Towards a World beyond cash in Kosovo - bqk-kos.org · Towards a World beyond cash in Kosovo 19th...
Transcript of Towards a World beyond cash in Kosovo - bqk-kos.org · Towards a World beyond cash in Kosovo 19th...
©2012 MasterCard. Proprietary and Confidential
Towards a World beyond cash in Kosovo
19th September 2012
Cyril Ghanem & Golnaz Amininejad
©2012 MasterCard. Proprietary and Confidential
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
©2012 MasterCard. Proprietary and Confidential
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
©2012 MasterCard. Proprietary and Confidential
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
©2012 MasterCard. Proprietary and Confidential
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
February 2012 Page 6
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)
©2012 MasterCard. Proprietary and Confidential Page 8
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,…
©2012 MasterCard. Proprietary and Confidential
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
©2012 MasterCard. Proprietary and Confidential
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
©2012 MasterCard. Proprietary and Confidential Page 12
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
©2012 MasterCard. Proprietary and Confidential
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
©2012 MasterCard. Proprietary and Confidential
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
©2012 MasterCard. Proprietary and Confidential
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
©2012 MasterCard. Proprietary and Confidential
4. Bill Payment
©2012 MasterCard. Proprietary and Confidential Page 17
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
©2012 MasterCard. Proprietary and Confidential
5. Implementation
©2012 MasterCard. Proprietary and Confidential Page 19
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
©2012 MasterCard. Proprietary and Confidential
February 2012 Page 20
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
©2012 MasterCard. Proprietary and Confidential Page 22
February 2012
5. Resume