
The purpose of this document is to summarise Newcastle Building Society's approved Card Issuing Policy to current and possible future business partners. The document is based on Version 0.6 of the Card Policy Document approved by the Newcastle Building Society Board of Directors on 27th June 2006.
The purpose of the policy itself is to provide clear and concise instructions relating to the pursuit and control of quality Card issuing business and in particular to set out Newcastle Building Society's risk appetite and how it identifies, measures, monitors and controls that risk.
Currently, the Society assesses each card scheme on its own merit against an agreed approvals procedure. The requirements of this procedure are to ensure that:
Issuing policy will be reviewed by the Executive on an ongoing basis and referred to the (Risk) Committee of the Board for changes considered appropriate. Annually, full Policy Statements relating to issuing will be readdressed and confirmed, or amended, as necessary.
NBS is responsible for holding all funds, performing daily reconciliation and settlement with MasterCard®, maximizing interest on balances held and settling interchange and transaction fees with Programme Managers. NBS is responsible for all compliance items and for approving all aspects of any scheme in operation. NBS holds the relationship with MasterCard® on behalf of the Programme Manager and is responsible for proposing all new schemes or amendments to schemes.
MasterCard® provides the mechanism for cards to be used via their merchant/acquirer networks and calculates all clearing and settlement amounts. MasterCard® is also responsible for approving all card scheme types, card designs and marketing/promotional material. Any disputes between the card issuer (NBS) and merchants/acquirers are handled by MasterCard®.
The Processor is responsible for the technical system which authorises or declines each transaction. All card balances are held on the Processor's system. The Processor also manages card production and implements velocity checks as part of card fraud management.
The Programme Manager is typically any third party wishing to issue cards but is not eligible for MasterCard® issuer membership (NBS sponsors the Programme Manager to issue cards). The Programme Manager proposes schemes to NBS for approval along with associated items such as card designs, terms and conditions, card volume projections and transaction profiles for the scheme.
NBS passes on responsibility for any fraud (except internal fraud) through contracts in place with Programme Managers/Nomad Processing Services. This is reflected in all contractual arrangements. As Programme Managers and Processors have an exposure for professional indemnity/fidelity insurance risks (negligence & fraud), contractual arrangements will incorporate the Society requirements that these covers are in place throughout the term of the contract with the Society with appropriate annual levels of indemnity being set, minimum recommended level £1m. On an annual basis the Compliance/Insurance Manager will carry out insurance audits of Programme Managers and feedback the results to the Card Relationship Manager and Chief Solicitor.
The prepaid card market in the UK is mirroring the already mature market of the USA. The common types of card schemes are:
The following factors are key to the operation of the card:
Prepaid cards are covered by the FSA's Electronic Money Sourcebook and as such limits are placed on the value that can be loaded on the cards. It is generally accepted that the lower the value on the card, and the more control over how the money is loaded and taken from the card, the lower the risk.
Each card scheme will be defined by parameters including
It is a requirement that, proportionate to the risk, the source of funds is identified. This is typically carried out by Know your customer (KYC) checks when the card is ordered/purchased.
The following are deemed acceptable subject to them having satisfied normal vetting procedures. Card schemes should not conflict with agreements in place with other third parties where some exclusivity has been agreed.
All new Programme Managers will be subject to a rigorous approvals procedure based on agreed internal procedures. The following departments are involved in the approval of a new Programme Manager or card scheme:
Legal Department
Finance Department
Newcastle Strategic Solutions Limited (NSSL) Management
The following central controls must be satisfied:
NBS will be happy to advise further on any aspects of possible card schemes. Requests for information should in the first instance be directed to Head of Card Relations:
Newcastle Building Society
Principal Office
Portland House
New Bridge Street
Newcastle upon Tyne
NE1 8AL
As a Principal Member of MasterCard®, Newcastle Building Society is currently acting as the issuing bank for several innovative prepaid and debit card schemes. These schemes range from non-reloadable gift card schemes through to fully reloadable online and instant issue prepaid cards from personal spending, payroll, employee incentive and money share.
Newcastle Building Society through their subsidiary Newcastle Strategic Solutions, Card Solutions celebrated its 1st anniversary in December 2006 with the production of its millionth prepaid card. The Society now has the most MasterCard® approved card programmes in the UK market and predicts that the huge growth is set to continue in 2008. Loyalty and card programs are an excellent opportunity to reward customers and reinforce repeat visits and personal referrals from your customers.
To discuss how this system could work for you call +44 (0)191 244 1777 or email cardsolutions@newcastle.co.uk.