Now in its sixth year,
the World Payments Report from Capgemini, Royal Bank of
Scotland, and the European Financial Marketing Association looks at
the payments business as it faces challenges from economic and
competitive conditions, technology advances, increased regulatory
pressure and customer demands.
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Payments and other
transaction banking services have proved resilient during the
economic crisis, but the rapidly changing external environment will
require banks to decide to what extent payments are core to their
business strategies.
The World
Payments Report estimates that global e-payments and
m-payments collectively accounted for approximately 20.3bn
transactions valued at some €832bn ($1.16tn) in 2009.
“Admittedly, there is a
significant lag in global payments data, so it is premature to
conclude what effect the crisis will ultimately have had on
payments flows,” the report said.
But the data showed there has
been no significant impact on emerging-market payments flows in
2009, and that the mature markets of Europe and the US continued to
grow overall, although the mix of payment instruments may be
changing.
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By GlobalDataThe size of the US and
European payments markets increased slightly in 2009 in terms of
the number of transactions and the aggregate value of those payment
flows. Interim data from the UK and other developed economies
suggest there is every reason to believe payments were still
growing as of mid-2010. The report said this resilience in payments
demonstrates why retail payments remain a critical source of stable
revenues for many banks.
Optimising the payments
business, however, is becoming increasingly difficult as regulatory
compliance becomes more onerous.
Nearly all European Economic
Area Member States had transposed the Payment Services Directive
(PSD) into national law by August. However, certain inconsistencies
in interpretation still remain, and these ambiguities will need to
be resolved to help ensure SEPA can progress as planned.
Moreover, banks are likely to
see a growing challenge from non-bank payment service providers
(PSPs), which have proved willing to innovate on technology and
business models to migrate existing and new customers to their
payments services.
Of the estimated global
e-payments and m-payments, almost 8.6% of the volume was conducted
via alternative (non-bank) providers and channels, rather than
traditional banking providers. With card payments representing some
158bn transactions, another sizeable proportion of these were
captured by alternative providers.
What lies
ahead
Payments trends show the
volume of payments is expanding, although there is still a distinct
disparity in behaviour among different countries and regions around
the globe. This partly reflects longstanding user preferences and
the growing availability of modern alternatives such as m- and
e-payments.
Industry and some government
initiatives are also encouraging electronic payments but the use of
cash is still growing, representing a significant cost for global
economies.
Regulatory initiatives (including SEPA, PSD and Basel III)
all have the potential to increase costs and put pressure on
margins, prompting banks to look for more cost-effective solutions.
New liquidity rules will also challenge bank business models and
require excellence in managing intraday liquidity.
