By Glenn Wheeler, president, Viewpointe Clearing, Settlement & Association Services
The payments landscape has been transforming. Jockeying for position are some major non-banking players – social networking sites, peer-to-peer payment services, mobile phone providers and credit card companies. As the competition heats up, the time horizon for establishing supremacy in the market will get shorter and shorter.
Some believe that banks, long the dominant facilitator of payments, will have problems reacting and adapting to this new paradigm. Certainly the evolving payments market presents new challenges for banks, but the situation might not be as dire as some have predicted.
There is no question customers are demanding convenience. According to a recent Bank Systems & Technology article, “Mobile Payment Users Expected to Surpass 375 Million by 2015,” market research firm In-Stat predicts that the number of mobile payment users globally will triple by 2015. Where will this demand be met? Well, there are a multitude of channels for customers to gain access to mobile payments; many do not require a financial institution. Consumers have many options: there is “virtual currency” offered by social networking mobile apps such as Facebook, "tap and pay" apps via smartphone using near-field communication (NFC) offered by Google and telecom providers, and mobile peer-to-peer services from PayPal, among others. Undoubtedly, there are additional mobile payment channels being innovated as I type this.
Banks are keenly aware of the risk mobile payments pose to a key part of their business. However, it is the security component of mobile payments that deserves a second look. Security is a differentiator and one in which non-bank providers may have a hard time competing with the banks. By developing capabilities for payment transactions that bypass financial institutions, thereby circumventing the advanced systems that help secure and oversee transactions, consumers could be at risk. Naive consumers might falsely believe that they have the same type of security and protection that they do with their bank. From an individual concern, payment data could wend its way without needed security and structure.
Certainly the mobile payment market is fascinating to watch. Who would have imagined 20 years ago that your wallet could very well be replaced by a mobile phone?
But will this technology disrupt or energize banks? While mobile payments pose some challenges, I believe banks will rise to the occasion, and many already have. Billions of dollars have been spent securing the existing payment ecosystem and new entrants have to play by the same rules. This is one area where banks clearly have a leg up, and are well-prepared for the challenges ahead. Banks, mobile payment providers and consumers should keep this in mind.
What do you think?
Showing posts with label banks. Show all posts
Showing posts with label banks. Show all posts
Tuesday, June 14, 2011
Monday, April 4, 2011
High-dollar transactions moving to p-cards
By Mark Brousseau
Purchasing card (p-card) volume growth remains strong, Aaron L. Bills, founder and chief operating officer of 3 Delta Systems said this morning during a wide-ranging interview at NACHA Payments in Austin, Texas. “We never saw a slow down as a result of the recession,” Bills said. 3 Delta Systems expects to build on this growth with the release today of a new scalable platform that can handle any payment.
As evidence of the growth of p-cards, Bills points to a milestone that his company reached last month: for time, 3 Delta Systems processed over 1 million p-card transactions, representing more than $1 billion in value, in a single month.
“Part of this growth is the fact the economy is coming back, but the major driver is the increased use of buyer-initiated payments in accounts payables,” Bills said.
For instance, one 3 Delta Systems customer, a healthcare supplies firm, processed $11 million in p-card payments in March, representing just 11 transactions, he said. “And it would have only been two p-card transactions if the company’s payments processor could handle transactions of more than $1 million each,” Bills added.
“This may be an extreme case, but there are versions of this story unfolding all over the place. P-cards are really starting to step up,” Bills said. “P-cards are picking up a greater share of business-to-business transactions at more organizations.”
Bills said he isn’t surprised by the growth of p-cards, given their maturity. “P-cards are established, they are ubiquitous, there is a financial infrastructure in place, and all of the parties understand the rules,” he said. What’s more, merchants are willing to accept p-cards, “as long as they are not getting a 4 percent haircut,” Bills noted.
“From the point of view of the companies using p-cards, they earn a revenue share for every purchase that they make,” said Daniel L. Miner, CTP, general manager, Treasury Services, 3 Delta Systems. “At a time when money is tight for most companies, p-cards provide an opportunity to turn a cost center into a revenue-generating cost center. We’ve seen a lot of companies jump on this concept.”
Miner notes that financial institutions are helping to drive p-card volume growth. “There’s an incentive for issuing banks to get p-cards out there. They are looking for alternatives to consumer cards,” Miner explained. “We’re seeing more banks talking to their corporate customers about moving p-cards to the next level to earn a greater revenue share, and the corporates are responding.”
What do you think?
Purchasing card (p-card) volume growth remains strong, Aaron L. Bills, founder and chief operating officer of 3 Delta Systems said this morning during a wide-ranging interview at NACHA Payments in Austin, Texas. “We never saw a slow down as a result of the recession,” Bills said. 3 Delta Systems expects to build on this growth with the release today of a new scalable platform that can handle any payment.
As evidence of the growth of p-cards, Bills points to a milestone that his company reached last month: for time, 3 Delta Systems processed over 1 million p-card transactions, representing more than $1 billion in value, in a single month.
“Part of this growth is the fact the economy is coming back, but the major driver is the increased use of buyer-initiated payments in accounts payables,” Bills said.
For instance, one 3 Delta Systems customer, a healthcare supplies firm, processed $11 million in p-card payments in March, representing just 11 transactions, he said. “And it would have only been two p-card transactions if the company’s payments processor could handle transactions of more than $1 million each,” Bills added.
“This may be an extreme case, but there are versions of this story unfolding all over the place. P-cards are really starting to step up,” Bills said. “P-cards are picking up a greater share of business-to-business transactions at more organizations.”
Bills said he isn’t surprised by the growth of p-cards, given their maturity. “P-cards are established, they are ubiquitous, there is a financial infrastructure in place, and all of the parties understand the rules,” he said. What’s more, merchants are willing to accept p-cards, “as long as they are not getting a 4 percent haircut,” Bills noted.
“From the point of view of the companies using p-cards, they earn a revenue share for every purchase that they make,” said Daniel L. Miner, CTP, general manager, Treasury Services, 3 Delta Systems. “At a time when money is tight for most companies, p-cards provide an opportunity to turn a cost center into a revenue-generating cost center. We’ve seen a lot of companies jump on this concept.”
Miner notes that financial institutions are helping to drive p-card volume growth. “There’s an incentive for issuing banks to get p-cards out there. They are looking for alternatives to consumer cards,” Miner explained. “We’re seeing more banks talking to their corporate customers about moving p-cards to the next level to earn a greater revenue share, and the corporates are responding.”
What do you think?
Friday, March 6, 2009
The Future of Payments
By Mark Brousseau
When NCR Corp. considers the future of payments, it envisions the evolution of multi-channel payments optimization, Stephen Reade, vice president and general manager of global software and technology services, told attendees of TAWPI’s Payments Automation Conference this week in Ft. Lauderdale, FL.
“Ultimately, our goal is to enable faster, easier customer interactions, across multiple channels. Many financial institutions consider this business process optimization,” Reade said during a keynote presentation. To enable these multi-channel opportunities, financial institutions will have to enhance their operations infrastructure. But the effort can pay big dividends, Reade said.
“Multi-channel consumers spend more, and they spend more consistently,” he said. “Our clients are starting to recognize this.” Reade pointed to an Aberdeen Group study that found 38.3 percent of multi-channel consumers are significantly more profitable than single-channel consumers. “They’ll spend more on a single transaction,” Reade said, “and they’ll use multiple payment types.”
The broadening mix of payments channels also is forcing financial institutions to address multi-channel optimization. “Once a financial institution begins to establish a relationship with a customer via a particular channel, it’s almost impossible to turn it off,” Reade said, noting that despite the growth of mobile banking, financial institutions are still seeing strong interest in ATM-based channels.
“Consumers will always assume and expect self-service,” Reade said.
What do you think? Post your comments below.
When NCR Corp. considers the future of payments, it envisions the evolution of multi-channel payments optimization, Stephen Reade, vice president and general manager of global software and technology services, told attendees of TAWPI’s Payments Automation Conference this week in Ft. Lauderdale, FL.
“Ultimately, our goal is to enable faster, easier customer interactions, across multiple channels. Many financial institutions consider this business process optimization,” Reade said during a keynote presentation. To enable these multi-channel opportunities, financial institutions will have to enhance their operations infrastructure. But the effort can pay big dividends, Reade said.
“Multi-channel consumers spend more, and they spend more consistently,” he said. “Our clients are starting to recognize this.” Reade pointed to an Aberdeen Group study that found 38.3 percent of multi-channel consumers are significantly more profitable than single-channel consumers. “They’ll spend more on a single transaction,” Reade said, “and they’ll use multiple payment types.”
The broadening mix of payments channels also is forcing financial institutions to address multi-channel optimization. “Once a financial institution begins to establish a relationship with a customer via a particular channel, it’s almost impossible to turn it off,” Reade said, noting that despite the growth of mobile banking, financial institutions are still seeing strong interest in ATM-based channels.
“Consumers will always assume and expect self-service,” Reade said.
What do you think? Post your comments below.
Wednesday, January 30, 2008
The Compliance Challenge
By Mark Brousseau
If compliance challenges make you feel like a hamster running on a wheel, you’re not alone. Compliance costs grew significantly faster than net income for the financial institutions in a recent survey by the Deloitte Center for Banking Solutions. While compliance spending as a percentage of net income for the financial institutions surveyed were 2.83 percent in 2002, by 2006 it had grown to 3.69 percent, the survey of top 50 banks found. The indirect costs of compliance management are much greater, but more difficult to precisely measure.
The Deloitte Center for Banking Solutions also found that as costs have risen, financial institutions appear to have responded more by applying people to monitor compliance rather than focusing on process improvement and technology to manage it.
For instance, 95 percent of the financial institutions surveyed said their executives were much more involved in compliance management than in the past, with 40 percent saying that the time devoted to compliance had increased by more than 25 percent.
What do you think? E-mail me at m_brousseau@msn.com.
If compliance challenges make you feel like a hamster running on a wheel, you’re not alone. Compliance costs grew significantly faster than net income for the financial institutions in a recent survey by the Deloitte Center for Banking Solutions. While compliance spending as a percentage of net income for the financial institutions surveyed were 2.83 percent in 2002, by 2006 it had grown to 3.69 percent, the survey of top 50 banks found. The indirect costs of compliance management are much greater, but more difficult to precisely measure.
The Deloitte Center for Banking Solutions also found that as costs have risen, financial institutions appear to have responded more by applying people to monitor compliance rather than focusing on process improvement and technology to manage it.
For instance, 95 percent of the financial institutions surveyed said their executives were much more involved in compliance management than in the past, with 40 percent saying that the time devoted to compliance had increased by more than 25 percent.
What do you think? E-mail me at m_brousseau@msn.com.
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