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Oz Government gives go-ahead for access card The Australian Government is to proceed in principle with a new smart card-based access card for health and welfare services, at the same time ruling out a compulsory national ID card. One of the aims of the new access card system is to enable people to obtain government benefits in a convenient and reliable way without having to re-register and repeat the same information each time they visit a different government office. It is hoped that the system will also assist in minimising fraud and misuse of public funds. The addition of a digital photograph enhances the identity security elements of the card,
protecting the cardholder’s identity and reducing the opportunities for fraud. The Australian Government needs to be sure that the A$92 billion paid each year in health and social service benefits is available to those who are eligible, ensuring that taxpayers’ money goes to the right people and that they get the right payment. A detailed analysis of the financial benefits of the access card by KPMG indicated that it could generate savings of up to A$3 billion over 10 years. The access card will replace 17 health and social services cards and vouchers across the Human Services portfolio. Once registered, people will only need to show their card when they want to access Government services. The access card will have limited cardholder information on it, but will
include the cardholder’s name, a digital photograph, their signature and card number. A microchip will store a photo, address, date of birth and details of any children or other dependants. The card will also provide cardholders with the option to voluntarily store other information such as emergency contact details, allergies, health alerts, chronic illnesses, immunisation information and organ donor status. The access card will be phased in over a two year registration period beginning in 2008. From early 2010, people will only be able to obtain government health and social service benefits if they have an access card. A$1.1 billion of the Australian government’s 2006-2007 federal budget has been allocated to the proposed national access card.
VIEWPOINT Brussels tires of slow progress towards Single Euro Payments Area The European Commission has threatened to take action under EU antitrust rules against the payment card industry – a clear indication that Brussels has had enough of the banks’ slow progress towards implementing the Single Euro Payments Area (Sepa). The Commission claims that banks and national card networks are conspiring to thwart competition by raising barriers to new entrants. The commission has initiated a consultation process and says if the preliminary report findings are borne out by the consultation it will consider legal action in individual cases. The inquiry will also be used to determine whether amendments to the regulatory framework for the payment card industry are necessary. The basic principle of Sepa is that payment transfers between countries should cost no more than a domestic euro transfer in the country of origin. As far as the card industry is concerned, banks should not charge more for cross-border card payments, ATM withdrawals and credit transfers than for corresponding national payments. However, the Commission says, much of the card industry operates on a purely national basis with 25 separate markets in the EU. Some national payment systems exclude non-banks from the cards business and sometimes charge high joining fees to new entrants. Agreements among local banks may also raise costs for new card issuers. In addition, credit card charges, to consumers and merchants, vary considerably from country to country. In some EU countries MasterCard and Visa interchange fees are 100% higher than in others. The row between the Commission and the credit card issuers is just one aspect of a wider dispute. The Commission says that making all forms of cross-border payments (including payment cards) as easy and affordable as domestic payments could save the EU economy between EUR50 and EUR100 billion per year. But, seen from the point of view of the banks, Sepa could reduce their payments revenue by as much as EUR29 billion - or 60% - by 2010. In the worst case scenario, say consultants CapGemini, banks would need to reduce their payments processing cost base by 50% or more just to maintain current profitability. It is not entirely surprising that Europe’s bankers are dragging their heels
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over the introduction of Sepa; cross-border payments have for years been a rich vein of profitable business. On the positive side, the European Commission has come up with some useful ideas: 'portable' bank account numbers, so that customers could keep their account number if they changed banks; minimum safeguards for protection against hacking, fraud and breakdowns in payment networks; and the creation of a single EU-wide phone number for reporting lost or stolen credit cards. Furthermore by removing legal barriers to cross-border direct debits, people could pay utility bills or magazine subscriptions in one member state through a direct debit set up via a bank in another. MasterCard is taking a constructive approach. ‘European consumers surveyed are ready and willing to use their cards abroad,’ says the association. ‘It's time to move from debate to action and make the Single European Payments Area a reality.’ Accordingly MasterCard Europe has outlined its own pricing programme for Sepa, with plans to introduce a single, harmonised and transparent set of prices for both intra-Sepa and national transactions with effect from 1 January 2007. MasterCard has also flagged the introduction from January 2008 of a single Sepa interchange structure that will apply to all crossborder debit transactions in the euro zone. One problem remains insoluble. The European directive on cross-border payments applies only to countries where the euro is the denomination of currency – but the most enthusiastic card users and most profitable banks in Europe are in the UK, which remains obdurately outside the eurozone. Will UK consumers always be penalised? ‘Some banks are more competitive than others and it always pays to shop around for a bank that may offer more competitive rates’ says APACS, the UK banks’ payment association. ‘The way to minimise the charges when you transfer money to Europe would be to tell your bank in the UK that you want to pay ALL the charges, i.e. those at both ends of the transaction. The receiving bank will not then levy charges. Secondly, you should quote the international bank account numbers (IBANs) for both accounts (which your respective banks will allocate). This will ensure that your payment is processed electronically where possible and may assist in the transaction being priced slightly lower.’ UK consumers can only live in hope… David Jones
Card Technology Today May 2006
government ID
Oz Government gives go-ahead for access card The Australian Government is to proceed in principle with a new smart card-based access card for health and welfare services, at the same time ruling out a compulsory national ID card. One of the aims of the new access card system is to enable people to obtain government benefits in a convenient and reliable way without having to re-register and repeat the same information each time they visit a different government office. It is hoped that the system will also assist in minimising fraud and misuse of public funds. The addition of a digital photograph enhances the identity security elements of the card,
protecting the cardholder’s identity and reducing the opportunities for fraud. The Australian Government needs to be sure that the A$92 billion paid each year in health and social service benefits is available to those who are eligible, ensuring that taxpayers’ money goes to the right people and that they get the right payment. A detailed analysis of the financial benefits of the access card by KPMG indicated that it could generate savings of up to A$3 billion over 10 years. The access card will replace 17 health and social services cards and vouchers across the Human Services portfolio. Once registered, people will only need to show their card when they want to access Government services. The access card will have limited cardholder information on it, but will
include the cardholder’s name, a digital photograph, their signature and card number. A microchip will store a photo, address, date of birth and details of any children or other dependants. The card will also provide cardholders with the option to voluntarily store other information such as emergency contact details, allergies, health alerts, chronic illnesses, immunisation information and organ donor status. The access card will be phased in over a two year registration period beginning in 2008. From early 2010, people will only be able to obtain government health and social service benefits if they have an access card. A$1.1 billion of the Australian government’s 2006-2007 federal budget has been allocated to the proposed national access card.
VIEWPOINT Brussels tires of slow progress towards Single Euro Payments Area The European Commission has threatened to take action under EU antitrust rules against the payment card industry – a clear indication that Brussels has had enough of the banks’ slow progress towards implementing the Single Euro Payments Area (Sepa). The Commission claims that banks and national card networks are conspiring to thwart competition by raising barriers to new entrants. The commission has initiated a consultation process and says if the preliminary report findings are borne out by the consultation it will consider legal action in individual cases. The inquiry will also be used to determine whether amendments to the regulatory framework for the payment card industry are necessary. The basic principle of Sepa is that payment transfers between countries should cost no more than a domestic euro transfer in the country of origin. As far as the card industry is concerned, banks should not charge more for cross-border card payments, ATM withdrawals and credit transfers than for corresponding national payments. However, the Commission says, much of the card industry operates on a purely national basis with 25 separate markets in the EU. Some national payment systems exclude non-banks from the cards business and sometimes charge high joining fees to new entrants. Agreements among local banks may also raise costs for new card issuers. In addition, credit card charges, to consumers and merchants, vary considerably from country to country. In some EU countries MasterCard and Visa interchange fees are 100% higher than in others. The row between the Commission and the credit card issuers is just one aspect of a wider dispute. The Commission says that making all forms of cross-border payments (including payment cards) as easy and affordable as domestic payments could save the EU economy between EUR50 and EUR100 billion per year. But, seen from the point of view of the banks, Sepa could reduce their payments revenue by as much as EUR29 billion - or 60% - by 2010. In the worst case scenario, say consultants CapGemini, banks would need to reduce their payments processing cost base by 50% or more just to maintain current profitability. It is not entirely surprising that Europe’s bankers are dragging their heels
16
over the introduction of Sepa; cross-border payments have for years been a rich vein of profitable business. On the positive side, the European Commission has come up with some useful ideas: 'portable' bank account numbers, so that customers could keep their account number if they changed banks; minimum safeguards for protection against hacking, fraud and breakdowns in payment networks; and the creation of a single EU-wide phone number for reporting lost or stolen credit cards. Furthermore by removing legal barriers to cross-border direct debits, people could pay utility bills or magazine subscriptions in one member state through a direct debit set up via a bank in another. MasterCard is taking a constructive approach. ‘European consumers surveyed are ready and willing to use their cards abroad,’ says the association. ‘It's time to move from debate to action and make the Single European Payments Area a reality.’ Accordingly MasterCard Europe has outlined its own pricing programme for Sepa, with plans to introduce a single, harmonised and transparent set of prices for both intra-Sepa and national transactions with effect from 1 January 2007. MasterCard has also flagged the introduction from January 2008 of a single Sepa interchange structure that will apply to all crossborder debit transactions in the euro zone. One problem remains insoluble. The European directive on cross-border payments applies only to countries where the euro is the denomination of currency – but the most enthusiastic card users and most profitable banks in Europe are in the UK, which remains obdurately outside the eurozone. Will UK consumers always be penalised? ‘Some banks are more competitive than others and it always pays to shop around for a bank that may offer more competitive rates’ says APACS, the UK banks’ payment association. ‘The way to minimise the charges when you transfer money to Europe would be to tell your bank in the UK that you want to pay ALL the charges, i.e. those at both ends of the transaction. The receiving bank will not then levy charges. Secondly, you should quote the international bank account numbers (IBANs) for both accounts (which your respective banks will allocate). This will ensure that your payment is processed electronically where possible and may assist in the transaction being priced slightly lower.’ UK consumers can only live in hope… David Jones
Card Technology Today May 2006