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Retail payments in the global economy (Review Report)Published by: Datamonitor Published: Dec. 5, 2006 - 54 Pages Table of ContentsDATAMONITOR VIEW 1 CATALYST 1 SUMMARY 1 METHODOLOGY 2 EXECUTIVE SUMMARY 3 Introduction 3 Retail Payments in the Post-SEPA Landscape (Market Focus) 3 Retail Payments: Preparing for the Future (Strategy Focus) 3 Retail Banking Payment Operations (Technology Focus) 4 Retail Payments Databooks (Databook) 4 RETAIL PAYMENTS IN THE POST-SEPA LANDSCAPE (MARKET FOCUS) 8 Summary 8 Pressure on payment margins is forcing banks to develop new customer segments 8 The payments industry continues to be a volume game 8 Downwards pressure on charges increases as the industry continues to be ever more competitive 9 Required spend on payments is often largely outside of the banks control... 10 However, the sub-prime market offer an rare opportunity for new revenue generation in some markets 10 SEPA will open up the European payments industry for players worldwide 11 Banks in the Eurozone will feel the brunt of the SEPA initiative 11 European banks outside of the Eurozone will not be priorities in the short term 12 SEPA will open up competition with banks outside of Europe 12 The impact of SEPA will drive consolidation across the payments industry 13 Pan European Automated Clearing Houses (PE-ACHs) are emerging 13 Domestic debit card schemes are all but certain to disappear over the long term 14 Payment processor service providers are gaining market share 14 As payments borders come down in Europe, so the opportunities for fraud will increase 15 The benefits of the EMV directive are showing... 15 ... but fraud and risk management remain major problem as the payments industry evolves under SEPA 16 RETAIL PAYMENTS: PREPARING FOR THE FUTURE (STRATEGY FOCUS) 17 Summary 17 Product innovation in the payments market is critical for developing margins and markets 17 Prepaid cards facilitate the conversion of previously unviable market segments to electronic payments 17 Contactless functionality has significant potential to take share from cash dominated markets 17 Banks are developing multi-functional products in order to improve both customer acquisition and retention 18 Customer segmentation - a card for every niche 18 The threat that online and mobile network payment providers pose to the incumbent industry is very real 18 SEPA is driving banks to examine how to leverage spend beyond simply SEPA compliance 19 Institutions' infrastructure investments in SEPA must be aligned with their wider business goals 19 Banks should consider how SEPA investments will impact future product innovation potential 20 Institutions must develop sourcing strategies that will support their future payments vision 21 Sourcing strategies need to be aligned with both their business and cost focus 21 Legacy payment instruments such as checks will start to be phased out 22 The issue of payments fraud will become even more critical as the industry opens up 22 Payments fraud is a moving target that institutions must continuously address 23 As fraudsters become more sophisticated, the case for transaction monitoring grows 24 RETAIL BANKING PAYMENT OPERATIONS (TECHNOLOGY FOCUS) 25 Summary 25 Legacy payments systems are holding banks back from being flexible and adaptable 25 Simplification/consolidation of payments operations will enable flexibility going forward 26 Banks must get back to basics when addressing payments infrastructure investments 28 The automation of payments processes will be key in improving efficiency and enabling STP 28 Payments operations improvements must be implemented with the maximum efficiency and minimum risk 28 A long term enterprise-wide payments strategy will prevent the duplication of investment across the business 29 Upgrading payments operations will facilitate sophisticated fraud detection techniques 29 Analytics will be key to fraud detection, and can be leveraged from AML investments 29 However, investments in transaction origination security should filter out the majority of fraudulent attempts 30 RETAIL PAYMENTS IN EUROPE (DATABOOK) 32 Introduction 32 European payments IT spend by country, 2005 - 2009 32 European payments IT spend by source, 2005 - 2009 34 European payments IT spend by type, 2005 - 2009 35 RETAIL PAYMENTS IN NORTH AMERICA (DATABOOK) 36 Introduction 36 North American payments IT spend by country, 2005 - 2009 36 North American payments IT spend by source, 2005 - 2009 38 North American payments IT spend by type, 2005 - 2009 39 CARD PAYMENTS (DATABOOK) 40 Introduction 40 Pay now card IT spend by country, 2005 - 2009 40 Pay later card IT spend by source, 2005 - 2009 42 Card payments IT spend by source, 2005 - 2009 44 AUTOMATED CLEARING HOUSE PAYMENTS (DATABOOK) 45 Introduction 45 European ACH payments IT spend by country, 2005 - 2009 45 North American ACH payments IT spend by country, 2005 - 2009 47 ACH payments IT spend by source, 2005 - 2009 47 PAYMENTS FRAUD (DATABOOK) 49 Introduction 49 European payments fraud IT spend by country, 2005 - 2009 49 North American payments fraud IT spend by country, 2005 - 2009 51 Payments fraud IT spend by source, 2005 - 2009 52 APPENDIX 53 Definitions 53 Further reading 53 Ask the analyst 54 List of Tables Table 1: European payments IT spend by country, 2005 - 2009 33 Table 2: European payments IT spend by source, 2005 - 2009 34 Table 3: European payments IT spend by type, 2005 - 2009 35 Table 4: North American payments IT spend by country, 2005 - 2009 37 Table 5: North American payments IT spend by source, 2005 - 2009 38 Table 6: North American payments IT spend by type, 2005 - 2009 39 Table 7: Pay now card IT spend by country, 2005 - 2009 41 Table 8: Pay later card IT spend by country, 2005 - 2009 43 Table 9: Card payments IT spend by source, 2005 - 2009 44 Table 10: European ACH payments IT spend by country, 2005 - 2009 46 Table 11: North American ACH payments IT spend by country, 2005 - 2009 47 Table 12: ACH payments IT spend by source, 2005 - 2009 48 Table 13: European payments fraud IT spend by country, 2005 - 2009 50 Table 14: North American payments fraud IT spend by country, 2005 - 2009 51 Table 15: Payments fraud IT spend by source, 2005 - 2009 52 List of Figures Figure 1: European retail banks regulatory spend drivers 12 Figure 2: Fraud losses in the UK 15 Figure 3: European retail banks' payment project priorities 20 Figure 4: European retail payment players 22 Figure 5: Retail banks' fraud priority areas 23 Figure 6: Payments infrastructure in banks 27 Figure 7: Factors of authentication 31 Figure 8: European payments IT spend by country, 2005 - 2009 32 Figure 9: European payments IT spend by source, 2005 - 2009 34 Figure 10: European payments IT spend by type, 2005 - 2009 35 Figure 11: North American payments IT spend by country, 2005 - 2009 36 Figure 12: North American payments IT spend by source, 2005 - 2009 38 Figure 13: North American payments IT spend by type, 2005 - 2009 39 Figure 14: Pay now card IT spend by country, 2005 - 2009 40 Figure 15: Pay later card IT spend by country, 2005 - 2009 42 Figure 16: Card payments IT spend by source, 2005 - 2009 44 Figure 17: European ACH payments IT spend by country, 2005 - 2009 45 Figure 18: North American ACH payments IT spend by country, 2005 - 2009 47 Figure 19: ACH payments IT spend by source, 2005 - 2009 47 Figure 20: European payments fraud IT spend by country, 2005 - 2009 49 Figure 21: North American payments fraud IT spend by country, 2005 - 2009 51 Figure 22: Payments fraud IT spend by source, 2005 - 2009 52 AbstractIntroductionGoing forward, the payments industry is going to undergo dramatic changes. As a result, players in the industry are under pressure to address their payments strategies in order to position themselves for the future. Scope *Primarily covers the European, but also North American, payments markets *Discusses implications and industry dynamics for retail payments institutions Highlights Due to the lack of significant profit generation opportunities, banks are often reluctant to make any investments in their payments infrastructure. As a result, changes in the payments landscape are often driven by regulation (or the threat of it) rather than from internal necessity. Electronic payments volumes will continue to increase, driven by the move away from traditional cash and check markets, as well as the rise in new electronic payment instruments. As other methods of payment drop off, electronic fraud will become increasingly attractive to criminals so steps must be taken to minimize the risk and tackle fraud. As the retail banking industry continues along the path of consolidation and becomes increasingly competitive, a flexible payments infrastructure that can be operated and maintained at the minimum cost will be fundamental to supporting a responsive, customer oriented business going forward. Reasons to Purchase *Gain visibility into the dynamics of the retail payments market *Gain market insight to assist in your strategic planning and go-to-market strategy Get Full Details About This Report >> |
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