Polish banks prep mobile payments system to take on card schemes

A group of six leading Polish banks have agreed to come together to define a common standard for mobile payments, creating a system that could threaten the dominance of Visa and MasterCard.

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Polish banks prep mobile payments system to take on card schemes

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

Alior Bank, Bank Millennium, Bank Zachodni WBK, BRE Bank, ING Bank Śląski and PKO Bank Polsk - which between them account for 70% of Poland's electronic banking market - say that they will create a joint venture to develop the standards under the national regulator.

The offering will be based on PKO Bank's IKO app, which was launched in March and lets customers make in-store payments and ATM withdrawals by keying in a code generated by the app. Customers can also send money to recipients by entering their mobile phone number, like Barclays Pingit in the UK.

The system bypasses card firms, a fact that PKO's MD of electronic banking, Wojciech Bolanowski, admitted at MobeyDay last month, Visa was "not happy about".

Bank Millennium CEO Boguslaw Kott has openly admitted that the group is challenging Visa and MasterCard, telling Reuters: "This will be a more competitive system compared to the credit card system. The credit card system will probably be put under a question mark in the future."

The partners say that although similar collaborations are under way in places like Spain and the UK (where telcos have formed the Weve JV), their project is unique because it comes from financial institutions.

None of the six will have a dominating position, each using the same platform and then adding their own extra features, while the group says it is also open to bringing other banks and acquirers onboard.

Mateusz Morawiecki, chairman, of the Bank Zachodni WBK management board, says: "We are convinced that the initiative, which covers with its scope 70% of bank clients in Poland, stands very good chance to become a commonly used standard."

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Comments: (2)

A Finextra member 

I think this is a great move. There are many different hands involved in standard credit and debit card transactions, so this makes a lot of sense, and should lower the costs for merchants (should).

There is potentially a lot of opportunities for these banks to then look at how their infrastructure could be used to greater potential with other mobile wallet (e.g. Zync Wallet by CloudZync) solutions and companies out there, increasing dramatically their proposition and usage of the platform... 

 

I'm sure VISA and MasterCard are not happy at all...

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

For a long time, alternative payments have simply been offering a new form factor (e.g. mobile wallet) on top of the same old card network rails. We're recently seeing a change, with a spate of banks (e.g. Barclays) and nonbanks (e.g. Dwolla) introducing new methods of payment that bypass traditional card rails. By (potentially) offering lower MDF / MSC, they're likely to find favor with merchants. However, their value proposition to the consumer is unclear: Will they offer rewards and deferred payment, two benefits enjoyed by consumers with traditional credit cards? Performance of similar programs from multibank consortia has so far been mixed: While China UnionPay has been a resounding success, RuPay has barely managed to scratch the surface of retail payments in India, with its offering still restricted to debit cards. This is in spite of the fact that both China UnionPay and Rupay cover every bank in their respective country, and not just a handful. 

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