The global payments industry is robust and growing even through the worldwide recession, according to a study released in September 2011. The World Payments Report 2011, the seventh annual study sponsored by U.K. companies Capgemini S.A. and the Royal Bank of Scotland PLC, as well as by the European Financial Management Association, looked at trends in payment volumes and the payment tools used by the industry. It also studied regulatory and industry changes driving change in the industry and successful strategies for coping in the resulting new environment.
"Payments have weathered the economic crisis well: the volume of noncash payments globally continued to grow in 2009, albeit at a more modest pace than in recent years," the paper said. "Initial data suggests the growth in volumes picked up again in 2010, but several external and internal factors are driving banks and forcing transformation in the industry."
The report said the impact of the shifting regulatory environment, the rapidity of technological change, the standardization of the industry and the blurring of lines among traditional payment transactions will significantly impact ISOs. It also stated that ISOs and merchant level salespeople (MLSs) must learn to specialize and rely more on their "ability to build a distinctive set of products and services."
The report said it is likely the industry will eventually sort itself into companies that sell wholesale processing services and companies that focus on merchant level sales "since few are likely to have the scale, capabilities, strategic ambition or will to pursue both ends of the value chain as it disaggregates."
In addition, the report predicted a wholesale shift in the way banks, processors and ISOs will do business and concluded consolidation of the processing industry is "inevitable" because only a few large banks will have the capacity for this task.
The study found that the trends driving change include:
The report also indicated ISOs and MLSs may be better positioned than banks to leverage technology and harness it to customer needs.
The World Payments Report 2011, based on data collected in 2009 and including preliminary data from 2010, also found the global volume of noncash payments (direct debit, credit transfers, cards and checks) grew 5 percent in 2009, to 260 billion transactions. However, the rate of volume increase is slowing despite the predicted double-digit payment volume growth for most of the world's major markets.
Additionally, the report found the use of credit and debit cards continues to grow worldwide, with transaction volumes up 9.7 percent. And while cards remain the payment method of choice for more than 40 percent of the market, the average value per credit card transaction continues to fall.
The report also stated that mobile and Internet commerce growth continues to skyrocket; by 2013, e-payments are expected to reach 30.3 billion transactions while m-payments are projected to reach 15.3 billion. In addition, government use of e-payments is speeding the move to noncash payments in developed countries, and standardization is making it harder for competitors to differentiate products and services, which has forced businesses to find differentiators in other business processes, such as in distribution and production.
To see the full document, visit http://www.capgemini.com/insights-and-resources/by-publication/world-payments-report-2011.
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