Online, Contactless Card and Mobile Payments set to top $2,000 billion within five years

Internet, mobile and contactless payments are expected to soar according to a new report from payments consultancy firm Edgar, Dunn & Company (EDC) in partnership with Payments Card & Mobile magazine (PCM).

According to the report the greatest growth in payments, on a worldwide basis, over the next five years will come in what they call 'advanced payments' – online, contactless card and mobile payments. It estimates that the global market size for internet or online payments will continue to grow and is expected to more than double to over $2,000 billion by 2016.

The “Advanced Payments Report 2011”, sponsored by MasterCard Worldwide, is based on a review of the global payments landscape, surveys of payment industry stakeholder opinion, and discussions with more than 650 industry executives and thought leaders.

But the greatest growth will come in mobile and contactless payments. The global market for mobile payments is expected to reach $680 billion by 2016, with that for contactless payments estimated to exceed $320 billion.

“Payments Cards and Mobile has been reporting on the global growth in Advanced Payments for a number of years now,” says Alex Rolfe, Managing Director, Payments Cards and Mobile. “This report validates the continuing emergence and success of new market entrants and the changing nature of the payments infrastructure.”

Of all the drivers for success, “executive commitment is perhaps the most powerful driver for pushing out a new payment product,” the report says. It adds that while many organizations undertake limited, partially funded and often half-hearted trials of new payment products, the really important element missing in many such initiatives is executive commitment and the allocation of the right levels of investment.

The stakeholder opinion survey identifies payment cards as the most important payment method for making payments online but recognizes the need to allay customer concerns of potential security risks. For contactless payments, the report notes that lack of contactless point-of-sale (POS) terminal infrastructure is the most critical challenge to growth in payment volumes.

On mobile payments, the survey points to the general lack of cooperation between the banks and the mobile network operators (MNO) as a continuing issue that needs to be addressed. It also notes that both banks and MNOs must address the needs of consumers as well as merchants and design suitable incentives where necessary.

Samee Zafar, Director at EDC, said “Robust and secure mobile payment technologies are widely available. These can leverage existing payments infrastructure as far as possible thereby saving payment processing costs. What is now required is for payment services providers to develop advanced payment products that can be effective and successful in the marketplace.”

Fed calls for comment regarding systemically important nonbank financial companies

The Federal Reserve Board has requested comment on a proposed rule that implements two provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act related to the designation by the Financial Stability Oversight Council of systemically important nonbank financial companies for consolidated supervision by the Board.

In the first instance the proposed rule establishes the requirements for determining if a company is "predominantly engaged in financial activities." Under the Dodd-Frank Act, a company generally can be designated by the Council only if 85 percent or more of the company's revenues or assets are related to activities that have been determined to be financial in nature under the Bank Holding Company Act.

Secondly, the proposed rule defines the terms "significant nonbank financial company" and "significant bank holding company." Among the factors the Council must consider in determining whether to designate a nonbank financial company for supervision by the Board is the extent and nature of the company's transactions and relationships with other "significant" nonbank financial companies and "significant" bank holding companies. Under the proposal, a firm would be considered "significant" if it has $50 billion or more in total consolidated assets or had been designated by the Council as systemically important.

Comments on the proposal have to be submitted by March 30, 2011.

Financial Services Authority bans and fines corporate finance advisor £150,000 for market abuse

The Upper Tribunal (Tax and Chancery Chamber) has directed the Financial Services Authority (FSA) to fine Mr. David Massey £150,000 and ban him from performing any role in regulated financial services for engaging in market abuse.

On 1 November 2007, Massey short sold 2.5million shares of Eicom, the then AIM-listed digital broadcaster, at 8p per share on the basis of the inside information that Eicom was intending to issue new shares at 3.5p per share. Within a matter of minutes he accepted an offer to subscribe for 2.6 million newly issued Eicom shares at 3.5p and used the shares he obtained to close his short position, making a net profit of over £100,000.

Massey, then a Corporate Finance Executive at Zimmerman Adams International, had also occasionally acted as a financial PR consultant for Eicom for approximately five years, sometimes receiving payment from Eicom for his services. In and after June 2007 Eicom was in discussion with Massey about its need for further funds for a possible acquisition. At the time of his short sale of Eicom shares, Massey knew that Eicom was prepared to issue up to 3million shares to him at a substantial discount.

Following the trading, Massey initially tried to book the transaction to the account of an associate and, when questioned about the deal by Zimmerman Adams International and its compliance advisors, he gave the impression that he hardly knew Eicom.

Margaret Cole, managing director of the enforcement and financial crime at the FSA, said:

“Massey’s actions were unacceptable. He abused his position as an FSA approved person by acting in a personal capacity and failing to inform the buyer that they would be buying new shares issued at a significant discount to the market price, keeping all the profit for himself.

“Massey used the trust invested in him by both parties to create the opportunity to trade on the basis of inside information and he distorted the truth to hide his actions, profiting at the expense of other market users. This type of conduct threatens the integrity of the market and will not be tolerated by the FSA.”

Another form of “Mobile Banking”

Mobile banking is not only about using ones mobile phone to initiate transactions, check balances or make payments from a nifty little hand held device.

Once upon a time mobile banking was also about a bank, on four wheels, which of course made it mobile. Such a bank can travel from one site to another, either where the bank’s services are needed or to a fixed schedule providing banking services to communities who with no fied bank facilities.

This type of mobile bank exists in many places in the world. One such service is the Mobi Baitok mobile bank vans run by the Kuwait Finance House.

The Kuwait Finance House say that their service is a success and claim a 200 per cent increase in amount of money withdrawn from Mobi Baitok, 400 per cent increase in deposits in 2010.

The Manager of the Direct Sales Unit at Kuwait Finance House Nedal Ameen said that KFH's Mobi Baitok vehicles (that is, like a 'bank on wheels', these vans can be driven to areas where banking services are inaccessible) have made great strides in 2010, which is evident by the increase in amount of money withdrawn from the vehicles that reached 200%, and an increase in deposits in 2010 that reached 400%, compared to last year.

He went on to say that the amounts of money withdrawn from Mobi Baitok by clients of other banks reached by 40%, where those clients can take advantage of the service through K-net.

Kuwait Finance House launched this service through three vehicles that offer basic banking services, and that those vehicles are found in vital areas, especially at locations where the infrastructure there does not allow for ATM machines to be installed.

He revealed that the significant increase in the number of people benefitting from this service reflects their satisfaction, which prompted KFH to take into consideration increasing the number of Mobi Baitok vehicles to reach six during this year, in order to cover more areas and service more people.

He added that the total amount of money withdrawn during 2010 reached 76% compared to last year, which encouraged KFH to take into consideration increasing its ATM machines at malls and banks. He revealed that KFH owns a huge machine at Al-Salam Hospital that allows clients to withdraw US dollars, Euros, and UAE dirham. This service was launched in March 2010, and is highly popular with clients.

Aid Distribution in Kenya through M-PESA

The violence in Kenya a while back over disputed elections has provided the opportunity to recruit technology in form the innovative M-PESA system, to distribute emergency aid to many of the victims.

Reserve Bank of India forces PayPal to place more restrictions on Indian merchants

The Reserve Bank of India has set new rules on online payments which in turn has forced payments processor PayPal to impose more restrictions on their services in the country.

PayPal’s official blog staes the RBI is enforcing new rules "governing the processing and settlement of export-related receipts facilitated by online payment gateways".

From 1st March eBay merchants in India won’t be able to receive payments from abroad in excess of $500 per transaction. They will no longer be able to use any balance in their PayPal accounts to buy goods or services. Instead all payments must be first transferred into an Indian bank account.

PayPal has already being forced to suspend personal payments to and from India after falling foul of RBI licensing rules last year.

National Australia Bank's online banking in trouble again

National Australia Bank's customers have been unable to access their accounts while telephone banking services was also briefly affected earlier this week.

A bank spokesman told “The Australian” newspaper that the outage was caused by a glitch with its secure log-in system and there were no security risks.

In an attempt to placate unhappy customers NAB took to Twitter urging them to use the telephone service.

The bank spent much of last December suffering from payment processing problems attributed to a "corrupted file in the processing batch" leading to thousands of complaints.

Remittances to Zimbabwe – on the rise

The Reserve Bank of Zimbabwe (RBZ) has said that remittances from Zimbabweans living abroad increased 32.9% in 2010 to about US$263.3 million.

Figures released by the central bank showed that remittances had increased significantly from the US$198.2 million recorded in 2009.

“The growth rates primarily reflected the market’s confidence in the formal channel of remitting free funds,” the central bank said in a recent economic update.

“In the outlook, the sector is poised to grow in 2011 due to the broadening of the Bureau De Change operating framework.”

Millions of Zimbabweans now live in neighbouring Botswana and South Africa while others have settled in Europe and the United States. Most left the country over the last decade to escape a biting economic crisis characterized by the country’s world record inflation and high unemployment.

The vast majority Zimbabwean expatriates send money back home to support their families.

Crisis of Capitalism

In this short RSA Animate, radical sociologist David Harvey asks if it is time to look beyond capitalism, towards a new social order that would allow us to live within a system that could be responsible, just and humane.