Card Issuance

Architecting Card Systems for a Digital-First World

fsstiprod — Mon, 26 Jul 2021 07:25:54 +0000

Architecting Card Systems for a Digital-First World fsstiprod Mon, 07/26/2021 - 12:55

Cards are the most frequent interactions that financial institutions have with their account holders. Each transaction presents an opportunity to create accountholder engagement and drive revenue. A combination of factors - fierce competition, regulatory interventions, rapidly evolving customers, and technology trends are, however, challenging card issuers.

Customer expectations have changed with the pervasiveness of smartphones and convenient, intuitive access to services through real-time payment apps. Banks need to compete with the digital transaction expectations set by providers like Uber and Amazon, that offer integrated, holistic experiences for which the payment just happens. The digital shift requires banks to step-up efforts to be the customers’ card of choice, whether in physical or — as is increasingly the case — digital form.

Further with the growth of real-time payment rails and alternative payment mechanisms, the consumer payment mix is evolving. In 2020, according to the GSMA, Africa had 562 million registered mobile money accounts, an increase of 12% from the previous year. The region also had 161 million active accounts, an increase of 18% year-on-year. Similarly in India transaction volumes over real-time payment rails outpaces card adoption by a factor of 6X, according to PWC. Between 2021 and 2026, UPI transaction volumes in India are projected to grow from 36 billion to 99 billion. During the same period, card transaction volumes (debit and credit) would grow from 6 billion to 10 billion. Person to merchant payments is likely to drive a significant share of the growth, with a large number of merchants promoting UPI payments due to rationalisation of transaction fees.

New competitors are stepping into card payments and bringing disruptive business models with them. A leading payments bank in India, with a base of 350 million users, for instance, offers instant virtual cards to its wallet users. Customers can get a card within minutes as opposed to waiting for a few days. The dynamics of competition have also shifted from ‘bank versus bank’ to ‘bank versus Big Tech.’ Tech firms are integrating payments as an enabler into consumer apps, leveraging their large customer base and deep pockets. Google is partnering with existing banks and credit unions in an attempt to be a platform for offering digital-first capabilities. For established financial institutions this could mean being potentially relegated to the role of providing a stored-value account, with Google owning customer interactions the overall relationship.

Regulation and new global standards are pushing institutions to transform at an accelerated pace, with requirement for open banking being a good illustration. In markets where open banking payments infrastructure is more mature, such as the United Kingdom and Europe, transactions are rapidly shifting to account-based alternative payment options due to their lower cost, significantly impacting issuer revenues. In addition, interchange caps by regulators further compress margins.

Collectively the trends are reshaping the dynamics of the market. Banks can no longer just recalibrate the slide rule, they need to have an elemental rethink of how they can remain relevant. Given the rapidly changing marketplace, forward looking issuers are strongly motivated to invest in new age platforms to build a strong competitive foundation and grow market share.

Current issuance systems fall short along multiple dimensions. Over the years, established financial institutions have built card issuance stacks that are monolithic and inflexible. Designed to meet the needs of issuers in a pre-digital era, the card issuance platforms are not enabled to adapt to demands for digital-first card programs. Limited extensibility and customization capability constraints innovation and impedes time to market for new products and services. On average, depending on the complexity, new functionality may take between three and nine months to develop and deploy. In addition, many issuers have discrete systems sourced from multiple vendors for prepaid, credit and debit card issuance. Siloed systems further contribute to costs and lost opportunities. Few issuers, as an example, can offer an add on prepaid forex card to high-net-worth credit card customers, as these are two discrete functions and systems within the bank.

There is significant value to be unlocked by issuers who take a strategic approach to modernizing their issuance architecture. Financial institutions will need to start from the inside-out and redesign core issuance systems around three interlinked design principles -- digital-first, open ecosystems and data-driven.

Digital-First Card Programs

Digital-first for issuers entails looking at the entire card program lifecycle, from application and onboarding to cardholder engagement, to provide best-in-class services experience. This includes replacing physical cards with a 16-digit card number that can be linked to a wallet as well as layering on additional services such as consumer card controls and personal financial management to drive top of wallet recall. India’s leading private sector bank is working with FSS to issue instant, open-loop virtual cards to any customer that downloads their wallet app. The card is linked to a host of consumer benefits, enabling the issuer to build a strong base of loyal customers.

Ecosystem Ready

Issuers need to shift their focus from transactional services and prioritise VAS. A card management platform underpinned by open APIs provides issuers an opportunity to foster an extensive added value services ecosystem. A partnership with large players may be an opportunity to innovate quickly and provide experiences that cardholders are seeking. Issuers, for instance, can use APIs to embed card payment capabilities and provide adjacent services. For example, a travel related savings plan in conjunction with a travel aggregator or expose digital card issuance APIs to merchant-owned apps to embed payment capabilities in the shopper’s path to purchase.

Data-Driven

Issuers can affect a shift from being product-led to becoming customer-centric by harnessing insights into cardholder transacting behaviour. Leveraging data, issuers can tailor products and services to customers’ needs and create entirely new experiences before, during and after a transaction. As an example, proactively alert customers to an upcoming credit card payment when the customer’s account is under-funded. Another example is the ability to issue instant cards at checkout, with pre-approved EMIs, basis cardholder transacting and banking history.

Effective program management, especially, in the context of prepaid store value cards, is critical to managing the profitability of the overall card portfolio. A digital-first, data-driven approach equips program managers with strategic cardholder insights that can optimise customer acquisition costs, reduce cost of servicing, improve return on marketing as well as maximize cardholder lifetime value

Better By Design

Issuers can transform by moving away from legacy technologies and embracing a componentized, micro-services, cloud-native architecture. Systems built on a service-oriented architecture, tend to have larger scoping and multiple process steps that must be orchestrated. This makes change more complex and time-consuming. In contrast, a micro-services architecture typically organizes services around smaller business components. The services can be consumed from the cloud, enabling banks to run a more cost-efficient operating model whilst providing the agility that legacy models lack.

In Conclusion

Issuers are entering an era where technology excellence is at the heart of business growth. Rather than make incremental improvements, issuers need to actively shape the market by reengineering their card issuance infrastructure to be more agile and responsive to opportunities today and in the future. Progressive issuers will gain considerable technological and operational benefits in terms of improved IT agility, better customer experience, and improved data insights.

Author -- N Sathish, Dy CPO FSS

Will Biometric Cards Change the Way Benefits are Dispensed?

fsstiprod — Thu, 15 Jul 2021 14:02:39 +0000

Will Biometric Cards Change the Way Benefits are Dispensed? fsstiprod Thu, 07/15/2021 - 19:32

Biometric cards can play a vital role in the proper dispensation of benefits in India going forward, K Srinivasan, Chief Operating Officer, FSS PayTech told ET while speaking about the company's collaboration with Zwipe to bring next generation contactless payment cards to issuers globally.

Srinivasan said that while FSS has not directly engaged with the government, he said the use case for biometrics, especially in a country like India where there is a lot of adoption of biometrics in any case, owing to Aadhaar and Aadhaar-enabled payments makes it a perfect place to use biometric cards for the dispensation of benefits.

"Direct benefit transfer in many countries happens through a card," he explained. " How do you make sure that the right person is coming and taking the benefit? These biometric cards can play a very good role for this, particularly for customers like where we have in Africa, where they use an issuing system, they use cards to dispense pension, for example."

For instance, he said that if one was to transfer money for Covid relief, the biometric card can be programmed to ensure that the card will only function when used by the right person and at the right place, say a ration store rather than a store that sells alcohol. Thus, making it possible to make sure the money disbursed is used for the right purpose and the dispensation mechanism can be centrally loaded.

Srinivasan said that the pandemic has accelerated the use of contactless payments even further as consumers demand a safe, contact-free transacting environment. However, the lack of cardholder authentication with contactless cards translates into usage being restricted to relatively small and medium value payments, hampering the ability to deliver a fully contact free experience for all payment values. The response to this is the biometric payment card that fully enables contact-free transactions while boosting confidence and security for consumers, retailers and issuers.

"Biometric payment cards will bring strong differentiation and value uplift to our card issuance and management offerings. Our collaboration with Zwipe will help our issuer clients to deliver a completely touchless and PIN-free check out experience, better in-store payments hygiene and much stronger cardholder security. Zwipe Pay ONE is recognized as the most advanced (Gen3) biometric payment technology and complements FSS's innovative card portfolio. It will be made available to our clients for piloting and deployment from H2 2021," Srinivasan said.

FSS is a provider of card issuance products globally and its card portfolio consists of 800 plus million payment cards for Tier One banks and payment processors. The organizations will be working together closely and will combine FSS's Unified Issuance Platform and Zwipe Pay One biometric card capabilities, supported by Zwipe's growing global network of card manufacturing partners.

As part of this collaboration, FSS will offer Zwipe Pay ONE biometric payment cards globally. The initial focus will be in those markets where contactless is bringing considerable benefits in the area of financial inclusion as seen in Canada, India and a number of countries within Europe, Middle East (GCC countries) and Africa. Both partners will start engaging with issuers from Q2 2021 and aim for starting pilots from H2 2021, FSS said in a statement.

When it comes to India, Srinivasan said that these biometric cards can play a very vital role, but it is the adoption that is to be seen. For this adoption to happen, a strong ecosystem is the need of the hour. Srinivasan said that there is an ecosystem movement that's happening around biometrics currently.

"For example, Zwipe itself is a FinTech company that focuses on security, focuses on authentication mechanisms which is a very narrow, but deep field that is important when it comes to establishing credible authentication. They are trying to educate all the card manufacturers, they're trying to work with many processes, they're trying to talk about what they can carry out as proof of concept. So, there is a lot of momentum happening around those. The moment that shifts, there will be some sort of regulation, or some sort of adoption driven by the regulators."

He went on to add that in India, hesitation to use biometrics was not a cause for concern as the country has adopted Aadhaar and Aadhaar-enabled payments.

"There are more and more biometric cards that are likely to be issued in 2021in India," Srinivasan said. "And India itself is a country where there's been an extensive use of biometrics, for example, Aadhaar itself is a big part of biometrics. So, it's not about hesitation to use biometric because Aadhaar-enabled payment is itself a classic example of adoption of biometrics."

Research estimates 2.5 million biometric cards to be issued in 2021 and that according to industry reports, biometric payment cards with built-in fingerprint sensors could add $5 billion to revenue in the global banking sector by 2026.

Blog Source : The Economic Times

Get Ready to Ride the NCMC Wave?

fsstiprod — Mon, 05 Jul 2021 05:28:53 +0000

Get Ready to Ride the NCMC Wave? fsstiprod Mon, 07/05/2021 - 10:58

Get Ready to Ride the NCMC Wave

Over the last decade, India’s financial regulator has taken a series of measures to modernize the country’s payments infrastructure to drive a connected digital payments economy and promote economic and social inclusion. One such recent initiative is the cashless fare system powered by National Common Mobility Card (NCMC) or ‘One Nation One Card’, which will work across all public transit systems and day-to-day retail payments systems in the country.

Transit forms an approximate 10 per cent and 15 per cent of household monthly expenditure. Considering the recurring nature of transit transactions, modernising transit payments presents an opportunity to attract new customers to the financial services ecosystem and deepen adoption of digital payments. Currently, most transit operators deploy payment systems that are closed loop in nature. The fragmentation and the lack of interoperability in ticketing systems impedes broad acceptance by consumers. The replacement of non-standardized, closed-loop payment modes with an EMV-based open loop contactless payments system National Common Mobility Cards (NCMCs) will provide increased mobility and a seamless travel experience to customers.

The stored value on this wallet allows passengers to initiate tap and pay contactless fare payments on all bus, metro and rail services across the country using their debit prepaid or credit card or a single transit smartcard. Transit-specific purses such as monthly passes, season tickets can be activated on the card’s service feature area.

The total addressable opportunity is significant. Currently 62 state road transport undertaking units (SRTU), which have more than 1.6 million buses, transport an approximate 70 million people daily. The suburban railways of Mumbai, Kolkata and Chennai contribute to more than 50% of all railway passengers with the daily ridership of 13.5 million. Ten live metro services report a daily ridership of 4.6 million. Another 14 metro services are present at various stages of implementation.

From an issuer’s perspective, NCMC enables issuers to move into new markets and customer segments example blue collar workers who use public transit and are heavily reliant on cash. It optimises operating costs through cost savings on managing multiple card programs. It also creates the potential to earn fee revenue on non-transit usage and locks-in cardholders by supporting a range of payments, especially prepaid cardholder segments and infrequent users of public transit.

Beyond the benefits of offering a pervasive payment option, to capitalise on the revenue potential and differentiate offerings, financial institutions would need to rapidly layer on additional, innovative use cases early-on that create cardholder stickiness. Added value capabilities include:

Establish Last Mile Connectivity – Drive the usage of smart cards by introducing complementary ride-share and micro-mobility services. As an example, enable taxi service payments for last mile travel using the same card app

Support New Form Factors – Satisfy customer demand for instant digital issuance and embedded payments on any device. For instance, Singapore has enabled NFC fitness trackers with transit cards to pay for public transport
Tap into New Payment Flows – An approximate 60 per cent of India’s population is expected to live in smart cities. With growing urban concentration, issuers need to position NCMC as a smart city card and extend use cases by enabling customer make citizen payments, taxes, use cards within gated urban communities, receive real-time information on parking spaces, improves customer engagement levels
Incentivise Usage – Exploit customer transactional insights to offer geolocation and time-bound offers and incentivize cardholders to use the card for all payments, including transit and retail
Build Open Services Ecosystem – Partner with third party service providers to build services ecosystem by offering allied services such as travel insurance, hotel bookings for inter-city travel
Support Ride Now Pay Later Services – Extend deferred payment options to cardholders based on segment and transacting patterns to keep dormancy rates in check
Extend Spend Management-- Provide app-based cards support for managing card accounts as well as for making payments

At the backend, issuers need to have the right partner and a robust, efficient technology backbone to manage and issue physical and virtual transit cards. The selection criterion needs to be aligned to the future roadmap of the issuer and would span multiple dimensions including:

Unified platform for launching any card variant, open-loop prepaid + transit, open-loop debit-transit, credit + transit -- reducing overall cost of ownership
Flexible API-driven architecture to launch new card programs, integrate with bank internal systems as well as third party applications
Support for added value capabilities including spend alerts, spend controls, expense management, loyalty applications
Domain experience in implementing new capabilities whilst ensuring minimum modification in the existing card management system of the bank
Holistic services approach in helping financial institutions build an open issuance platform, backed by technology solutions such as Big Data, cloud technology, and the Internet of Things for shaping sustainable and interconnected, networked societies of the future

NCMC will have a transformative impact on payments and presents a significant growth to all transit ecosystem constituents -- FinTech players, financial institutions, transport operators and the government. As a global payments technology provider, FSS can provide a complete NCMC compliant solution spanning card issuance, transaction acquiring and automated fare collection management to help financial institutions capitalise on this opportunity.

Are Biometric Cards the Next Normal in Payments?

fsstiprod — Fri, 28 May 2021 06:54:56 +0000

Are Biometric Cards the Next Normal in Payments? fsstiprod Fri, 05/28/2021 - 12:24

Contactless (tap and pay) transactions, over the last year, have become synonymous with safe instore payments. Everyone -- from large retail chains to mom-and-pop neighbourhood stores -- is adopting contactless transactions, as customers are reluctant to handle cash or type in their PINs on devices for hygienic reasons.

Multiple industry surveys have highlighted the impact of the pandemic on cardholder transacting behaviours. A forecast on contactless payments by analyst firm Juniper Research estimates that the value of global contactless transaction will triple from US$2 Trillion in 2020 to US$6 Trillion in 2024. A survey from Mastercard indicates 79% of surveyed consumers worldwide are now using tap-and-go payments, citing safety and cleanliness as the key drivers. As per the Visa Back to Business Study, 48% of surveyed consumers have changed the way they pay, shifting to contactless payments whenever possible. An approximate 26% of the surveyed consumers have used ‘tap to pay’ technology during the COVID-19 for in-store purchase for the first time.

The pandemic-driven rise of contactless payments has contributed to increased activity in the biometric card space. With contactless payments set to grow further, the use of biometric cards will follow along the same trajectory. In fact, UBS analysts project that biometric payment cards could capture a 15% share of the global card market within the next five years. For issuers biometric cards offer a first-mover advantage, help them to differentiate card programs and improve card fee revenues. For instance, French bank BNP Paribas is offering its Visa Premier cardholders the chance to upgrade to a contactless fingerprint option - for a €24 annual fee.

For merchants, biometric cards are designed to be compatible with existing payment terminals that accept contactless- or chip-based payments around the world. As all the information processing takes place within the card, there are no additional support requirements for merchants or acquirers during transaction processing

Around the world, governments and regulators have raised the limits on contactless card transactions, enabling more transactions to take place without the need to touch a PIN pad. South Africa’s ABSA Bank for instance has raised the contactless transaction limit to a maximum US$38 (R500). The UK likewise increased the per-transaction limit from US$40 (GBP30) to US$141 (GBP100), while leading retailers in Australia increased their contactless limit to US$154 (A$200). In India transaction ranges have been relaxed from US$28 (INR 2,000) to US$68 (INR 5,000).

As contactless becomes a preferred payment mode for an increasing number of consumers, concerns around security of contactless transactions have intensified. With raised limits it becomes possible for fraudsters to spend significant sums of money on unprotected contactless cards, even if the theft is reported quickly. As customers do not need a PIN, a lost credit card or a stolen device potentially gives fraudsters easy access to the cardholder’s account. Several incidents have also been reported where hackers have been successful in making fake scanners or using card skimmers designed to steal data transmitted via RFID, enabling them to create cloned cards.

This is a real concern, and issuers must act now to ensure contactless transactions remain safe and bolster consumer confidence. Combining biometric authentication with contactless cards has emerged as a particularly effective solution, since it uses characteristics that cannot be forged and are unique to everyone. Using an embedded fingerprint sensor on-card, banks can add strong customer authentication to contactless, removing the hassle of PINs and the need for contactless payment caps. The sensor that is powered by the chip, authenticates identity through a fingerprint and can be used at EMV terminals worldwide.

Biometric payment cards are poised to become a mainstream payment product and will power a range of use cases

High-Value Transactions - Biometric authentication provides an added layer of security enables the use of contactless for any value payments. FSS recently teamed up with Zwipe for contactless biometric cards and they have successfully demonstrated high-value transactions of up to GBP 100,000. Major banks such as BNP Paribas are among the first few banks to introduce contactless cards for high value transactions.

Balance Convenience and Security - Card fraud has been on the rise throughout the last few years, costing global issuers a projected US$28.65 Billion in 2019, according to The Nilson Report. And the coronavirus pandemic has only worsened the dilemma Fingerprint authentication is a mature and also a preferred technology, having rapidly overtaken PIN authentication to secure payments.

Future-proof Retail - Touchless payment methods are an essential part of the high street’s future. With evolving formats such kerbside pickup, order online and pick up in store, the use of biometric contactless cards would grow. Merchants can enjoy greater certainty of genuine cardholder identity during transactions. As a result, merchants may see increased revenue from reduced false declines or forgotten PIN transactions.

Tap and Pay is now embedded in the daily transactional life of cardholders, as they want to get their shopping done safely, quickly, and painlessly. Biometrics contactless cards, adding a much-needed element of security to these transactions, would have a multiplier impact on value and volume of transactions.

FSS and Everlink to Drive Card Payments Growth in Canada

admin — Mon, 21 Sep 2020 05:12:36 +0000

FSS and Everlink to Drive Card Payments Growth in Canada admin Mon, 09/21/2020 - 10:42

Toronto (Canada) & Mumbai(India), 21st September 2020: FSS (Financial Software and Systems), a global payments technology company, announced today that Canada’s Everlink Payment Services Inc., a leading provider of payments solutions and services for Canadian credit unions, banks, and small and medium enterprises, has selected FSS’s Unified Card Management System to modernize card operations to support its future growth plans. The FSS solution was chosen as the replacement for Everlink’s legacy card issuance infrastructure to better respond to the needs of the market, with deployment scheduled to go live in the 4th quarter of this year.

Within the scope of the partnership FSS would implement its Unified Card Management System to manage debit and prepaid cards issuance from a single platform and also support transaction processing and programs for prepaid cards, bringing significant scale efficiencies. As part of the deal, FSS would replace the existing card issuance system with an API-based card management framework to simplify operations, reduce total cost of ownership (TCO) and mitigate obsolescence risk.

Speaking on the collaboration, Nagaraj V Mylandla, Founder, Chairman and Managing Director, FSS stated: “Everlink and FSS share a common vision to deliver convenient, flexible, simple payment experiences to customers. We are delighted to collaborate on this digital transformation journey helping to bring more choice and innovative services to the market. The Canadian market relies heavily on card spending and is digitizing rapidly. It is a market where FSS is deeply committed to work with partners such as Everlink to help revolutionize customer digital experiences.” .

Mark Ripplinger, President and CEO, of Everlink, stated: “Consumers in Canada are rapidly adopting newer payment products, such as co-badged, prepaid and contactless cards. We needed a flexible solution, capable of modernizing our card management to extend our portfolio of products and services to respond to the needs of an increasingly competitive and changing market. We identified FSS as a partner in this critical transformation journey for its expertise in managing complex large-scale migration projects, its modern state-of-the-art solution, and most importantly, the approach, flexibility, and the willingness of their team to work with Everlink.”

The current FSS deployment would enable Everlink to migrate from a legacy mainframe-based to an open stack system that integrates seamlessly with payment systems. FSS Unified Card Management System manages the complete lifecycle of card programs and allows for flexible configuration of card products and new program features in line with marketing trends, improving time to market. It is built to support any card type, including instant physical and virtual debit and prepaid cards and a range of added value products like financial institution card controls. Architected to support a multi-institutional model, the system supports logical partitioning and offers complete data security and privacy to each member institution. Member banks connected to the Everlink platform would benefit from automated web-based workflows to rollout card programs as well as rich dashboards and seamless interface with the core banking systems, bringing significant efficiencies in terms of reduced operating and integration overhead.

About FSS
Financial Software and Systems (FSS) is a leader in payments technology and transaction processing. The company offers an integrated portfolio of software products, hosted payment services and software solutions built over 29+ years of experience. FSS, end-to-end payments products suite, powers retail delivery channels including ATM, POS, Internet and Mobile as well as critical back-end functions including cards management, reconciliation, settlement, merchant management and device monitoring. Headquartered in Chennai, India, FSS services leading global banks, financial institutions, processors, central regulators and governments across North America, UK, Europe, Middle East, Africa, and APAC and has 2,500 experts on-board.For more information visit www.fsstech.com

About Everlink
Everlink Payment Services Inc. is a leading provider of comprehensive, innovative and integrated payments solutions and services for credit unions, banks, and SMEs across Canada. In addition to supplying best‐in-breed technology infrastructure and payment network connectivity, we offer a comprehensive range of integrated payments Lines of Business including: Payment Network Gateway, ATM Managed Services, Card Issuance & Management, Fraud Management Solutions, Mobile Payments, Professional Services and SME Solutions. For more information visit www.everlink.ca

Media Contact
In Europe: Louise Herbert /louiseherbert@fsstech.com / +32 476 81 13 92
Other Regions: Rajalekshme.R /rajalekshmer@fss.co.in/ +91 9500088290