2020 Foresight Report: Consumer Centric Payment Innovations

Date: October 17, 2013
Pages: 56
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US$ 3,800.00
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Publisher: Timetric
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: 29C282757F0EN
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2020 Foresight Report: Consumer Centric Payment Innovations
SYNOPSIS

The report provides information and insights into the changing landscape of the payment industry and emerging consumer trends acting as stimulating factors:
  • Provides global snapshot of payment innovations introduced by banks as well as non-bank payment companies in the key regions of the world
  • Provides insights into market potential of key payment cards and also discusses the state of mobile card payments in selected countries
  • Analysis of consumer technology trends and drivers highlighting key operational opportunities
  • Analysis of key issues faced by central banks, commercial banks and new market entrants while dealing with innovative payment solutions
  • Provides insights into best practices followed by market players to target key consumer drivers as a strategy to maximize their revenue
SUMMARY

Businesses are increasingly focusing on key consumer drivers such as convenience, accessibility, security, speed and the cost of payments to increase acceptability of their products and services, and gain an advantage over their competitors. To target these consumer drivers, stakeholders in the payment value chain are primarily concentrating on digitalization of payments, increased interoperability, and the introduction of disruptive strategies to plug gaps in user demand and solutions offered by the industry. Changing consumer behavior, such as increased use of mobile devices to manage day-to-day activities and the increasing use of social media, has attracted a number of organizations to build their business and product strategies around these platforms.

SCOPE
  • This report provides a comprehensive analysis of developments in the payment industry with a primary focus on consumer oriented products and services
  • Provides data forecasts for credit, debit and prepaid cards with historical insights on mobile card payments in selected countries
  • It covers key trends expected to reshape the payment landscape over the next five years
  • Provides insights into key technology drivers responsible for enabling organizations to introduce disruptive products and services
  • It covers the key challenges faced by central banks in regulating and the challenges faced by commercial banks and non-bank payment companies in introducing and sustaining an innovative payment service
  • It provides insights on the implementation strategies and best practices adopted by both banks and non-bank payment companies to drive revenue generation with the help of detailed case studies
REASONS TO BUY
  • Understand the dynamics of the evolving landscape of the payment industry on the back of changing tastes and preferences of consumers across key markets worldwide
  • Assess the current and future opportunities in various payment solutions and learn best practices to strengthen your business strategy and target consumer drivers more efficiently
  • Gain insights into various types of innovative services entering the payment ecosystem and their likely impact on redistribution of market share among various stakeholders
  • Gain insights into key consumer trends and technical drivers which are stimulating innovations along with information on expected hurdles in sustainability of new products
KEY HIGHLIGHTS
  • Innovations in payment can be broadly classified under four categories: innovations in payment cards; online payments, including electronic bill presentment and payments; mobile payments; and developments in overall payment infrastructure and security. Focus has increased on the convenience and speed of payments. As a result, mobile payments have received significant attention in recent years.
  • Regions dominated by emerging economies, such as Asia-Pacific, Africa and Latin America, exhibit high growth potential in innovative payment solutions, although most innovations currently tend to stem from North America and Europe. Europe, however, is expected to lose some steam over the next five years, while North America is forecast to continue to impress with new payment solutions, primarily led by developments in the US. Countries such as Turkey are highly innovative in terms of payment products and services, with consumers showing a readiness to experiment, as are parts of the Middle East, as regulation can be scattered and consumer demand pushes for new payment options.
  • Social media networks such as Facebook, Twitter and Instagram have become an attractive platform to target consumers. There are more than 1.15 billion (as per Facebook’s Q2 2013 earnings report) and 500 million users (as of March 2013) on Facebook and Twitter respectively, and their users bases are growing rapidly every year. This presents lucrative opportunities for merchants, financial institutions and new entrants to capitalize on a ready market.
  • Data analytics, powered by cloud and social media, are allowing stakeholders in the payment industry to identify gaps in the payment value chain and increase their probability of revenue generation. It is also being extensively used to address security concerns and limit exposure to fraud risks for card issuers, acquirers, merchants and network operators. Open APIs have emerged as another key enabler of innovation in the payment industry. Open APIs enable the development of payment gateways and solutions at a fraction of the cost of developing a payment system from scratch.
  • To remain competitive and gain market share, financial institutions and payment companies across the world have adopted various strategies in line with changing consumer behavior and technology. Companies have entered into agreements with merchants, as well as with each other, to reach a larger customer base, while service providers are also increasingly adopting emerging technology such as NFC, MPOS and mobile apps. There is also increased focus on using social media to generate sales and collect analytical data for strategic decision making.
1 EXECUTIVE SUMMARY

2 GLOBAL SNAPSHOT OF PAYMENT INNOVATIONS, AND REGIONAL OVERVIEW

2.1 Snapshot of Payment Innovations
2.2 Regional Overview

3 MARKET POTENTIAL OF PAYMENT CHANNELS AND PRODUCTS

3.1 Market Share of Payment Channels
3.2 Payment Dynamics and Outlook by Card Products
  3.2.1 Prepaid cards
  3.2.2 Debit cards
  3.2.3 Credit cards
3.3 Market Size of Card Payments through Mobile Devices in Selected Countries
  3.3.1 The US
  3.3.2 The UK
  3.3.3 Australia
  3.3.4 Singapore
  3.3.5 India

4 CONSUMER TECHNOLOGY TRENDS DRIVING INNOVATION IN PAYMENTS

4.1 Emerging Payment Channels
  4.1.1 Social media
  4.1.2 Mobile devices
4.2 External Enablers of Innovation in Payments
  4.2.1 Cloud technology
  4.2.2 Data analytics
  4.2.3 Open APIs

5 ISSUES AND CHALLENGES

5.1 Central Banks
5.2 Commercial Banks
5.3 Non-Bank and Alternative Payments

6 PAYMENT INNOVATION CASE STUDIES

6.1 Best Practices to Target Consumer Behavior
6.2 Case Studies
  6.2.1 Launch of innovative mobile app by Barclays in the UK
  6.2.2 The Home Depot’s adoption of MPOS technology to improve consumer satisfaction
  6.2.3 Octopus cards – expansion beyond transport in Hong Kong
  6.2.4 La Caixa’s introduction of the world’s first contactless ATMs in Spain
  6.2.5 Plink – the innovative loyalty payment system
  6.2.6 Chirpify – reinventing payments through social media

7 APPENDIX

7.1 Methodology
7.2 Contact Timetric
7.3 About Timetric
7.4 Timetric’s Services
7.5 Disclaimer

LIST OF FIGURES

Figure 1: Market Shares of Payment Channels in Selected Countries, 2012
Figure 2: Prepaid Card Transaction Values in Selected Countries (US$ Billion), 2008–2017
Figure 3: Debit Card Transaction Values in Selected Countries (US$ Billion), 2008–2017
Figure 4: Credit Card Transaction Value in Selected Countries (US$ Billion), 2008–2017
Figure 5: Card Payments through Mobile Devices in the US (US$ Million), 2008–2012
Figure 6: Card Payments through Mobile Devices in the UK (US$ Million), 2008–2012
Figure 7: Card Payments through Mobile Devices in Australia (US$ Million), 2008–2012
Figure 8: Card Payments through Mobile Devices in Singapore (US$ Million), 2009–2012
Figure 9: Card Payments through Mobile Devices in India (US$ Million), 2009–2012
Figure 10: Number of Mobile Subscriptions (Million), 2009–2013
Figure 11: Broadband Internet Users on Mobile Devices (Million), 2009–2013
Figure 12: Cloud Models
Figure 13: Intensity of Challenges in Developed and Emerging Economies
Figure 14: Basel II vs. Basel III
Figure 15: The Barclays Pingit App

COMPANIES MENTIONED

Chirpify
Dwolla
Octopus Cards
The Home Depot Inc.
Barclays
La Caixa
Plink
Bitcoin
Gemalto
iZettle
VeriFone
Facebook
Twitter
ASB Bank Limited
Foursquare
Citibank
MasterCard
Visa
Square
Intuit
mPowa
PayPal
Google
Amazon
Safaricom
ICICI
HDFC
Royal Bank of Canada (RBC)

Innovations in payment methods can be broadly classified under four categories:

  • Innovations in payment cards.
  • Online payments, including electronic bill presentation and payments,
  • Mobile payments
  • Developments in overall payment infrastructure and security.

Market Shares of Payment Channels in Selected Countries, 2012
Market Shares of Payment Channels in Selected Countries, 2012 

Most markets view innovations differently; an innovation reported in one country may not be considered as such in another. However, there is a common trend among the reported innovations across the world: most focus on increasing the convenience and speed of payments. As a result, mobile payments have received significant attention in recent years.

While most payment innovations provide services to domestic markets, similar services such as P2P and P2B mobile payments, NFC and cloud technology-based mobile wallets, same-day electronic clearing, and check truncation have been developed around the world. Although innovations are focused around electronic payments, cash continues to be an important form of payment and is expected to remain so over the next five years. However, innovative payment instruments are gaining popularity, with demand for P2B, P2P and utility payments topping the list.

Over the last five years, the payment industry has been buzzing with innovative products and services across the world. The industry is dynamic in nature and innovative products and services have allowed non-bank companies, including technical giants such as Google and new market entrants such as Chirpify, to leave their mark in the payment ecosystem. Developments in technology, changing consumer tastes and preferences, and rising competition among various stakeholders in the payment value chain have been the key drivers of innovations in payments. However, the role of consumers has been one of the most important factors in driving payment innovation.

The success of any new product depends on its acceptance by consumers. For example, although mobile wallets offer several advantages to users, such as increased convenience, they can be difficult to mesh with current consumer profiles and, consequently, have expanded below expectations. However, mobile wallets are expected to gain strength over the next five years as consumers become more aware and confident about their use.

Businesses are increasingly focusing on key consumer drivers such as convenience, accessibility, security, speed and the cost of payments to increase acceptability of their products and services, and gain an advantage over their competitors. To target these consumer drivers, stakeholders in the payment value chain are primarily concentrating on digitalization of payments, i9ncreased interoperability, and the introduction of disruptive strategies to plug gaps in user demand and solutions offered by the industry.

Changing consumer behavior, such as increased use of media devices to manage day-to-day activities and the increasing use of social media, has attracted a number of organizations to build their business and product strategies around these platforms. Banking institutions as well as non-bank startups are increasingly targeting consumers with smartphone apps, which allow consumers to transfer funds and carry out a payment transaction at any time and place. The vast audiences of social media networks are being targeted by startups such as Chirpify by converting social accounts into payment tools.

The material was prepared in November, 2013.

LIST OF TABLES

Table 1: Innovations by Product Category in Key Regions
Table 2: Prepaid Card Transaction Values in Selected Countries (US$ Billion), 2008–2017
Table 3: Debit Card Transaction Values in Selected Countries (US$ Billion), 2008–2017
Table 4: Credit Card Transaction Value in Selected Countries (US$ Billion), 2008–2017
Table 5: Card Payments through Mobile Devices in the US (US$ Million), 2008–2012
Table 6: Card Payments through Mobile Devices in the UK (US$ Million), 2008–2012
Table 7: Card Payments through Mobile Devices in Australia (US$ Million), 2008–2012
Table 8: Card Payments through Mobile Devices in Singapore (US$ Million), 2009–2012
Table 9: Card Payments through Mobile Devices in India (US$ Million), 2009–2012

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