The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘Payments’ Category

ING DIRECT Frees Canadians from Bank Fees with THRiVE ChequingTM, a No-Fee Daily Chequing Account that actually pays interest

Exciting news from ING this morning.  I knew this was coming but not the details till now.  For more details go to which is a very cool URL relative to this product.

I have been preaching for some time that bank product design since 2007 is not really attacking the core aspect of post crisis consumer need which I would characterise as features that support a deleveraging environment, where people saving and paying down debt is the defining average consumer strategy.  This new product from ING supports that strategy with a full featured yet cheap chequing facility.

ING Direct Canada Press release

August 18, 2010 @ 06:00AM

TORONTO – ING DIRECT today announced the upcoming launch of THRiVE Chequing, an online, no-fee daily chequing account that will enable Canadians to deposit, withdraw or transfer money for free, all while earning interest.  The first chequing account made for Savers, THRiVE Chequing stems from the frustration many Canadians feel about unfair bank fees that are on the rise.

According to a recent national poll conducted by Angus Reid Public Opinion on behalf of ING DIRECT, a quarter of Canadians are simply unaware of how much they pay in monthly bank fees, which on average is about $185 annually.

Written by Colin Henderson

August 18, 2010 at 10:26

Posted in Payments

SEPA – more confusion

Paul Styles nicely sums up the state of confusion amongst banks that surrounds SEPA.

Uncertainty piled on uncertainty – the SEPA story

And then came Finextra’s report of 10 June 2010 which proclaimed “SEPA migration deadlines: dates floated but no decision”. Uncertainty continues to reign…

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Written by Colin Henderson

June 20, 2010 at 22:44

Posted in Payments, SEPA

A model to help understand mobile payments | Glenbrook

The world of payments is mysterious and confusing to most bankers, and mobile payments is orders of magnitude worse.  Glenbrook operate on a simple categorisation that helps to follow.  This is a nice review of CTIA Wirleless conference just held at Las Vegas.

Mobile Payment Themes from CTIA | PaymentsViews

  1. Point of Sale (POS),
  2. eCommerce,
  3. Person-to-Person,
  4. Bill Payment and
  5. B2B
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Written by Colin Henderson

March 28, 2010 at 23:26

Posted in Payments

Non Cash Growth as a barometer of Payment Innovation

CapGemini have come out with their World Payments Report – 2009 [pdf 60 pages]. Lots of statistics, but the one that leapt out at me is this.


Japan stands out as a growth leader, despite being a mature economy.   Certainly their growth potential is large given the traditional consumer cash economy, but I have to look at the North American lowly 5% and wonder that lack of innovation in payments is not a driver. Certainly there remains lots of cash transactions to convert to payments but nominal innovation in the works to migrate to electronic.  The report notes that cash in circulation continues to growth in the Eurozone.

There is an interesting section reviewing the payments innovation in Asia, and a chapter devoted to summarising the state of SEPA.



Written by Colin Henderson

September 10, 2009 at 09:06

Posted in Payments, SEPA, US

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Bring the banking experience forward to the transactional experience

There is an enormous intelligence in this paragraph from Dave. It centres on the reality that with each transaction, a consumer is making a decision about their banking service. That service may be merely a payment card, or it may be a BarclaysBofALloyds Card. it doesn’t matter.

What has really happened is that the product experience has transferred from the old view of product, the bank account, to the new view, which is the experience. The experience occurs at the ATM, the POS terminal, the online banking session, the iphone app (oops you haven’t got that!). The customer experience is in the use of the account, not in the interest rate. That rate stuff is relegated to another mind space that is related to return and investment quality. That other mind space is critical, but not at the point of transactional experience.

United we fall | Digital Money Forum

Retailers don’t want to stop taking cards and go back to cash, but neither would they expect the product to be provided for free. So what is the real dynamic? Many people might sympathise with the retailers’ central complaint, that interchange has not evolved to reflect the modern retail payment environment, while being sceptical that a regulatory transfer of resources from one group (banks) to another group (retailers) will result in any benefit to the consumer. But there is a dynamic, so we cannot be static in response. We as an industry (by which I mean the electronic payments industry) need to demonstrate to retailers that our products are worth paying for. As I’m learning from the Innovation in Payments work over at the CSFI, if we restrict the value proposition to the payment transaction, this is difficult. It’s the value-added services around the payment transaction that create our future proposition.

This is essential stuff to consider in building new services. The traditional view of biulding a bank account goes like this:

  • how many free ATM transactions
  • how many free debit transactions
  • at which balance will interest kick in

These assumptions are negative in nature in a consumers view. How about a value proposition that says ..

  • monthly fee = $ XX
  • ATM – free
  • debit – free
  • interest – zero
  • savings account – no debit and high rates

Relevance to Bankwatch:
Of course I am simlifying here, but the point is to address the features of the account towards the requirements of the customer. Customers want simplicity, and understandabilty [I know that is not a word]. Take a look at any telco site and do the opposite. Allow customers to understand on the first page, what they are going to get.

Written by Colin Henderson

July 29, 2009 at 16:16

Posted in Payments

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Report: “The Role of Convenience and Risk in Consumers’ Means of Payment” | Bank of Canada

This is an unusual but insightful new working paper released today, on what the Bank of Canada refer to, in a somewhat quirky fashion, as “means of payment”. The survey and analysis compares use of cash, debit and credit. What is insightful, is that after establishing the consumer view on the three payment methods it tries to get at why people feel this way. When I asked Dave Birch the other day – what is the right strategy of banks and payments providers to increase their volumes? …. his answer was simple – increase share by taking it from cash. Even in Canada, cash is far and away the largest payment method. Anyhow, here is some analysis of the report, which can be downloaded at the foot of this post or at BofC site. [pdf 27 pages]

The Role of Convenience and Risk in Consumers’ Means of Payment | Bank of Canada

The survey results indicate that Canadians perceive debit cards to be the most convenient payment method: 70 per cent of respondents state that debit cards are very convenient, compared to 62 per cent for cash and 59 per cent for credit cards. Credit cards are seen as the most risky MOP: 36 per cent of respondents perceive credit cards to have high risk, compared to 21 per cent for cash and 19 per cent for debit cards.

The survey also suggests that cash is the most frequently used MOP: 73 per cent use cash at least once a week, compared to 64 per cent for debit cards and 36 per cent for credit cards. While all respondents use cash, 18 per cent of respondents say they never use debit cards and 24 per cent
say they never use credit cards.

There are several conclusions embedded in their summary, although its easy to imply a ‘but …. ‘ after each:

  1. cash is most used payment method
  2. debit is most trusted
  3. debit is most convenient
  4. credit cards are most risky

Beyond the summary are the demographic, educational and income there are impacts on the conclusions. Incidentally the survey was conducted over a reasonable spectrum of income and demographic Canadians. I won’t post the tables here because they are hard to follow. For the mathematicians, I suggest you download the report.

According to the ordered probit analysis shown in Table 2, consumers with higher education and income perceive significantly higher levels of convenience for debit and credit cards. Older consumers tend to find debit cards less convenient and credit cards more convenient. Men perceive cash to be more convenient than do women, and perceive debit and credit cards to be less convenient. As confirmed by a joint test of significance, there are no significant differences across demographic groups when it comes to the convenience of cash, aside from gender.

Relevance to Bankwatch:
While noting that more detailed and granular work is required, the study concludes that perceived risk is a strong driver of consumer decisions in payment methods choice. While there are variances by income and age, the importance of risk and convenience remains. There are embedded risk issues that are common to all demographic types. Finally the use of cash remains high largely because of convenience.

There are two aspects for payments to address and encroach on cash usage – convenience and risk. What I take away from this paper is that both must be addressed to be successful.

the role of convenience and risk in consumers means of payments dp09-8.pdf

Written by Colin Henderson

July 17, 2009 at 10:02

Posted in Payments

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A chat with Dave Birch | whirlwind review of changes in financial services

Today I had the pleasure of a chat with Dave while he visited Toronto on business. Inevitably the conversation weaved in and around banks, payments, and what is wrong with both. As we chatted it is evident there is much change going on in the world of financial services, and that change may or may not be as expected. It appears banks are not innovating much anywhere at the moment as predicted, while on the payments front there is a host of activity and very different activity in many parts of the world.

This fits with my general theme of these times that innovation in banking will come from outside banks, and that banks will generally (not all) be relegated to a role of financial utilities. We spoke about the enormous challenge banks have to digest the mergers and takeovers which resulted from the banking crisis. The combination of mergers, new regulation, and concern for conservation of capital leads many banks down this path. Euro banks have the additional challenge of absorbing SEPA and the associated changes there which are neither easy nor cheap.

Innovation will come from non-banks, from payments providers, even credit card companies, and Dave was kind enough to provide some insight there, and show me some pretty cool stuff coming later this year.

Back to the topic of banks the one thing they generally appear to have grasped is the importance of mobile; they remain unsure how or what to implement, but mobile is important, so we can expect to see more work in that area.

Now off to read my newly autographed copy of the 2009 Digital Money Reader!

Written by Colin Henderson

July 14, 2009 at 14:10

German and French banks push ahead with new debit card scheme | Finextra

Not often we see a plausible alternative in the payments space from banks, but here is one in the works.

German and French banks push ahead with new debit card scheme | finextra

Bundesbank board member Hans Georg Fabritius told the conference that a Visa and MasterCard duopoly is “an unsatisfying vision” for political and economic reasons. However, he warned that while the French and German project, called Monnet, is “promising” it is only a concept and he would want other countries to join in.

Written by Colin Henderson

July 12, 2009 at 22:30

Posted in Debit cards, Payments

Tagged with ,

DOCOMO to Launch Mobile Remittance Service

Banks continue to be challenged by disintermediation from telco’s and here is another example, this time in Japan.  The service will launch 21st July, and allow sending up to $200 with only the payee’s phone number being required.

An interesting tweak is the ability to have the money deposited with DOCOMO under the guise of a credit to your account, however this is deposit taking by another name.

DOCOMO to launch mobile payments service

Customers of DOCOMO’s i-mode™ mobile Internet service on the FOMA™ 3G network will be able to remit up to 20,000 yen (about 208 U.S. dollars) per transfer, basically just by inputting the payee’s mobile phone number. The payee receives a mail notification via their DOCOMO mobile phone and is given the option of depositing the money in a domestic bank account or having the amount credited to their monthly DOCOMO phone bill. The payee can receive remittances totaling up to 200,000 yen (about 2,080 U.S. dollars) per month.


It is a lucrative service with charges to payor and payee.

The charges per payment (including consumption tax) will be 105 yen for the payer and 65 yen for the payee.

Researched by Nobuyo Henderson

Written by Colin Henderson

July 4, 2009 at 17:15

Bell, Rogers, Telus to launch mobile payment service | Canada

Canadian Telco’s beat the banks out with the first serious country wide example of mobile payments in Canada, and frankly one of few in the world.  This is just one more example of disaggregated financial services, that cip away parts of what was previously banks’ territory.

The use of NFC technology is also worth noting here.  NFC (Near Field Communications) permits wireless data transfer over distances up to 10 cm.  This is designed to eliminate accidentally purchasing Dave Birch’s coffee for him.

In all seriousness while this has been a long time coming, my sense has always been that the telco’s would be front and centre in the payments business.  The 3.5% fee they are charging is essentially money for next to nothing to them in terms of revenue vs outlay.  They already have the riht deveice in the hands of consumers so they are off to the races.

Bell, Rogers, Telus to launch mobile payment service

The venture is the first tentative step toward a true mobile wallet, where phones equipped with the NFC chips themselves could be used in everyday transactions. Such phones are already in use in countries like South Korea and Japan, but have yet to come to North America except in trials.

Robin Dua, president of Enstream, said he hopes the service’s use of the NFC-enabled cards will pave the way for future adoption of NFC chip-enabled phones.

The software will work on most smartphones, including many of Research in Motion’s BlackBerrys. An iPhone application is also in the works he said.

Written by Colin Henderson

June 14, 2009 at 20:20

Posted in Payments

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