Retail payments in the global economy (Review Report): Industry Research Report

Retail payments in the global economy (Review Report)

Published Date: December 2006

Published By: Datamonitor

Page Count: 54

Order Code: R313-18920

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DATAMONITOR 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

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