This document summarizes challenges in the global payments industry and emerging trends. Cash is still widely used for small transactions but declining as electronic payments rise. Cheque usage is also declining in most countries. Electronic bank transfers like debit and credit are gaining popularity, especially for business-to-consumer and government payments. Regulations and technologies are driving changes like SEPA in Europe and real-time payment systems provide faster access to funds. The payments landscape is transforming rapidly under these forces.
eWallets
Easy and secure to use, this
is quickly growing payment
method becoming
increasingly popular across
all sectors. Consumers can
either use stored value or
take funds from a payment
type linked to their eWallet,
giving them choice and
convenience.
eInvoices
When using eInvoices,
consumers can pay for
goods after delivery,
without sharing credit card
or bank details.
It can be as simple as
entering their email
address and postcode to
make a payment.
Payments innovation is Critical for Every Global EnterpriseXTRMAccount
As fintech software and service innovations continue to disrupt the Financial Services market, even non-financial firms need to think about how to take advantage of this trend to improve
their payments processes for the benefit of the company, their customers and their partners.
Carlos Conesa innovations and non-banks in retail paymentsBogdan Stavrev
1.What is the CPMI and what is its role?
2.Recent work of the CPMI in the field of retail
Innovations in retail payments (what?)
Non-banks in retail payments (who?)
3.Some conclusions and future outlook
Potential second round effects (“faster” payment systems?)
And what about virtual currencies?
The Payments Innovation Jury Report, written by John Chaplin, details global trends in payments innovation, and future opportunities and challenges for the industry. The report is based on the expertise of a panel of 40 business leaders in the payments sector from 23 countries across six continents.
10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...Capgemini
Ten years after publishing the first World Payments Report, Capgemini and RBS continue to provides insight into global and regional non-cash payment trends. This year it gives us a view on cross border payments and a spotlight on the U.S. market; the latest regulatory and industry initiatives including PSD2, immediate payments and intraday liquidity management; innovation within payment processing; and key changes over the last 10 years and what can we expect from the payments industry over the next 10 years.
The Fintech industry which is the backbone of all economies has also been impacted because of Covid. What are the implications of Covid to an important sector?
eWallets
Easy and secure to use, this
is quickly growing payment
method becoming
increasingly popular across
all sectors. Consumers can
either use stored value or
take funds from a payment
type linked to their eWallet,
giving them choice and
convenience.
eInvoices
When using eInvoices,
consumers can pay for
goods after delivery,
without sharing credit card
or bank details.
It can be as simple as
entering their email
address and postcode to
make a payment.
Payments innovation is Critical for Every Global EnterpriseXTRMAccount
As fintech software and service innovations continue to disrupt the Financial Services market, even non-financial firms need to think about how to take advantage of this trend to improve
their payments processes for the benefit of the company, their customers and their partners.
Carlos Conesa innovations and non-banks in retail paymentsBogdan Stavrev
1.What is the CPMI and what is its role?
2.Recent work of the CPMI in the field of retail
Innovations in retail payments (what?)
Non-banks in retail payments (who?)
3.Some conclusions and future outlook
Potential second round effects (“faster” payment systems?)
And what about virtual currencies?
The Payments Innovation Jury Report, written by John Chaplin, details global trends in payments innovation, and future opportunities and challenges for the industry. The report is based on the expertise of a panel of 40 business leaders in the payments sector from 23 countries across six continents.
10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...Capgemini
Ten years after publishing the first World Payments Report, Capgemini and RBS continue to provides insight into global and regional non-cash payment trends. This year it gives us a view on cross border payments and a spotlight on the U.S. market; the latest regulatory and industry initiatives including PSD2, immediate payments and intraday liquidity management; innovation within payment processing; and key changes over the last 10 years and what can we expect from the payments industry over the next 10 years.
The Fintech industry which is the backbone of all economies has also been impacted because of Covid. What are the implications of Covid to an important sector?
Unleashing the o2 o business when the local mobile payment services are takin...Emil Chan
A presentation to 150 retail business executives on behalf of the Association of Cloud and Mobile Computing Professionals at the PCCW conference room on 9 Oct 2015.
Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...Luis Castejon-Martin
It is a pleasure to share with you our final report for the MIT Fintech Future Commerce course, Capstone Project Group 168, developed during this year by a dream team of very experienced managers and consultants as @Colin Bennett @Parrish Pryce-Williams @Andrea Monaco and @Jackie Noakes, working in the financial sector in London (except me in Madrid).
The main goal of the report is to develop our Fintech Strategic Roadmap for the UK’s Largest Banks: HSBC, Barclays, Lloyds, RBS and Santander.
The key recommendation is that every banking incumbent requires a robust Fintech Strategic Roadmap.
This presentation explores what future of commerce may look like given the current trends in mobile devices, digital payments, social commerce and security including tokenization and new forms of identity verification
Saldazo, a Visa debit card product co-branded with Banamex bank, has made Mexico’s largest corner store retail chain – OXXO – the country’s number one transactional account supplier. This presentation provides a Mexican market overview and shares key success factors, challenges and insights from this project.
Global payments community consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for- profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results.
From competition to partnerships banks, fin techs, and neobanks _ medicivinaykumar2984
This article from MEDICI talks about banks, FinTechs, and Neobanks going from being competitors to being in partnerships. Read about it all only on MEDICI.
As part of Societe Generale Global Solution Centre's 'Tech Connect' initiative, I did a webinar on 18th June 2021 on the topic 'Influence of Fintech on the Banking Sector'.
FinTech outlook for 2017 report discussing trends, opportunities and challengesMEDICI admin
The report is intended for readers who want to better understand the dramatic changes that have begun to take place—and that are accelerating—in the global FinTech landscape. The payments industry, which is one of the focus areas of this report, has never been more exciting.
The report starts with the current state of FinTech and then provides an analysis of major emerging technologies and market forces that are shaping the FinTech market for 2017. It discusses the major opportunities and challenges faced by incumbents as well as FinTech startups. The report also provides a brief on the geographic split of payments volume, revenue and how they are expected to shift gradually by 2024.
Unleashing the o2 o business when the local mobile payment services are takin...Emil Chan
A presentation to 150 retail business executives on behalf of the Association of Cloud and Mobile Computing Professionals at the PCCW conference room on 9 Oct 2015.
Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...Luis Castejon-Martin
It is a pleasure to share with you our final report for the MIT Fintech Future Commerce course, Capstone Project Group 168, developed during this year by a dream team of very experienced managers and consultants as @Colin Bennett @Parrish Pryce-Williams @Andrea Monaco and @Jackie Noakes, working in the financial sector in London (except me in Madrid).
The main goal of the report is to develop our Fintech Strategic Roadmap for the UK’s Largest Banks: HSBC, Barclays, Lloyds, RBS and Santander.
The key recommendation is that every banking incumbent requires a robust Fintech Strategic Roadmap.
This presentation explores what future of commerce may look like given the current trends in mobile devices, digital payments, social commerce and security including tokenization and new forms of identity verification
Saldazo, a Visa debit card product co-branded with Banamex bank, has made Mexico’s largest corner store retail chain – OXXO – the country’s number one transactional account supplier. This presentation provides a Mexican market overview and shares key success factors, challenges and insights from this project.
Global payments community consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for- profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results.
From competition to partnerships banks, fin techs, and neobanks _ medicivinaykumar2984
This article from MEDICI talks about banks, FinTechs, and Neobanks going from being competitors to being in partnerships. Read about it all only on MEDICI.
As part of Societe Generale Global Solution Centre's 'Tech Connect' initiative, I did a webinar on 18th June 2021 on the topic 'Influence of Fintech on the Banking Sector'.
FinTech outlook for 2017 report discussing trends, opportunities and challengesMEDICI admin
The report is intended for readers who want to better understand the dramatic changes that have begun to take place—and that are accelerating—in the global FinTech landscape. The payments industry, which is one of the focus areas of this report, has never been more exciting.
The report starts with the current state of FinTech and then provides an analysis of major emerging technologies and market forces that are shaping the FinTech market for 2017. It discusses the major opportunities and challenges faced by incumbents as well as FinTech startups. The report also provides a brief on the geographic split of payments volume, revenue and how they are expected to shift gradually by 2024.
Virtual currency would play a role in disrupting the conventional transaction models and have a potential impact on various sectors. Know more about the trends and the multiple challenges faced by businesses in adopting the virtual currency. Download the Business Research report by Aranca.
Virtual currency has been a debated concept within the technology community in the past few years, as transactions through this medium do not require any third party’s involvement. Know more details from Aranca's Business Research Experts here.
Virtual currency would play a role in disrupting the conventional transaction models and have a potential impact on various sectors. Know more about the trends and the multiple challenges faced by businesses in adopting the virtual currency. Download the Business Research report by Aranca.
The World Payments Report 2012 shows a healthy 7.1% gain in non-cash payments volume globally. But volume is only part of the story for the payments market, which is growing and changing in new and exciting ways. Payments continue to grow amidst volatility and increasing regulation, however the payments instrument mix is evolving fast and will never be the same.
Paying for stuff is, unfortunately, something we do every day! Be it with cash, cards, mobile phones or with our fingerprints and faces, we send money from one account to another. Globally speaking, cash is still king, but the payment experience is undergoing radical disruption which for the time being especially involves the act of payment more than the processing that goes on behind it. This presentation provides a description of payment processes and the new trends that are slowly but surely re-shaping the way we pay money. The authors are Philippe Collombel, Nico Valenti Gatto and Tanguy Confavreux who all work for Partech Ventures, a global venture capital fund with offices in San Francisco, Paris, Berlin and Dakar.
Technical Report of ITU Focus Group on Digital Financial Services : Bulk Payments and the DFSs Ecosystem
Written by Bennett Gordon, Carol Coye Benson, Carolina Trivelli, Daniel
Radcliffe, Abi Jagun, Mireya Almazán, Matt Homer, Toru Mino, Charles Niehaus, Satwik Seshasai,
Michael Goldfarb, Michael Faye, Niyi Ajao, and Quang Nguyen
Government-to-person (G2P) and employer-to-person payments of all sorts, often referred to as “bulk
payments”, are seen by many as key enablers for the growth of the digital financial services (DFS)
ecosystem. In this paper, we examine ways in which bulk payments have been made in the past and
look at ways in which this has improved over recent years. We also analyse the remaining challenges
which have stymied bulk payment rollouts in many countries.
1. Global Payments- Raising Wave 2014
enterpriseblueprints Page 1
Global Payments- Raising Wave
This document describes global payment challenges in
today’s banking environment. This white paper describe
the payment schemes and the factors impacting, major
payment components and offer some directional
guidance to financial institutions seeking to leverage the
new technologies and service to support their payment
business needs.
Ramadas Varier, Payment Practice, EBI
2. Global Payments- Raising Wave 2014
enterpriseblueprints Page 2
Context
Executive Summary .........................................3
Cash transaction is still a King.......................3
Cheques are on
Decline..………………………..…..4
Electronic Fund
transfers.……………………………4
International Payments....................................5
Single European Payment Area......................5
SWIFT………………………………………
………………....6
International Cross Currency
transfers………..6
Card
Scheme………………………………………
……….6
Remittances…………………………………
……………..7
Mobile
Payments……………………………………
……7
International Payment
Complexity………………..8
Enterprise
Payment………………………………………8
Conclusion……………………………………
………………9
3. Global Payments- Raising Wave 2014
enterpriseblueprints Page 3
Executive Summary
Global Payment Industry is quite complex and
diverse. When you look the Payment system value
chain, there are rapidly technical advance and
regulatory initiatives are working to transform the
payment industry. There are lots of challenges and
opportunities across the financial industry are
abound to. Different economy has different payment
instruments with different value drives associated.
Few industries today are undergoing a more rapid
and transformational change than the global
payments industry. Once viewed as a staid yet
fundamental component of most banks’ core
mission, today payments are being looked at with a
fresh eye by participants all along the value chain.
And for good reason, Payments and other
transaction services, such cash management, card
issuing and credit financing, are critical to the
economic health and customer relationships of most
banks and many large corporate.
At present, however, the game is changing. The
global recession and technological advances have
elevated payments processing to the top of priority
lists for banks, corporate and entrepreneurs alike, all
eager to find greater efficiencies, better ways of
doing business and new markets to serve.
Regulations and governmental initiatives, such as
the Single Euro Payments Area (SEPA) and the
Payments Service Directive (PSD) in Europe, and
recent NACHA rule changes addressing mobile
payments in the United States, RuPay in India are
further rewriting the rules for payments. And
consumer demand for newer, more convenient yet
still secure payment mechanisms are driving
visionaries and established Technological players
alike to develop new solutions. Together, these
forces are working in concert to reshape the entire
payments landscape across the globe.
Historically low margins and high costs, payments
processing is a not market for the weak or faint-
hearted. Throw in recessionary pressures, increased
regulation, rapid advances in technology and new
market participants, and it’s clear the competitive
landscape has fundamentally changed. As a result
the financial institutions and corporate will have to
identify a trusted partner with expertise in the
payments arena can help navigate tomorrow’s
landscape and be a key to managing the payment
revolution.
That means the financial institutions globally facing
the challenges to navigate tomorrow’s payment
landscape and managing the payment revolutions.
Cash transaction still strong
Cash is the prime mode of payment and is widely
accepted payment instrument across the world.
However, the recently the cash is being replaced by
the electronic payments, particularly the debit card
payments and the online payments. Over the last
decade the UK total spending has doubled, however
the cash usage only increased by 7%. Some countries
have recognized the cost of cash and its role in the
black economy and have taken active measures to
wage war on cash.
According to the UK Payment council cash is still very
popular for low-value transactions; cash accounts for
55% of all UK payment transactions, but the average
amount we spend is just £11. As a source of money
supply, cash provides full and final settlement of a
transaction. The picture below show the major Cash
circulation & Key players in UK.
These players (DWP-Department of Work and
Pension, CIT- Cash in Transit, NCS-Notes Circulation
Scheme) essentially provide various ways to use cash
to fund alternative payment instruments. They tend
to serve three main purposes:
• Enabling direct cash payments to third
parties, such as paying the utility bills or
topping up a prepaid mobile phone
account.
4. Global Payments- Raising Wave 2014
enterpriseblueprints Page 4
• Loading funds onto prepaid cards.
• Loading funds onto noncard-based
alternative instruments, this can
subsequently be used to make payments,
often online.
Last few years have seen an emergence of a wide
range of alternative payment methods, many of
which are only accepted online, such as UKash
/eWallet or WebMoney. They tend to target specific
segments like, UKash target the lottery, gaming and
gambling, entertainment etc.. The payments are
often quite small but frequent. As a result, such
players tend to partner with the physical cash
accepting outlets for “issuing of their payment
Instrument.
Cheques are on decline
Cheques usages universally are on decline, although
some countries they still play an important role
particularly in US and France. Habit, inertia ,
tradition still keeping continue to defer switching
from cheques. Cheque writing is expected to keep
declining as the use of faster and more efficient non-
cash payment methods expands, in some cases
fueled by government-led initiatives. In many
countries, the central bank is taking initiatives to
promote the use of faster and more efficient non-
cash payment methods. France, for instance, a
recent working group set up by the Ministry of
Finance recommends reducing the. The below
diagram provide the ‘Cheques to the total
percentage number of non cash transaction’.
(Source :BIS)
Number of checks processed by 50% by the end of
2017. The UK Payment Council has set the date,
October 2018, by when all cheques in the UK should
be phased out. Of course, acceptable alternative
solutions for various different scenarios have to be
available by then; therefore, annual reviews will
monitor the trends, and the final decision is
expected in 2016. Cheques also no longer exist in
some of the other European countries, such as
Finland and Netherlands, or have never taken off in
the first place (e.g., Poland, the Baltic countries).
Electronic Bank Transfers are favorites
Today the electronic bank transfers- Debit/Credit is
gaining momentum of the Payment industry. In the
UK, they represent nearly 40% of all noncash
transactions by volume and almost 70% by value.
Importantly, even as the so-called “alternative”
payment methods prolife rate, they need a link back
to the money supply and therefore, eventually will
trigger movement of funds between bank accounts.
The largest markets for direct-debit usage in 2010, in
terms of transactions per inhabitant, were Austria,
France, Germany, Netherlands, and the U.K. Direct
debits are most popular for consumer-to business
and Public (C2B and C2P) uses, such as utility,
insurance, and tax payments where the corporate
treasurer can benefit from reliable cash predictions.
Towards the end of 2010 direct debit transaction
usage were most common and the largest markets
for direct-debit usage in terms of transactions per
inhabitant, were U.K, Austria, Germany, France,
Netherlands, and the U.K. Direct debits are most
popular for consumer-to business and Public (C2B
and C2P) uses, such as utility, insurance, and tax
payments where the corporate treasurer can benefit
from reliable cash predictions. The number of credit
transfer transactions rose
Globally in 2010, but accounted for about the same
share of total transactions overall (around 18%).
5. Global Payments- Raising Wave 2014
enterpriseblueprints Page 5
Usage grew fastest in BRIC markets (Brazil, Russia,
India and China), where the growth has been driven
by the extensive use of credit transfers by
corporations and the public sector (e.g. for pension,
benefit, and wage payments), as well as the surging
number of individual internet users with broadband
connections.
Traditionally, ACH markets have been mostly
domestic, with typically strong regulatory,
governance, and political protection of domestic
players. At present, most countries have their own
systems for clearing bulk payments, with different
proprietary technical standards, operating practices,
and functionality (e.g., STP capability varies
considerably). The structure is also different—in
some countries, the majority of bulk payments are
cleared bilaterally (e.g., Austria, Germany),some
have developed strong, dedicated ACH
infrastructures (e.g. Netherlands, UK), and yet others
process low value payments through an RTGS
solution (e.g., Czech Republic, Slovakia).
ACH networks emerged at a time when real time
payment processing technologies were expensive,
and bank internal systems were set up to process
transactions in batches. This presents a number of
challenges. First of all, payment delays are
inconvenient for the customers. For example, the
standard clearing cycle in the UK for batch payments
is three days. For banks, their batch processing
systems provide only limited visibility into individual
payments and into their overall liquidity .It also
makes it more difficult to monitor and prevent
criminal activity such as fraud and money
laundering. In 2008, the banking industry in the UK
has introduced Faster Payments, a service which
allows the beneficiary to access funds within a
couple of hours of a payment being made. It is
available for credit transfers initiated by phone and
Internet and for Standing Orders.
The financial industry agreed to reduce clearing
times (and forgo float income) under pressure from
the Payment Systems Task Force, but it went a step
further and built a dedicated central infrastructure
to move low-value payment processing to as close to
real time as possible. This paved the way for a net
settlement system in terms of the actual interbank
settlement but payment instructions are submitted
real time, once complete are irrevocable, and banks
can view their net settlement position or their
bilateral positions in real time online.
Going ahead the payment industry will eventually
will transform to a real time processing. This process
will take time to graduate and it needed strong
commitment from financial intuitions and regulators.
International Transfer Scheme
Single European Payment Area –SEPA
The Single Euro Payments Area (SEPA) is a payment
scheme to harmonise the retail payment process in
euro. SEPA’s objective is to ensure that all euro
payments in the SEPA area (currently EU 27 member
states, Iceland, Norway, Liechtenstein, and
Switzerland), including cross-border payments, can
be made as efficiently as domestic payments. The
two instruments SEPA Credit transfers (SCT) and
SEPA Debit transfers (SCD) are progressing very
slowly so far. To encourage the transformation,
particularly of large corporation and public
institutions, the European Parliament has called on
the Commission to set a “clear, appropriate and
binding end-date, which date should not be later
than 31 December 2012, for migrating to SEPA
products”.
As domestic credit transfers and direct debits
migrate to SEPA instruments, the rationale for
country-based ACH infrastructures will disappear.
Instead, the banks will be seeking Clearing and
Settlement Mechanisms (CSMs) that will provide the
best reach and services at the most attractive price.
The existing ACHs will compete across Europe and
the necessary scale requirements, commonly
believed to be approximately 10 billion transactions1
per year, will lead to processor consolidation.
SWIFT
SWIFT, a nonprofit bank-owned cooperative set up
in 1973, has emerged as a key player in international
payments. Not only does SWIFT provide the
transport network for financial messages through its
IP-based SWIFTNet platform, it also develops and
oversees a wide range of message standards, from
payments to securities, trade, and many other
financial transactions.
SWIFT corporate access program to support new
generation payment factories in three ways. First,
6. Global Payments- Raising Wave 2014
enterpriseblueprints Page 6
the SWIFT network delivers a single, secure
connectivity window with high availability (99.999%)
and a scalable, global reach across over 8,000
financial institutions in 200+ countries. SWIFT covers
a broad spectrum of high-value payments and offers
a method for corporate clients to significantly reduce
or eliminate proprietary connections. Second, SWIFT
supports ISO 20022 XML-based standards as well as
existing propriety formats to provide flexibility.
Third, SWIFT offers support for corporate clients that
are implementing a payment factory or hub that will
leverage SEPA (with the usage of ISO 20022
messages) and handle necessary conversions with
international bank account numbers (IBAN) and bank
identifier codes (BIC).
International Cross Currency Payment
The International cross currency is a challenging task
as there is no global central bank to enact the
settlement of the cross currency. Therefore, access
to local clearing systems is required. Banks usually
achieve that by opening accounts in the local
currency with each other, a system called
correspondent banking. These local currency
accounts are called “nostro” accounts and are used
to either settle the international payment directly (if
the recipient also has an account with the partner
bank) or provide access to local clearing (see Figure
24). The arrangements get even more complex when
the payment needs to be in a third currency. The
correspondent banking concept, particularly for non-
urgent transfers, is under threat from the initiatives
such as International Payments Framework (IPF). IPF
Association was established as a US non-profit
association in February 2010 to define the rules,
standards, and operating framework which would
enable locally originated non urgent credit transfers
to reach markets around the world. Its approach
leverages existing payment networks and
International standards, such as ISO 20022 payments
messages, and seeks to enable interoperability
between domestic and regional non urgent
payments systems and banks.
The association has been making good progress and
has already completed an IPFA Credit Transfer Rule
Book as well as some technical message mapping.
Most importantly, Europe/US transactions between
the Federal Reserve and Equens began processing in
April 2010. The service supports bidirectional credit
transactions in USD/EUR/GBP. Transactions from
Europe have access to accounts at all US banks,
whereas transactions from the US to Europe have
access to accounts at all banks in 22 European
countries.
International Payment Framework Model
(There can be more than one entry/exit points from
any country. The domestic ACH rules and formats
are not impacted by the IPFA rules and procedures)
Card Scheme
Indisputably, cards are a hugely important payment
instrument. According to Nilson report, there were
over a billion credit and debit cards in circulation in
2010 in the US alone, and US consumers spent $1.76
trillion on their credit cards and $1.63 trillion on
debit and prepaid cards. Globally, more than $4.6
trillion of consumer spending is transacted just on
Visa-branded payment products every year.
At its most fundamental, the cards differ by the
source and timing of transaction funding. Debit
cards( Pay-now cards) are linked to bank
current/saving accounts, and customers can
withdraw cash from ATMs or shop at the retail
outlets accepting cards up to the amount of funds
available in their accounts (or agreed overdraft).
Credit cards are also “pay later” cards, because they
are funded from a revolving credit line which can be
paid off at once at the end of the grace period or
over time with interest. While other cards are
primarily payment instruments, credit card is also a
lending product with all the corresponding
implications for issuers around customer selection,
risk management, and funding requirements.
7. Global Payments- Raising Wave 2014
enterpriseblueprints Page 7
There are two main types of card schemes: four-
party or open-loop and three-party or closed-loop
schemes. Visa and MasterCard, the two largest four-
party schemes, work with the card issuers and
acquirers to develop the cards market. The card
scheme itself sets the rules of the game, develops
the brand, and provides a network to route the
transaction between the acquirer and issuer for
authorisation, clearing, and settlement. Other
parties may also be needed to complete the
transaction, such as card processors, terminal
manufacturers, telecommunications networks, and
others.
Card issuing has been and continues to be an
attractive business. Analysts estimates that credit
card issuing revenues in the US were $128.6 billion
in 2007 and accounted for 46% of the overall
payments revenue pool. By contrast, card acquiring
revenues were “only” $11.2 billion in the US in 2007.
Revenue dynamics differ strongly by region and even
by country. For example, UK and France, both
countries with strong adoption of “pay later” cards,
derive most of their card revenues.
Gold, Platinum, and other “premium” cards are
targeted at “premium” customers. These cards tend
to carry a higher interchange rate, which enables
issuers to reward their best customers with special
perks, such as travel insurance, concierge services,
and other benefits
Remittances
Traditionally the remittances have space in the
international cross currencies. They are typically low
value retail payments, often made by migrant
workers to send money back to their families at
home. In the recent past there has been tremendous
growth in remittances globally. India, China, and
Mexico top the list of the receiving countries,
perhaps somewhat unexpectedly, France, Spain, and
Germany are also among the top 10 receivers.
United States, Switzerland, Russia, and Saudi Arabia
are the largest senders of money .Remittance flows
are concentrated in a number of key corridors.
In recent years, the remittances market has seen a
lot of entrants, many of them with mobile-based
solutions. The “corridor” nature of the remittances,
however, means that it has been difficult for any one
of the players to gain the overall market dominance.
Mobile Payments
Alternative to the traditional banking and financial
service, the Mobile banking and financial services
among consumers has continued to increase and the
range of services offered has continued to expand.
The increasing number of mobile subscribers around
the world indicate the growth potential for this
channel. Services that allow consumers to obtain
financial account information and conduct
transactions with their financial institution (“mobile
banking”) and that allow consumers to make
payments, transfer money, or pay for goods and
services (“mobile payments”) have become
increasingly prevalent over the past year.
Despite a lack of major functionality innovation, the
US mobile banking market has been experiencing
steady growth, both in the number of banks that
have adopted the technology and the number of
consumers who are using it. And in Canada and UK,
the banks are also offering dedicated iPhone apps,
which allow the customers to check their account
balances and transaction history. In January 2011,
First Direct launched a free Banking ‘on the go’ App”,
which allows customers to use their iPhones and
iPod Touches not only to view their balances and last
20 transactions, but critically, make payments and
transfer money between accounts.
The use of mobile banking has increased by more
than a third in the past year, and it appears likely to
continue to increase as more and more consumers
use smart phones .While still small, the use of
mobile phones to make payments at the point of
sale has increased even more rapidly. Over a quarter
of mobile phone users express some interest in using
their phones to make payments at the point of sale,
giving mobile payments substantial growth potential
as the ability to make these payments becomes
more widespread.
8. Global Payments- Raising Wave 2014
enterpriseblueprints Page 8
Payment Complexity
Moving from a single payment type in one country
to many payment types across the globe represents
a mathematical increase in complexity rules, formats
and systems. However the complexities arises more
than these factors which are described in below
picture.
Payment Complexity Structure
Complexity structure changes from simple to
extreme. The above exhibit shows the complexity
scale from top to bottom from simple payment
operations to the extreme complexity. A simple
payment operation has a few variables; one
account system, one payment type, one connection
type, single bank and single currency, once country
vendors and settlement defined by the payer.
Additional complexity is exhibited by moving up in
each column with respective category. The extreme
complexity is exemplified by; multiple back office
systems, multiple payment types (SEPA, Wire, Paper,
ACH etc..), numerous connection (SWIFT, TARGET2,
SFTP etc..), multiple banks in multiple region with
multiple currencies. The operational complexity as
indicated is an inherent characteristic of a
international payments in an organization that have
extensive reach and often grown by acquisition.
Enterprise Payments new hope for Banks
Executives around world are seeking to maximize
the efficiency, productivity and competitiveness of
their business must look around and beyond the
financial intuitions existing payments capabilities.
Without the constraints of departmental barriers,
the banks must search for new ways to optimize its
operations, getting competitive advantage by
leveraging an efficient cost structure with the
flexibility required to respond to changes and
opportunities in the market. There are more
material market dynamics in play in the payment
industry today than ever before, and the bank’s
payment business must understand and consider
how each dynamic will impact the bank. The
payments market is changing, and the bank must
have a plan to maximize the potential from what the
future brings. Believing the planning task set forth
here is anything less than nearly impossible would
be naïve, but having an enterprise plan for the
payment franchise is an opportunity bank shouldn’t
miss.
The Industry has already started looking at the
enterprise payment management as baseline
organizational and operational methods for running
a payments franchise, not a change agent or the end
game for payments industry managers. The bank
must look out at the horizon and define a vision for
its role in the future in an industry that will be
serving and supporting the needs of the businesses
that serve them. The changes needed to serve the
next market will primarily be small and evolutionary.
The challenge for the banking industry today,
though, will be in understanding that supporting the
market evolution (especially when considering non-
bank and international competition) will require a
revolution in how it manages and operates its
business, particularly its payments business.
9. Global Payments- Raising Wave 2014
enterpriseblueprints Page 9
Conclusion
Several internal and external forces have multiplied
the scope of the international payment
requirements. The complexity of theses creates
additional demand which is often significant. In
addition to this various factors driving the usage. The
payment environment undergoing significant
changes to format, rules and compliance
requirements. Each of this adds multiple
requirement or complexity to the payment. Based
on our experience there are 3 major services or
payment types are being used to increase the
frequency to help the banks to extent their payment
business by managing the complexity elegantly.
• SWIFT: Helps Banks and Financial institutions to
leveraging their service to reach out more banks
around the world in highly flexible and secure
manner.
• Single European Payment Area (SEPA) :
Simplifying payments reducing cost as well as
the currency and bank account complexity.
Predominantly managing the country risk within
Euro zone.
• Payment Hub: Leveraging an enterprise wide
payment transaction solution to reduce cost,
risk and, improve the efficiency and ensure
flexibility.