ViA concept to overcome security risks in card business

The UAE has a meeting within eight to 10 weeks with what seems to be a revolutionary concept in the banking business. The ViA Group operating headquarters opens in Dubai, introducing a new technology which is expected to become the first global, secure, instant clearing and settlement monetary solution with no parallel in the world.

In an interview with Emirates Business, Lars Olof Kanngard, developer, founder and president of ViA Group, said his concept will dismantle the old paradigm of middlemen and can handle any currency and complementary currency up to any value.

He also said the concept will offer a definite solution to the issue of security in the contemporary banking sector, making it nearly impossible to breach customers' accounts or have fraud cases in ATM or credit cards, which are leading to multi-billions of loses annually.



So what is the ViA concept?

ViA stands for Via Instant Access, which is a way to conduct, clear and settle transactions of any value anywhere in the world. Today, there are no card accounts targeting the emerging markets and the middle class segment. Our ViA concept is different from the current system. Banks around the world target only 20 per cent of potential consumers who are at the top-end of the pyramid because their transactions are large and the fees are huge.

We are targeting the middle class, which represents around 60 per cent of potential customers. This segment is so far neglected by the banking system because their transactions are small in value and huge in numbers, so profits will be limited and the operating costs high.

We invented the ViA system, which will offer banking services to this segment through an innovative solution that can use the internet and mobile phone networks in carrying out transactions worldwide. This will create a boundless payment methodology, allowing our clients to transact and transfer money from anywhere in the world to anywhere else instantly, securely and at the lowest rates. It is a card system that stores the value and can be used in any place in the world because the infrastructure for communications is there – the internet and the mobile phone networks.

How will it be able to solve the security problems?

In the current banking system, Point of Sale (PoS) terminals can read the card number and the keyboard can store the PIN. There are around 23 million PoS terminals around the world and it is easy for any of them to be compromised. Also, any transaction by a card goes through several processes – up to 12 from the merchant until settlement. In most of these processes, the card number and sometimes the PIN code can be accessed by a lot of people and this makes the system highly vulnerable.

We have introduced the STS (Secure Transaction String), which shifts the basic information to the microchip in the card instead of the PoS terminal. The card number and PIN is encrypted with thousands of encryptions in each card. Only the company and the client have access to this information while the merchant will be able to get a reference number for the account, not the account number. With this concept, clients can use any terminal, even if it is unsecure, without the fear of being compromised.

When using STS, all data is encrypted directly on the spot in the smart chip of the SIM card and no personal data is visible or accessible to any device during the chain of clearing and settling the transactions. Through the solution we are offering, fraud cases will soon be history.

How will ViA work to serve the huge segment of potential clients that you pointed out and what are the fees and charges?

ViA Group is opening up pool accounts in banks, and companies with large numbers of employees – such as construction companies – will transfer the salaries to these accounts. The companies will send us a file with the names of the employees and their salaries. The pool accounts will act as custody accounts. When we get confirmation from the banks that the money is there in the accounts, we will add salaries to the accounts of employees and they can use ViA cards for any transactions, money transfer or cash withdrawals.

For merchants who always use cash because their clients do not hold cards and the value of transactions are small, we will distribute around four million POS devices free of change during the first year of operation. The connection will depend on the internet and mobile phone networks.

Our innovative POS devices can be handled by shop cashiers. We even have portable devices that home delivery staff can use to receive payments. Our charges are unified at two per cent of any transaction at any value without a minimum charge. The merchants will be charged this amount in purchases while the clients will be charged for money transfers. This will be a revolutionary facility for expatriates because any worker can transfer money from his ViA account to his family's ViA account, in India, for example, instantly and at two per cent charges only.

How do you plan to launch the service?

We will launch our global operations from here in Dubai within the next eight to 10 weeks. ViA is the only global monetary and stored value solution with headquarters in Dubai. This reflects the increasing importance of the UAE as a global financial centre, thanks to its corporate and culture environment and the co-operation of the Dubai Department of Economic Affairs and the Dubai Chamber. We received classification as a financial institution in the country in 2006 and Dubai will be the global operating headquarters of the ViA Group.

We plan to start our services for between 800,000 and one million clients in the UAE this year. Dubai is in the centre of our targeted markets in the Middle East and Asia where emerging markets are expanding very fast and we have already secured partners in more than 20 countries and have another 15 countries under negotiations.

ViA will be in operation with local partners in around 15 countries before the end of the year. We expect around 50 million cardholders during the next eight years. We will start distributing four million POS devices and we expect the number of devices to reach tens of millions. We estimated a country such as India will be a market for around 20 million POS devices.

The company's capital has reached more than $100m (Dh367.5m) and we are planning to sell country licences around the world to collect another $250m within the next three to five years. We are selling a percentage of these licences but the group will keep at least 40 per cent of the ownership.

Have you got a licence from the UAE Central Bank and what is its supervision over your operations?

No, we did not get a licence from the Central Bank because the Central Bank regulates companies that deal in money. The ViA Group is handling transactions, not money. Our business is to facilitate transactions for middle people. However, our accounts are in banks that are regulated by the Central Bank and accordingly we will be under the jurisdiction of central banks around the world. We are fully compliant with rules and regulations of central banks regarding transparency, disclosure and security. All our operations are being settled in the banking system and accordingly our operations are complaint with rules and regulations of central banks and monetary authorities.

What about compliance with anti-money laundering and anti-terrorism finance regulations?

This will be monitored very closely, and through ViA transactions authorities can have better control over illegal activities. If a worker's salary is around Dh3,000 and he transfers Dh20,000 through our system, it will be clear and we will report such transactions to authorities. Our system will never allow breach of regulations; on the contrary it will give a better control over such activities because it will give a clearer vision of transactions vis-a-vis the income of suspects and their spending and transactions.



Lars Olof Känngard: Developer, Founder and President of ViA Group

Känngård is a serial entrepreneur who has been involved across the world at the executive level in planning, developing and implementing electronic systems for the last 35 years.

In 2003, he innovated the security solution STS: Secure Transaction String, which has a global patent pending.

In the early 70s he developed his first patented application for the Safety Lok System – a radio-frequency reflector built into price tags and bank notes for tracing shoplifters and bank robbers. This technology is known today as RFID.

During the 90s Känngård co-founded Telitel AB, which was the first Pan-European tele-operator.

From 1999-2000, Känngård was business development manager for Dubai Internet City where he was responsible for creating strategic communication plans, including a teleport and full RFP procedures.

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