'There is R12bn under mattresses'

The Banking Association of South Africa believes that the country's unbanked are holding about R12 billion, which would have a massive impact if brought into the market.

Brian Richardson, the CEO of mobile banking company Wizzit, said at the association's inaugural summit in Johannesburg recently that the case of R12 billion 'under mattresses', was not unique to SA.

But he said it was 'sad' that last year, the number of unbanked people increased.

'We seem to be going backwards and the economy and the global meltdown has been blamed.'

WIZZIT Payments (Pty) Ltd is a provider of basic banking services for the unbanked and underbanked (people or enterprises that have no or only limited access to banking services) in SA. Its services are based on the use of mobile phones for accessing bank accounts and conducting transactions, in addition to a Maestro debit card that is issued to all customers upon registration.

Wizzit is a branchless banking business, meaning that its services are designed so that customers can generally conduct transactions without the need to visit bank branches.


While Wizzit does not operate any branches on its own, it has partnered with the Absa Group and the South African Post Office and the that act as banking agents and allow Wizzit's customers to deposit funds at any Absa or Post Office branch.

However, Richardson said the key to getting more people to open bank accounts depended on affordability, accessibility and availability.

'We don't have all the answers and if it was easy to bank the unbanked, everyone would be doing it.'

Richardson said banks could not be all things to all people and big banks would experience some difficulties in serving the informal market.

'Banks are highly formally structured organizations designed to serve a formal structured market so it's not easy for them to deal with the chaos of the informal market.'

He said that when it came to mobile banking, SA was losing the race.

'Our system in countries like Zambia is far more successful.'

Most US consumers remain wary of Mobile Banking – Recent Study

Although a growing number of consumers are taking advantage of mobile banking, most have yet to use their cell phones or PDAs to manage their cheque accounts or savings accounts.

The two biggest reasons, according to an August report by Javelin Strategy & Research in San Francisco, are concerns about security and a “lack of a compelling value proposition.” In other words, many question; “What’s the point?”

Javelin, which says 19 of the 30 largest US financial institutions now offer mobile banking, rates Federal Savings Bank “best in class” for the second year in a row. The others with the most robust mobile banking offerings are Bank of America, JPMorgan Chase, Citibank and Wells Fargo, which all provide multiple modes for mobile banking, including text banking, access to websites created for mobile banking and smartphone applications.

Still, banks are missing opportunities. Just over one-third of top financial institutions have Android-based applications, compared to 80 percent that have iPhone apps, even though Android owners now outnumber iPhone users and half of them are mobile bankers, the research firm says. Other opportunities include money transfers, remote deposit and account opening capabilities, according to Javelin.

Meanwhile, results of recent survey by KPMG, the audit, tax and advisory firm, show almost one in five US consumers has conducted a banking transaction on a mobile device, compared to only 9 percent when KPMG completed the survey 18 months earlier.

Young people ages 16 to 24 are the most likely users, with a third reporting they had banked on a mobile device. Among US respondents who had never banked by cell phone, roughly half cited security and privacy as the primary reasons.

Those who said that they were comfortable with mobile banking grew to 16 percent, up 6 percent from the last survey. Those who weren’t comfortable dropped to 55 percent, an 11 percent decline, according to KPMG.

Despite this US consumers are behind much of the world when it comes to mobile banking. KPMG says about one-third of consumers globally in the new survey say they are comfortable making financial transactions on a mobile device.

Euroclear Bank to allow transactions in Chinese Yuan

Euroclear Bank has announced that it is to allow clients to settle transactions and deposit Eurobonds and Hong Kong domestic securities denominated in the Chinese Yuan Renminbi in Euroclear Bank.

The first transactions in Renminbi are due to be settled on 27 September.

Euroclear Bank will support the Renminbi-denominated securities market, said Olivier Grimonpont, Regional Head and General Manager of the Euroclear Bank branch office in Hong Kong. He also added, investors will be able to settle these transactions in Euroclear Bank and eliminate foreign-exchange risk by having to settle in alternative currencies as offshore borrowers look to raise funding in Renminbi or to broaden their investor base.

Euroclear Bank intends to take an early and significant role in servicing these securities for issuers and investors alike. The Yuan Renminbi is the 53rd settlement currency offered by Euroclear Bank.

Hong Kong RTGS adds new real-time features to its SWIFTNet platform

The Hong Kong Monetary Authority (HKMA), the Hong Kong Interbank Clearing Limited (HKICL) and SWIFT have announced that they have completed the migration of Clearing House Automated Transfer System (CHATS) payments to SWIFT with the addition of “InterAct” and “Browse” to the RTGS platform.

These new services are live and provide interactive real-time query and response messaging to RTGS participants. Apart from other channels to access Central Moneymarkets Unit (CMU) services, with InterAct and Browse, the real time CHATS and CMU functions can now be undertaken by the 151 RTGS participants and 163 CMU participants in a more interactive and user-friendly manner.

“Our decision to move from a proprietary platform to SWIFT has been a success for our participating banks because they are able to use one uniform standard to process domestic and international payment messages since phase 1 migration. The complete migration further facilitates the interoperability between domestic and international messages, which are conducive to the further development of the multi-currency and multi-dimensional platform in Hong Kong, thus helping consolidate Hong Kong as an international financial centre,” said Eddie Yue, Deputy Chief Executive, HKMA.

Starbucks expands mobile payment system to BlackBerry

Starbucks is introducing its mobile payment app to BlackBerry smart phones in the US.

First developed for the iPhone, the app allows customers to load their prepaid Starbucks cards directly onto their smart phones. At the register, the phone produces a bar code on its screen, which is then read by special scanners in the payment terminal.

With both Apple and BlackBerry on board, Starbucks now boasts a mobile payment system covering 70% of smart phone users in its customer base. 35 percent of all smart phone users own a BlackBerry, with Apple and Android trailing at 28% and 13%, respectively.

Starbucks’ investment in BlackBerry acknowledges that many people willing to use their phones for transactions will likely be carrying company-issue BlackBerrys.

Russian hacker gets suspended sentence for $9m RBS WorldPay heist

One of the ringleaders of the 2008 cyber-attack on RBS WorldPay's computer network, which led to the theft of over $9.4 million, has escaped with a six year suspended sentence, according to press reports.

Viktor Pleshchuk, who was one of eight suspects from Eastern Europe named in a US federal grand jury indictment last year, was arrested in his home country of Russia in March.

US authorities believe Pleshchuk and Estonian Sergei Tsurikov were the ringleaders behind the attack, which compromised the encryption used by the processor to protect customer data on payroll debit cards.

This allowed the gang to raise the limits on accounts before handing over 44 counterfeit payroll debit cards to a network of "cashers" who withdrew over $9 million in less than 12 hours from more than 2100 ATMs in at least 280 cities worldwide, including in the US, Russia, Ukraine, Estonia, Italy, Hong Kong, Japan and Canada.

Pleshchuk pleaded guilty and agreed to provide prosecutors with information on his accomplices in exchange for a six year suspended sentence and four years of probation. He was also ordered to pay RBS WorldPay 275 million roubles ($8.9 million), according to Bloomberg.

Last month Tsurikov was extradited from Estonia to the US to face charges which, if found guilty could see him jailed for up to 35 years and fined a maximum of $3.5 million.

Pre-paid cards to distribute aid to flood victims in Pakistan

The Pakistan government is working with Visa and United Bank Limited (UBL) to distribute aid to millions of families hit by the monsoon floods through pre-paid cards.

The Pakistan floods have affected around 20 million people, leaving four million homeless and six million in urgent need of food aid, according to the UN.

The country's identification agency Nadra is working with Visa and UBL to issue around two million government-funded pre-paid cards loaded with PKr20,000 ($230) each.

The switch from cash to electronic distribution of aid follows a similar project last year that saw 400,000 cards issued by the partners to internally displaced persons in the Northwest of the country.

Visa says it is also working with others in Pakistan to establish an acceptance infrastructure that allows recipients to make purchases of essential items for their families at local merchants or to withdraw cash.

Ali Arshad Hakeem, chairman, Nadra, says: "Our positive experience with the IDP Visa prepaid debit card last year increased confidence among the government and people of Pakistan that electronic payments are the future for aid disbursement, and an important first step towards financial inclusion."