Top 10 reasons FIs have the advantage in payments

At NACHA’s Payments 2011 in Austin, Texas, today, Fiserv released its Top 10 reasons why financial institutions have the advantage in the battle for consumer payments, including Web and social media payments.

Those reasons are:

1. Consumers express a strong preference for a financial institution-centric new media payments system, according to Fiserv primary and sponsored research.

2. Customers already have an account relationship with their financial institution.

3. Financial institutions have payment systems that are robust, and secure.

4. Financial institutions have extensive fraud prevention, detection, and resolution operations in place.

5. Financial institutions are held to strict privacy practices which today are pervasive throughout their organizations.

6. Payment systems at financial institutions are strongly regulated, so even though banking regulations are currently in flux, consumers are best protected from fraud or abuse.

7. Financial institutions have laws, binding agreements and professional standards governing their payment-related activities.

8. Financial institutions can be held responsible, with known personnel and locations, which may contribute to a higher level of trust by consumers and businesses to handle transactions.

9. Financial institutions payment-pricing models depend on repeat business, not one-time payments, IPOs or collateral advertising revenues.

10. Financial institutions already have extensive, secure, bank-to-bank payment networks in place including ACH, credit card, check clearing and more.

There’s a lot at stake for financial institutions in the payments space. From a revenue perspective, the payments business is the most significant single line-of-business in U.S. banking. In fact, according to First Annapolis Consulting, payments in the U.S. represented more than $282 billion in total revenue.

“Now is the time for financial institutions to strongly defend the payments franchise, while the industry has the advantage,” said George Warfel, consulting director, Fiserv. “However, this will require opening up to new ways of doing business and offering new payments methods that people, merchants and corporations will want to use again and again, such as Internet or web payments, mobile phone and iPad payments, and soon, social media payments.”

What do you think?