edc global payment trends survey 2011

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Global Trends in Payment Systems Summary of 2011 Survey Findings

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Global Payment Trends Survey

Overview

Summary of 2011 Survey Findings Global Trends in Payment Systems

Summary of 2011 Survey Findings Global Trends in Payment Systems 3

For the 4th year running, Edgar, Dunn & Company

has conducted a survey of payments professionals globally on key industry

dynamics in their markets

The questions asked revolved around five main topics:

Current & future importance of individual payment products

Current & future importance of individual payment channels

Expected future importance of payment technologies

Most influential market participants

Key industry events that will shape payments markets



participated in the survey and represented a total of 50 countries


Respondents to the survey covered a wide cross section of roles within the industry, and generally had extensive cards / payments experience



USA / Canada

Overview of Findings

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.



Europe 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.



Asia 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.



Australia & New Zealand

Overview of Findings

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.

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Detailed Survey Findings


Current relative importance of

payment products

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Globally, credit and charge cards continue to be perceived

as the most important payment products – with little

change from 2010 Please score the current relative importance of these payment products in your country?



The current importance of individual payment products continues to vary significantly by region

Please score the current relative importance of these payment products in your country?

Product % Respondents who rated the product as ‘important’ or ‘very important’

Global Europe USA / Canada Asia Australia / NZ

Credit / 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%

‘Notably’ higher than global average

‘Notably’ lower than global average

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Cash appears to be increasing in importance in all regions except Europe

Difference in % of respondents answering ‘important’ or ‘very important’ between 2011 and 2010 surveys



Product Global Europe USA / Canada Asia Australia / NZ

Cash 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 payments)

-10% -9% -5% -25% -8%

Remittances (excluding Mobile) -11% -8% -10% -19% -7%

Prepaid / stored value cards -13% -18% -12% -16% -8%

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Over the next 5 years,

the greatest growth continues to be expected to occur in

Mobile payments – both NFC and Remote – followed by

Contactless Cards

What are the 3 payment products which will experience the greatest growth in importance in your country over the next 5 years?



Expected growth in importance of Mobile and Contactless Card payments is significantly lower in Asia than in the other regions What are the 3 payment products which will experience the greatest growth in importance in your country over the next 5 years?






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 payments)

31% 35% 29% 34% 28%

Prepaid / stored value cards 22% 22% 33% 23% 14%


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%


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%




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 payments)

31% 35% 29% 34% 28%

Prepaid / stored value cards 22% 22% 33% 23% 14%


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%


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%

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As a payment channel the Internet is perceived to be as important as the ‘traditional’ Point of Sale terminal with overall results very similar to 2010

Please score the current relative importance of these payment channels in your country?



Channel % Respondents who rated the product as ‘important’ or ‘very important’


Point 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%

Bank branch and ATM retain significantly

higher importance as a payment channel in Asia

than in the other regions surveyed

Please score the current relative importance of these payment channels in your country?



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The Mobile and Internet channels

are expected to continue to grow in

importance in the coming 5 years

What are the 3 payment channels which will experience the greatest growth in importance in your country over the next 5 years?



Channel % Respondents who rated the product as ‘important’ or ‘very important’


Mobile 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%

The growth in importance of the

Mobile channel was significant in all regions,

and highest in USA / Canada

What are the 3 payment channels which will experience the greatest growth in importance in your country over the next 5 years?



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Globally, smart phones will drive the growth in mobile, however basic phones will still play a key role in

‘developing’ payments markets

What are the mobile channels which will experience the greatest growth in importance in your country over the next 5 years?


Given the expected future growth of Mobile and Contactless, it is not

surprising that related technologies are also

often mentioned Which 3 payment technologies will experience the greatest growth in importance in your country over the next 5 years?





Mobile 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%

Reflecting the expected trends in payment products, the growth in importance of payment technologies also tends to vary significantly by region Which 3 payment technologies will experience the greatest growth in importance in your country over the next 5 years?



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The role of Central Banks / Regulators is seen as less significant this year (32%

of respondents versus 44% in 2010), with

Consumers and Telcos coming to the fore…

In 5 years time, who do you believe will be the 3 most influential market participants in your country?



…although 62% of Asian respondents believe that Central Banks / Regulators will have a major influence over the next five years In 5 years time, who do you believe will be the 3 most influential market participants in your country?



Market Participant % Respondents who rated the product as ‘important’ or ‘very important’


Consumers 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%

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Payments professionals believe that the growth of

Mobile / NFC is going to be the key driver in

shaping the immediate future of payments

markets Which of the following events will have the greatest impact in shaping the payments market within your country over the next 3 years?



Event % Respondents who rated the product as ‘important’ or ‘very important’


Growth 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, surcharging)

41% 43% 51% 32% 37%

Regulator changes to industry practices (e.g. consumer lending, levying of fees)

32% 27% 35% 50% 21%

Regulator changes to processing (e.g. domestic, scheme separation)

21% 16% 13% 42% 18%

Industry mergers / acquisitions 18% 25% 12% 21% 11%

Growth of Mobile / NFC is considered to be the key driver in shaping the immediate future of payments markets across all regions surveyed Which of the following events will have the greatest impact in shaping the payments market within your country over the next 3 years?



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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.

Pascal Burg Director | Edgar, Dunn & Company Immeuble Elysées La Défense 42 rue Vignon, 5th Floor, 75009, Paris Phone: +33 1 4007 9224 | Mb +33 6 79 37 55 47 [email protected]

David Dee Director | Edgar, Dunn & Company Suite 501, 45 Lime Street Sydney NSW 2000 Australia Ph +61 2 9279 2442 | Mb +61 411 112 220 [email protected]

John Bresnahan Director | Edgar, Dunn & Company 817 West Peachtree Street NW Suite 310, Atlanta, GA 30308 Phone: +1 404 879 0710 | Mb +1 678 644 0585 [email protected]

edc global payment trends survey 2011

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