EDC Global Payment Trends Survey 2011

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For the fourth year running, Edgar, Dunn & Company has conducted a survey of payments professionals globally on key industry dynamics in their markets. The response to this year’s survey involved 685 professionals representing 50 countries.

The survey questions were focussed on five main topics:

Current and future importance of individual payment products
Expected future importance of payment technologies
Most influential market participants
Key industry events that will shape payments markets
The findings illustrate where common themes are developing globally in relation to future trends and, perhaps more interestingly, highlight the key differences in expectations between regions and countries.

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EDC Global Payment Trends Survey 2011

  1. 1. 1Global Trends in Payment SystemsSummary of 2011 Survey Findings
  2. 2. 2Global Payment Trends Survey Overview
  3. 3. Global Trends in Payment Systems Summary of 2011 Survey Findings 3 For the 4th year running, The questions asked revolved around five main topics: Edgar, Dunn & Companyhas conducted a survey of Current & future importance of individual payment products payments professionals globally on key industry Current & future importance of individual payment channelsdynamics in their markets Expected future importance of payment technologies Most influential market participants Key industry events that will shape payments markets
  4. 4. Global Trends in Payment Systems Summary of 2011 Survey Findings 4participated in the survey andrepresented a total of 50 countries
  5. 5. Global Trends in Payment Systems Summary of 2011 Survey Findings 5Respondents to the survey covered a wide cross section of roles withinthe industry, and generally had extensive cards / payments experience
  6. 6. Global Trends in Payment Systems Summary of 2011 Survey Findings 6 USA / Overview of FindingsCanada Card based payments and electronic bill payments are considered the most important payment methods, with credit/charge and prepaid cards significantly higher than other regions. Cash is lower in importance as a method of payment than in any other region, but has increased its score versus 2010. There are high expectations for growth over the next 5 years in both mobile payments and mobile as a channel; this is supported by the expected growth in the importance of both mobile and, to a lesser extent, contactless technologies. Growth in the importance of Security/authentication and Fraud technologies is the highest for any region, possibly due to the fraud losses being incurred by the industry. The USA / Canada continued to rate the consumer as the most influential market participant. In 2011, growth in mobile/NFC continues to be the event expected to have the greatest impact in shaping the payments market over the next 3 years.
  7. 7. Global Trends in Payment Systems Summary of 2011 Survey Findings 7Europe Overview of Findings Direct debit/giro/ACH is considered the most important payment product, well ahead of its score in other regions, and has grown significantly in importance compared to 2010. The importance of Mobile and Contactless products is the lowest of any region, and has reduced compared to 2010; nonetheless, there are high expectations for growth in both of these products over the next 5 years. Mobile technologies are seen as growing most in importance in the next 5 years, well ahead of contactless and internet technologies. In support of this, Telcos/MNOs are expected to be the most influential participants in the market over the next few years, and growth in mobile/NFC is the event expected to have the greatest impact in shaping the payments market. Europe has the highest expected growth in virtual card technologies of any region.
  8. 8. Global Trends in Payment Systems Summary of 2011 Survey Findings 8Asia Overview of Findings Despite the relative strength of the Asian economies, there is an underlying theme of ‘back to the basics’ – to some degree replacing the ‘leapfrog’ intentions in previous surveys. Unlike other regions, contactless and mobile payments did not rank highly – possibly reflecting technical / acceptance issues – although this may change as smart phones become common. Instead, there was a focus on developing out bill payment and domestic debit card systems – with the latter preferred by respondents over scheme debit. Payment schemes were expected to play a lesser role into the future than in other regions – perhaps reflecting the greater role played by regulators, as well as convergence / disintermediation. And despite the generally low rating given to mobile, MNO’s were ranked as the second most influential participant moving forward. Amongst new market entrants mentioned, MNO consortiums, tech companies (Google, Apple, Paypal) and major retailers (Carrefour, Amazon) were often mentioned. Amongst new products / services, Internet-based technology, mobile & contactless, payment hubs were also frequently mentioned.
  9. 9. Global Trends in Payment Systems Summary of 2011 Survey Findings 9 Australia & Overview of FindingsNew Zealand Cards, electronic bill payment and direct entry/ACH are all scored as highly important payment products (perhaps due to the ubiquity of BPAY and “pay anyone” on internet banking). Contactless and Mobile payments still rank low in importance, although the highest of any region, but with high expectations for growth over the next 5 years; interestingly, mobile as a channel for payments already scores highly. The internet channel is expected to show the strongest growth in the next 5 years (the highest for any region), just ahead of the mobile channel. Consumers and Issuers are expected to be the most influential participants in the payments market over the next few years, just ahead of Payment Schemes. As in a number of other regions, growth in mobile/NFC is the event expected to have the greatest impact in shaping the payments market.
  10. 10. 10Detailed Survey Findings
  11. 11. Global Trends in Payment Systems Summary of 2011 Survey Findings 11 Current relative importance ofpayment products Globally, credit and chargecards continue to be perceived as the most important payment products – with little Please score the current relative importance of these payment products in your country? change from 2010
  12. 12. Global Trends in Payment Systems Summary of 2011 Survey Findings 12The current importance of individual payment ‘Notably’ higher than global averageproducts continues to vary significantly by region ‘Notably’ lower than global averagePlease score the current relative importance of these payment products in your country? % Respondents who rated the product as ‘important’ or ‘very important’Product Global Europe USA / Canada Asia Australia / NZCredit / charge cards 84% 75% 95% 78% 89%Direct debit / credit / giro / ACH 75% 84% 69% 63% 80%International scheme debit cards 73% 71% 71% 60% 88%Electronic bill payments 70% 49% 83% 55% 91%Cash 67% 64% 57% 84% 65%Domestic debit cards 66% 58% 82% 49% 72%Internet based payments 63% 57% 68% 51% 75%Remittances 39% 31% 39% 63% 34%Prepaid cards 33% 18% 52% 31% 34%Mobile payments (remote) 25% 19% 21% 24% 36%Contactless cards 24% 15% 22% 26% 35%Cheques 23% 20% 30% 41% 8%Mobile transfers 21% 9% 24% 24% 30%Mobile NFC payments 19% 13% 20% 13% 29%
  13. 13. Global Trends in Payment Systems Summary of 2011 Survey Findings 13Cash appears to be increasing in ‘Notably’ higher than global averageimportance in all regions except Europe ‘Notably’ lower than global averageDifference in % of respondents answering ‘important’ or ‘very important’ between 2011 and 2010 surveysProduct Global Europe USA / Canada Asia Australia / NZCash 7% 0% 11% 14% 9%Mobile payments (remote / to merchants) 1% -3% -3% -10% 18%Direct debit / direct credit / Giro / ACH 1% 11% -4% -14% 4%International scheme (Visa & MasterCard) debit cards 1% -4% 1% -2% 5%Credit / charge cards -1% -3% 3% -5% -3%Domestic debit cards (e.g. PIN debit in USA) -1% -3% 1% 0% -6%Electronic bill payments -3% -2% -2% -30% 7%Cheques -5% -2% -3% -4% -8%Contactless cards (e.g. PayPass, PayWave, transit) -8% -16% -3% -14% -5%Mobile NFC payments -8% -12% -11% -21% 8%Mobile transfers (P2P, remittances) -10% -13% -12% -24% 5%Internet based payment products (incl. P2P / excl. bill -10% -9% -5% -25% -8%payments)Remittances (excluding Mobile) -11% -8% -10% -19% -7%Prepaid / stored value cards -13% -18% -12% -16% -8%
  14. 14. Global Trends in Payment Systems Summary of 2011 Survey Findings 14 Over thenext 5 years,the greatest growth continues to be expected to occur in Mobile payments – both NFC and Remote – followed by What are the 3 payment products which will experience the greatest growth in importance in your country over the next 5 years? Contactless Cards
  15. 15. Global Trends in Payment Systems Summary of 2011 Survey Findings 15Expected growth in importance of Mobile and ‘Notably’ higher than global averageContactless Card payments is significantly ‘Notably’ lower than global averagelower in Asia than in the other regionsWhat are the 3 payment products which will experience the greatest growth in importance in your country over the next 5 years? % Respondents who rated the product as ‘important’ or ‘very important’Product Global Europe USA / Canada Asia Australia / NZMobile NFC payments 47% 52% 50% 24% 58%Mobile payments (remote / to merchants) 46% 49% 54% 35% 42%Contactless cards (e.g. PayPass, PayWave, transit) 44% 53% 32% 21% 63%Mobile transfers (P2P, remittances) 34% 25% 35% 39% 38%Internet based payment products (incl.P2P / excl. bill 31% 35% 29% 34% 28%payments)Prepaid / stored value cards 22% 22% 33% 23% 14%Electronic bill payments 18% 15% 17% 32% 11%International scheme (Visa & MasterCard) debit cards 12% 15% 2% 12% 17%Domestic debit cards (e.g. PIN debit in USA) 12% 6% 16% 16% 11%Credit / charge cards 11% 8% 11% 24% 5%Direct debit / direct credit / Giro / ACH 9% 8% 10% 14% 2%Remittances (excluding Mobile) 4% 2% 4% 10% 1%Cash 3% 1% 2% 11% 2%Cheques 0% 1% 0% 1% 0%
  16. 16. Global Trends in Payment Systems Global Trends in Payment Systems Summary of 2011 Survey Findings Summary of 2011 Survey Findings 16As a payment channel the Internet is perceived to be asimportant as the ‘traditional’ Point of Sale terminalwith overall results very similar to 2010Please score the current relative importance of these payment channels in your country?
  17. 17. Global Trends in Payment Systems Summary of 2011 Survey Findings 17 Bank branch and ATM retain significantly higher importance as a payment channel in Asia than in the other regions surveyed ‘Notably’ higher than global average ‘Notably’ lower than global averagePlease score the current relative importance of these payment channels in your country? % Respondents who rated the product as ‘important’ or ‘very important’Channel Global Europe USA / Canada Asia Australia / NZPoint of sale (e.g. purchases, prepaid top-up) 89% 89% 93% 84% 89%Online / internet 86% 84% 92% 75% 94%ATMs & self service devices (e.g. kiosks) 76% 72% 73% 86% 75%Mobile 43% 34% 49% 39% 55%Bank branch 33% 27% 20% 56% 31%Telephone (IVR, customer service officer) 20% 15% 18% 21% 25%Agencies (e.g. post office) 15% 14% 5% 28% 14%
  18. 18. Global Trends in Payment Systems Summary of 2011 Survey Findings 18 The Mobile and Internet channels are expected tocontinue to grow in importance in the What are the 3 payment channels which will experience the greatest growth in importance in your country over the next 5 years? coming 5 years
  19. 19. Global Trends in Payment Systems Summary of 2011 Survey Findings 19 The growth in importance of the Mobile channel was significant in all regions, and highest in USA / Canada ‘Notably’ higher than global average ‘Notably’ lower than global averageWhat are the 3 payment channels which will experience the greatest growth in importance in your country over the next 5 years? % Respondents who rated the product as ‘important’ or ‘very important’Channel Global Europe USA / Canada Asia Australia / NZMobile 92% 94% 100% 82% 94%Online / Internet 89% 92% 87% 83% 95%Point of Sale 57% 58% 55% 60% 54%ATMs & self service 32% 22% 31% 56% 25%Telephone 6% 6% 5% 3% 9%Agencies (e.g. Post office) 4% 6% 1% 5% 4%Bank branch 2% 2% 0% 5% 1%
  20. 20. Global Trends in Payment Systems Summary of 2011 Survey Findings 20Globally, smart phones will drive the What are the mobile channels which will growth in mobile, however basic experience the greatest growth in importance in your country over the next 5 years? phones will still play a key role in ‘developing’ payments markets
  21. 21. Global Trends in Payment Systems Summary of 2011 Survey Findings 21 Given the expectedfuture growth of Mobileand Contactless, it is not surprising that related technologies are also Which 3 payment technologies will experience the greatest growth in importance in your country over the next 5 years? often mentioned
  22. 22. Global Trends in Payment Systems Summary of 2011 Survey Findings 22Reflecting the expected trends in payment products, the ‘Notably’ higher than global averagegrowth in importance of payment technologies also ‘Notably’ lower than global averagetends to vary significantly by regionWhich 3 payment technologies will experience the greatest growth in importance in your country over the next 5 years? % Respondents who rated the product as ‘important’ or ‘very important’Product Global Europe USA / Canada Asia Australia / NZMobile based technology (excluding NFC) 64% 76% 60% 42% 72%Contactless / NFC technology 64% 56% 62% 60% 75%Internet based technology 48% 54% 36% 63% 41%Security / authentication technology 33% 32% 39% 37% 27%Payment hubs (shared payment infrastructure) 22% 16% 17% 38% 20%Fraud detection technology 20% 20% 23% 17% 19%Contact chip technology (including display, key pad) 19% 14% 24% 18% 19%Virtual Cards 17% 21% 20% 11% 18%Credit evaluation / risk assessment technology 8% 4% 11% 11% 6%
  23. 23. Global Trends in Payment Systems Summary of 2011 Survey Findings 23The role of Central Banks / Regulators is seen as less significant this year (32% of respondents versus 44% in 2010), with Consumers and Telcos In 5 years time, who do you believe will be the 3 most influential market participants in your country? coming to the fore…
  24. 24. Global Trends in Payment Systems Summary of 2011 Survey Findings 24…although 62% of Asian respondents believe ‘Notably’ higher than global averagethat Central Banks / Regulators will have a ‘Notably’ lower than global averagemajor influence over the next five yearsIn 5 years time, who do you believe will be the 3 most influential market participants in your country? % Respondents who rated the product as ‘important’ or ‘very important’Market Participant Global Europe USA / Canada Asia Australia / NZConsumers 38% 32% 49% 35% 40%Telecommunications / mobile network operators 37% 42% 33% 43% 30%Card issuers 32% 29% 30% 29% 40%Payment associations / schemes 32% 34% 37% 17% 38%Central banks / regulators 32% 25% 18% 62% 26%Merchants 24% 29% 32% 15% 18%Financial institutions - other than issuer / acquirer 23% 21% 16% 37% 20%Payment processors / networks 19% 18% 22% 21% 17%Mobile handset manufacturers 18% 17% 18% 9% 27%Merchant acquirers 12% 12% 9% 9% 15%System vendors / service providers 12% 14% 12% 11% 11%Other government agencies 2% 2% 1% 6% 1%
  25. 25. Global Trends in Payment Systems Summary of 2011 Survey Findings 25 Payments professionalsbelieve that the growth of Mobile / NFC is going to be the key driver in shaping the immediate future of payments Which of the following events will have the greatest impact in shaping the payments market within your country over the next 3 years? markets
  26. 26. Global Trends in Payment Systems Summary of 2011 Survey Findings 26Growth of Mobile / NFC is considered to be the key ‘Notably’ higher than global averagedriver in shaping the immediate future of ‘Notably’ lower than global averagepayments markets across all regions surveyedWhich of the following events will have the greatest impact in shaping the payments market within your country over the next 3 years? % Respondents who rated the product as ‘important’ or ‘very important’Event Global Europe USA / Canada Asia Australia / NZGrowth of Mobile / NFC 77% 76% 76% 65% 89%Technology advancements 47% 40% 53% 41% 56%New market entrants 43% 54% 41% 31% 43%Regulator changes to pricing (e.g. interchange, 41% 43% 51% 32% 37%surcharging)Regulator changes to industry practices (e.g. consumer 32% 27% 35% 50% 21%lending, levying of fees)Regulator changes to processing (e.g. domestic, scheme 21% 16% 13% 42% 18%separation)Industry mergers / acquisitions 18% 25% 12% 21% 11%
  27. 27. Global Trends in Payment Systems Summary of 2011 Survey Findings 27Pascal BurgDirector | Edgar, Dunn & CompanyImmeuble Elysées La Défense42 rue Vignon, 5th Floor, 75009, ParisPhone: +33 1 4007 9224 | Mb +33 6 79 37 55 47pascal.burg@edgardunn.comDavid DeeDirector | Edgar, Dunn & CompanySuite 501, 45 Lime StreetSydney NSW 2000 AustraliaPh +61 2 9279 2442 | Mb +61 411 112 220david.dee@edgardunn.comJohn BresnahanDirector | Edgar, Dunn & Company817 West Peachtree Street NWSuite 310, Atlanta, GA 30308Phone: +1 404 879 0710 | Mb +1 678 644 0585john.bresnahan@edgardunn.com This presentation was prepared based on 2011 Global Payments Trends Survey conducted in September 2011. © 2011 Edgar, Dunn & Company. This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without the prior written permission of the authors. Requests and inquiries concerning reproduction and rights should be addressed to the undersigned.

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