regions Bank 16 16 $44.76 9.9% 25 26 $8.02 11 11 $21.46 8 8 $14.69 19 20 $0.59 The Bancorp Bank 17 18 $43.93 9.5% 179 172 $0.11 21 19 $6.88 89 108 $0.40 1 1 $36.55 SunTrust Bank 18 15 $43.62 4.5% 19 20 $11.32 13 12 $18.53 9 10 $13.41 22 21 $0.35 BB&T 19 19 $42.71 12.6% 22 24 $9.06 12 13 $20.81 11 11 $12.45 21 22 $0.39 Fifth Third 20 20 $40.11 7.5% 21 19 $10.95 10 8 $21.94 15 15 $6.61 18 19 $0.62 MetaBank 21 21 $32.01 14.4% — — — 209 211 $0.02 177 181 $0.01 2 2 $31.97 Comdata 22 22 $28.36 6.4% 13 13 $27.12 — — — — — — 14 15 $1.24 Citizens Bank 23 23 $26.09 4.3% 29 29 $5.08 16 16 $16.99 19 18 $4.02 — — — Comerica Bank 24 24 $25.64 10.8% 32 35 $3.62 36 38 $2.64 43 43 $1.41 3 3 $17.97 Cabela’s WFB 25 25 $21.91 5.5% 14 14 $21.91 — — — — — — — — — Wex 26 26 $20.29 16.3% 15 15 $20.29 — — — — — — — — — KeyBank 3 27 32 $20.01 47.3% 36 39 $2.95 17 18 $11.25 16 19 $5.34 20 28 $0.47 First Nat’l Nebraska 28 27 $18.43 7.9% 18 16 $15.59 49 51 $1.96 53 58 $0.88 — — — Green Dot 29 28 $16.34 1.8% — — — — — — — — — 4 4 $16.34 BMO Harris 30 29 $15.92 0.0% 24 23 $8.24 25 25 $4.81 24 25 $2.86 36 36 $0.01 M&T Bank 31 30 $15.54 6.0% 37 36 $2.95 18 17 $10.19 27 28 $2.40 — — — Commerce Bank 32 31 $14.25 3.3% 23 22 $8.68 32 32 $3.36 30 27 $2.11 26 27 $0.11 State Employ. CU N.C. 33 34 $13.78 10.0% 52 53 $1.07 20 21 $8.03 18 17 $4.67 35 35 $0.02 BBVA Compass 34 33 $13.19 1.2% 45 46 $1.60 22 22 $6.60 17 16 $4.93 29 32 $0.07 Huntington Nat’l 4 35 38 $12.72 41.0% 46 57 $1.48 19 20 $8.90 28 44 $2.34 54 — <$0.01 Alliance Data 36 39 $11.16 28.6% 20 21 $11.16 — — — — — — — — — Bank of the West 37 35 $10.20 0.6% 41 42 $2.00 26 26 $4.65 20 20 $3.56 — — — Zions Bancorporation 38 37 $9.82 5.0% 34 34 $3.26 28 28 $3.85 25 24 $2.69 39 40 $0.01 UMB Bank 39 36 $9.72 3.3% 30 31 $4.44 65 66 $1.25 83 85 $0.45 10 9 $3.57 BECU 40 41 $9.01 8.7% 39 41 $2.15 30 33 $3.59 22 21 $3.27 68 69 <$0.01 Arvest Bank 41 40 $8.99 6.6% 48 50 $1.15 27 27 $4.45 21 22 $3.33 30 29 $0.06 First Citizens 42 43 $8.15 11.9% 42 43 $1.96 29 29 $3.62 26 31 $2.57 42 42 <$0.01 TCF Financial 43 42 $7.48 0.8% — — — 23 23 $6.29 48 46 $1.19 — — — HSBC Bank 44 46 $7.47 18.3% 28 30 $5.58 62 58 $1.33 73 67 $0.56 — — — Santander Bank 45 44 $7.38 9.3% 65 69 $0.60 24 24 $5.43 45 50 $1.34 — — — Union Bank 46 45 $6.55 –1.3% — — — 31 30 $3.58 23 23 $2.98 — — — Credit One 47 49 $6.36 25.9% 26 28 $6.36 — — — — — — — — — BofI Federal 48 87 $5.65 157.7% 230 232 <$0.01 207 209 $0.03 174 176 $0.02 7 13 $5.60 SchoolsFirst FCU 49 50 $5.39 12.4% 54 54 $1.04 47 48 $2.38 33 33 $1.98 55 60 <$0.01 America First CU 50 52 $5.38 14.2% 47 49 $1.20 38 46 $2.61 37 35 $1.57 — — —

Rank TOTAL Credit Signature Debit PIN Debit Prepaid Issuer 2016 2015 (bil.) Chg. 2016 2015 (bil.) 2016 2015 (bil.) 2016 2015 (bil.) 2016 2015 (bil.)

Golden 1 CU 51 51 $5.36 12.8% 55 56 $0.95 46 50 $2.39 32 30 $2.01 77 79 <$0.01 Suncoast CU 52 56 $5.35 21.8% 57 59 $0.78 34 36 $2.86 36 49 $1.71 — — — First Tennessee 53 54 $5.28 15.6% 50 48 $1.11 44 49 $2.41 35 36 $1.75 40 45 <$0.01 VyStar CU 54 57 $4.74 8.2% 63 64 $0.64 37 40 $2.62 42 42 $1.48 48 48 <$0.01 People’s United 55 55 $4.63 1.8% 132 154 $0.18 43 39 $2.42 31 29 $2.03 — — — MB Financial 56 66 $4.60 19.3% 194 206 $0.09 118 114 $0.52 126 154 $0.21 9 10 $3.78 Randolph Brooks FCU 57 60 $4.51 7.8% 64 63 $0.62 45 47 $2.40 41 39 $1.49 51 52 <$0.01 Hancock/Whitney Bank 58 59 $4.49 4.8% 58 61 $0.74 40 41 $2.46 46 45 $1.29 41 41 <$0.01 BancorpSouth 59 58 $4.40 2.1% 81 82 $0.41 52 54 $1.74 29 26 $2.25 — — — Frost Bank 60 62 $4.36 6.2% — — — 41 43 $2.46 34 32 $1.90 — — — Pentagon FCU 61 65 $4.30 7.5% 31 33 $3.77 119 122 $0.52 179 183 <$0.01 — — — FirstBank (Colo.) 62 61 $4.26 1.9% 68 70 $0.58 33 34 $3.22 82 86 $0.47 — — — Webster Bank 63 74 $4.08 28.6% — — — 63 65 $1.28 51 52 $0.99 13 17 $1.81 State Farm 64 63 $4.01 –1.9% 33 32 $3.60 177 180 $0.25 146 149 $0.15 45 47 <$0.01 First Hawaiian 65 68 $3.77 1.6% 38 38 $2.16 77 75 $0.93 62 63 $0.69 — — — Associated Bank 66 67 $3.74 0.4% — — — 48 44 $2.19 39 37 $1.55 — — — Alaska USA FCU 67 69 $3.61 –1.2% 74 73 $0.52 55 55 $1.54 38 34 $1.55 — — — Synovus Bank 68 70 $3.60 0.2% 53 47 $1.06 50 52 $1.96 77 79 $0.55 32 31 $0.02 IBC Bank 69 71 $3.50 0.7% 139 150 $0.16 51 53 $1.94 44 41 $1.38 37 38 $0.01 TIB 70 72 $3.39 4.8% 44 45 $1.86 — — — 40 40 $1.51 34 33 $0.02 Mountain America CU 71 76 $3.32 20.3% 59 65 $0.71 39 45 $2.61 — — — — — — BOK Financial 72 73 $3.27 1.6% — — — 35 35 $2.66 68 75 $0.61 — — — Security Service FCU 73 75 $3.13 10.4% 79 88 $0.42 42 42 $2.46 113 147 $0.25 — — — Merrick Bank 74 80 $3.13 24.3% 35 37 $3.13 — — — — — — — — — Umpqua Bank 75 78 $3.07 21.2% 211 221 $0.07 53 62 $1.72 47 48 $1.27 43 46 <$0.01 Desert Schools FCU 76 77 $2.70 2.9% — — — 54 56 $1.56 49 47 $1.14 — — — San Diego County CU 77 79 $2.66 5.2% 77 80 $0.48 68 70 $1.16 50 51 $1.02 70 72 <$0.01 Delta Community CU 78 86 $2.62 10.5% 67 67 $0.59 59 64 $1.44 71 80 $0.59 — — — First Tech FCU 79 81 $2.60 5.6% 56 58 $0.78 75 76 $1.00 54 56 $0.82 — — — Redstone FCU 80 82 $2.57 4.9% 69 72 $0.57 66 67 $1.24 58 61 $0.77 — — — PSECU 81 83 $2.56 7.2% 71 68 $0.56 64 68 $1.27 60 62 $0.73 — — — IberiaBank 82 85 $2.44 2.5% 72 77 $0.55 67 69 $1.17 61 60 $0.73 — — — Central Bank (Mo.) 83 84 $2.42 1.2% 94 94 $0.29 72 71 $1.02 55 55 $0.81 23 23 $0.30 Simmons Bank 84 91 $2.34 17.8% 76 79 $0.49 70 81 $1.06 56 65 $0.79 — — — Old National 85 88 $2.30 6.8% — — — 56 60 $1.51 57 59 $0.79 47 50 <$0.01 Bank of Hawaii 86 89 $2.17 1.1% 160 168 $0.13 58 57 $1.49 76 78 $0.55 — — — Trustmark National 87 90 $2.10 0.9% 115 114 $0.21 73 72 $1.01 52 54 $0.88 — — — UBS Bank 88 92 $2.10 9.6% 40 40 $2.10 — — — — — — — — — Premier Bancard 89 93 $1.94 7.4% 43 44 $1.94 — — — — — — — — — BancFirst 90 94 $1.89 7.2% — — — 57 59 $1.50 91 97 $0.39 — — — Members 1st FCU 91 97 $1.86 16.6% 85 90 $0.35 69 74 $1.15 93 101 $0.36 — — — Patelco CU 92 95 $1.80 2.7% 82 85 $0.40 97 98 $0.70 63 64 $0.67 31 30 $0.03 Mich. State Univ. FCU 93 98 $1.73 9.7% 70 76 $0.56 82 90 $0.83 98 99 $0.34 62 65 <$0.01 City Nat’l Bank (Calif.) 94 109 $1.73 20.0% 51 55 $1.10 103 106 $0.63 180 184 <$0.01 — — — Digital FCU 95 100 $1.71 9.8% 49 51 $1.15 113 113 $0.56 — — — — — — University FCU (Texas) 96 99 $1.70 7.8% 102 101 $0.25 76 82 $0.96 80 84 $0.49 — — — Ent CU 97 104 $1.66 10.1% — — — 74 77 $1.00 64 69 $0.66 73 71 <$0.01 First Midwest 98 101 $1.64 5.0% — — — 71 73 $1.02 67 72 $0.61 — — — Fulton Financial 99 107 $1.60 7.9% — — — 60 63 $1.38 122 138 $0.22 46 49 <$0.01 Wescom CU 100 103 $1.60 5.5% 87 92 $0.32 100 103 $0.67 69 73 $0.61 59 62 <$0.01

Includes both consumer and commercial cards with Visa, Mastercard, American Express, and Discover brands, and EFT system debit cards with brands such as Star, Interlink, Pulse, Nyce, etc. Excludes store, oil, and other proprietary cards. . 1Excludes third-party issuers. 2ICBA Bancard is not an issuer. It is a payment

services company that contracts with processors to provide debit services to community banks. Its data is for all of the issuing banks on its program. 3Includes First Niagara, which was normalized to refl ect a full year of activity. 4Includes FirstMerit, which was normalized to refl ect a full year of activity. © 2017 The Nilson Report

Purchase Volume at Merchants 2016 General Purpose Credit, Debit, and Prepaid Cards Issued in the U.S.

© 2017 HSN Consultants, Inc. THE NILSON REPORT10 VISIT US ONLINE AT WWW.NILSONREPORT.COM Order Back Issues / Preview Upcoming Conferences / View Newsletter Archive 11APRIL 2017 / ISSUE 1108 / THE NILSON REPORT

are made without online authorizations. It has become a consumer protection issue in

the U.K., where that country’s Financial Conduct Authority (FCA) raised concerns this month, even though fraud on contactless transactions is only slightly higher than on contact-type transactions.

There are nearly 110 million contactless cards in the U.K. Visa holds a 96% market share of the debit cards in circulation versus Mastercard and 41% of the credit cards in circulation versus Mastercard, American Express, and Diners Club.

There were approximately 380 million contactless payments in the U.K. in March 2017. All were valued at £30 ($38.36) or less. None required use of a PIN. Almost half of those transactions occurred without an online authorization from the card issuer. All contact-type chip card payments in the U.K. are authorized online and require use of a PIN.

Merchants store the offline contactless payments they accept and submit them in batches for settlement at the end of the business day. It is only then that

issuers and cardholders become aware of any fraud that has occurred. Fraud occurs even on cards that have been reported as lost or stolen that day.

Sometime before October of this year, Visa will require all contactless payments in the U.K. to go online to the issuer for authorization. PINs will not be required. At the same time, Visa will institute the online authorization requirement for contactless transactions in Bulgaria, Croatia, Germany, Ireland, Malta, the Netherlands, Portugal, Romania, Slovenia, and Spain. The remaining countries in Europe will follow in 2018. Moving to 100% online for contactless payments aligns these markets with Visa practice in the rest of the world.

Visa’s action will significantly cut fraud on contactless cards that are reported as lost or stolen by cardholders. Fraud will still occur on contactless transactions when issuers don’t receive lost/stolen reports. The only protection from fraud in those cases comes from usage parameters in the chip. When cards are used to make contactless payments without any transactions involving insertion into an ATM or POS terminal, the chip in the card prompts for

a PIN after a certain number of purchases. That number is set by the card issuer. Every time a card is used at an ATM or POS terminal with a PIN, the count for the number of PIN transactions at the point of sale is reset.

Cardholders are not liable for fraud on Visa credit and debit cards lost or stolen in the U.K. However, debit cardholders can be inconvenienced. There are 73 million debit cards in the U.K. that offer contactless payments. Fraud can draw down funds on deposit to the point where problems can

be created when preauthorized payments are submitted for settlement. The cardholder might lack sufficient funds to cover those payments until losses from fraud have been reinstated.

Over the last decade, the maximum per-transaction amount for contactless payments has gone from £10 to £20 to the current ceiling of £30. The average contactless purchase amount is less than £10.

... approximately 380 mil. contact-less payments in the U.K. in March.

Visa Fights Stolen Contactless Cards in Europe from page 1...

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David Robertson, PublisherApril 28, 2017