1 ©2007 TSYS. All Rights Reserved. Payment Systems Istanbul 3 rd March 2009 Presentation of...
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Transcript of 1 ©2007 TSYS. All Rights Reserved. Payment Systems Istanbul 3 rd March 2009 Presentation of...
1©2007 TSYS. All Rights Reserved.
Payment Systems
Istanbul
3rd March 2009Presentation of Mr.Simon Jarvis to Bilgi University Students
2
18 April 2023
Card Payment Cycle
Merchant
Settles Terminal
Purchase
Credit
Cash Advance
Acquirer
Merchant
Processor
Association
Vendor
Payment
Issuer
Cardholder
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18 April 2023
Supported card product types
Credit Revolving
Charge
Debit
Corporate
Pre-paid
Instalments
Affinity Cards
Proxy / Virtual Cards (e-Card)
Private label (profiled cards)
Co-Branded Cards
Payroll Cards
Health Cards
Remittance Cards
Travel Cards
Gift Cards
Custom Electronic Purse
Support issuance of Magnetic stripe and Chip (VSDC/M/Chip) cards:
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18 April 2023
Turkish Market Dynamics
• Bank Consolidation– Number of banks has nearly halved
in last ten years
– Over 60% of credit cards issued by top 4 issuers
• Foreign Ownership– Increase in assets owned by foreign
banks looking to benefit from fast growing market and gateway to the Region
• Regulation– Increasing regulatory supervision
– Eye to European harmonisation
• High Growth– 3rd largest credit card market in
Europe by cards issued
– Credit card loans have quadrupled since 2002
– Activation lagging issuance
• Highly innovative products, especially around loyalty and co-branding
– Sophisticated products and segmentation strategies
– Technology maximised to deliver innovations quickly
– Largely in-house processing
Turkey is an exciting and dynamic credit card market
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18 April 2023
Financial Commentary
Global Cards Markets
0500
1,0001,5002,0002,5003,000
USA China Japan Brazil Russia UK India S Korea Canada Mexico
• Markets Typically Follow An “Issuance First” Lifecycle … Transaction Volumes Grow As Infrastructure Matures
• Issuance Volumes Of BRIC Markets Take Longer To Translate Into Card Usage Reflecting Investment In POS/Consumer Propensity to Migrate From Cash
Turkey is forecast to be the 11th largest market for card based transaction by 2011
Millions Of Cards In Market 2006 - 2011
2006
2011
010203040506070
Billions Of Transactions In Market 2006 - 2011
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18 April 2023
Creating scale: comparable growth markets
• Comparable markets in Brazil and Turkey have been showing average growth of 20-24%, compared to India’s growth of 17% p.a.
• Both the Brazilian and Turkish markets have shown periods of accelerated growth over the period of 2004-05, reaching growth rates over 30%, albeit at the expense of growth in neighbouring years
• Turkish market continues to exhibit growth, even given current size, reflecting market potential.
• Datamonitor forecasts Turkey will be 11th largest card market by transactions in 2011
Comparable transaction volume growth
Turkey represents sizeable market today, but also one with considerable growth potential
Source: Financial Cards in India 2008 paper; Lafferty
0%
50%
100%
150%
200%
250%
2001 2002 2003 2004 2005 2006 2007
Txn
vol
ume
reba
sed
2003
AAGR %
23.9%
20.8%
17.1%
Comment
India
Brazil
Turkey
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18 April 2023
• Turkey is the fastest-growing card market in Europe– An underdeveloped cheque clearing system has enabled banks to
leapfrog from cash directly to card payments– Debit cards are used almost exclusively for cash withdrawals– The vast majority of banks are dual issuers of Visa and MasterCard– Turkey is one of the leading markets for affinity and co-branding
• Very high inflation has helped drive preference for Credit cards by consumers (due to cost of carrying cash, and advantage of delayed payment) and banks (who have been averse to providing longer term loans)– Credit cards dominate the sector and multiple credit card holding is
commonplace with 2 cards per cardholder on average– All Credit cards offer a revolving facility and are the most popular form
of consumer borrowing– Charge cards are virtually non-existent– Banks are the almost exclusive issuers of Credit cards and Retailer
cards have not had been successful (unlike in most other European markets)
• High foreign ownership of the Turkish banking sector• Processing, acquiring and card issuing is in most cases
undertaken in-house by banks (or bank-owned subsidiaries)• Turkey has a single central switch, BKM, which provides very
comprehensive and publicly available data on card payments• Growth estimates for credit cards vary between sources from
10.3% (2006-11, Euromonitor 2006) to 12.3% (2007-11, Datamonitor 2007)
Overview of the Turkish card market
938
1,176
1,543
1,7661,892
2,144
2,407
2,676
2,969
3,275
0
500
1000
1500
2000
2500
3000
3500
2002
2003
2004
2005
2006
2007
e
2008
e
2009
e
2010
e
2011
e
Tra
nsac
tions
(m
)
07-1102-06CAGR
13.2%25.4%Total
15.3%20.7%Pay now
12.3%27.8%Credit Card
Turkish card transactions by card type (2002-2011e)
Source: Datamonitor 2007
The Turkish market is the fastest growing in Europe (over 20% p.a. historically); this is forecast to continue, albeit at a reduced rate
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18 April 2023
• The ‘Big 4’ of Garanti, Kocbank, Akbank and IsBank make up 57% of credit card issuing
• The top 8 make up over 80% of credit card issuing
• All the banks issue both credit and debit/ATM cards, however some are more heavily weighted towards one than the other– 66.8% of Granati’s cards are credit
– Isbank is only half this (38.1%)
• BKM is local domestic switch, and offers the gateway to the international schemes
• Major banks are incorporated in an international banking group
• Major loyalty brands (World / Bonus) have licensed their loyalty programme to smaller banks
Overview of Turkish credit card issuing
5,625
5,000
4,008
3,741
2,600
2,170
1,883
1,494
1,203
926
749
2,850
66.8%
46.5%
38.1%
39.1%
77.9%
53.7%
8.8%
37.8%
21.3%
15.7%
0 1,000 2,000 3,000 4,000 5,000 6,000
Garanti Bankasi
Kocbank/Yapi ve Kredi
Akbank
Is Bankasi
Finansbank
HSBC
Vakiflar Bankasi
Denizbank
Ziraat Bankasi
Disbank
Halk Bankasi
Other
Card issued ('000)
Turkish credit card issuance by issuer, total = 32m(Credit cards as % of all cards issued)
Source: Datamonitor (2007)
N/A
N/A
Over 80% of issuing is controlled by the Top 8 banks; the largest 4 control nearly 60% of the market
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18 April 2023
• Acquiring and issuing are closely linked, driven by the sophisticated PoS loyalty systems in place
• The ‘Big 4’ acquired 88% of all transactions (2004), and issued 57% of credit cards (2006)
• Profitability is poor in the Acquiring market, but crucial for banks to the success of multi-brand loyalty schemes
• Acquiring is very competitive in Turkey and is mostly carried out in-house by the banks (approximately 20) or their acquiring/processing subsidiaries
• Competition is increasing due to the increased level of ‘on-us’ transactions due to loyalty/instalment programmes
• The market is dominated by 4 of the leading banks: YKB, Akbank, Isbank and Garanti bank; they are looking to leverage their control of the main loyalty schemes to take further acquiring market share, particularly from the smaller players
• Akbank is the exclusive acquirer of American Express (and issuer)
• Garanti (Turkiye Garanti Bankasi) represents JCB in merchant acquiring operations and processing. It also claims to have a 70% share of e-commerce transactions
Overview of the Turkish acquiring market
17.4%24.1%
15.5%
26.7%12.4%
21.4%
11.6%
15.5%
8.1%
6.7%
28.2%
12.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Credit cards issued (2006)Volume of acquired txns (2004)
Turkish credit card issuance by issuer(Credit cards as % of all cards issued)
Source: RBR (2004), Datamonitor (2007)
HSBC
Finansbank
Is Bankasi
Akbank
Kocbank/Yapi ve Kredi
Garanti Bankasi
Other
Self-acquiring is typical is the Turkish Market, particularly amongst the Big 4
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18 April 2023
Purchase
Customer makes purchase
TSYS authorizes using anti-fraud systems
Update
TSYS updates account and provides merchant clearing and settlement
Billing
At end of billing cycle, TSYS produces and mails statement
Account Creation
Customer applies
TSYS analyzes, creates account and issues plastic
What TSYS Does
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18 April 2023
Purchasing Behavior
Customers have unique buying patterns
TSYS analyzes using data analytic tools and informs the issuer
Loyalty
Customer uses card
TSYS provides processing, marketing, consulting and fulfillment services
CustomerService
Customer needs assistance
TSYS provides a workflow management system that profiles all the relationships issuers have with their cardholders
Collection
TSYS offers collections, debt, skip-tracing and bankruptcy management services
What TSYS Does
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18 April 2023
Future of Payments
• Further erosion into cash and other non card payments
• Need to ensure balance between parties to foster growth
• Risk will continue to be major concern
• Regulators will continue to oversee
• New technologies and channels– Mobile
– Voice
– Contactless
– E-payment
– Maximisation of the chip on the card