Payments 2012: Growing Range of Services and Demand
Credit unions will need to continue to seek out and provide a full – and expanding – range of services if they wish to position themselves as their members’ payment provider of choice in 2012.
Particular areas of focus in the coming year will be in person-to-person and mobile payments and in image capture.
Credit and debit card services also will see growth in a slowly recovering economy, which prepaid cards showing particularly strong uptake.
Here is a more in-depth look at these areas.
With more financial institutions and third-party providers putting serious marketing muscle behind their person-to-person payment offerings, consumer awareness of the category will grow exponentially in 2012.
P2P payment networks will grow as well, adding more financial institutions and consumers, and their focus will expand to include small business participants. Small businesses will increasingly be able to leverage P2P networks to both request money (send invoices) and receive payments.
Although network growth and enhancements will expand the availability and convenience of P2P, it will be interoperability between networks that serves as the catalyst for P2P to become a ubiquitous service. Some networks may take initial steps toward interoperability as 2012 progresses.
According to a Forrester Consulting survey commissioned by Fiserv in late 2011, top-tier financial institutions will be focused on delivering mobile bill payments and mobile P2P payments in 2012.
Mobile bill payment is already starting to see use, with more than 6 million households paying a bill from their smartphone last year. Consumer interest in mobile bill payments will continue to increase, particularly for expedited payments.
As noted above, financial institutions will continue to build out person-to-person payment offerings, making these services available through smartphones and even tablets.
While the Forrester Consulting survey mentioned above showed that financial institutions are less focused on remote payments (such as those initiated via a mobile browser) and point-of-sale payments, it is advisable for credit unions to go ahead and start thinking about plans for delivering those services so they will not be caught off guard in the rapidly developing mobile space.
The slow economic recovery will continue to keep cardholder spending patterns cautious, although growth rates in each segment will be positive.
Debit card transaction volume is positioned to grow approximately 9% – despite interchange pressures. This growth will be due in large part to payment behaviors cardholders adopted during the recession and the spending patterns of younger consumers. In general, cardholders will remain extremely comfortable with debit cards and will continue to value the ease and control debit provides to their daily financial lives.
Issuers will make credit products more attractive with rewards and other enticements, consumers will slowly loosen their wallets, and transaction purchase volume is positioned to grow by 7%.
More credit unions will also get back into credit card issuing because they will realize that not having their own credit card offering is a significant gap in their member value proposition.
The prepaid market will continue to experience tremendous growth, with general purpose reloadable card loads increasing by upwards of 40% this year.
Some growth will be driven by financial institutions re-pricing their debit and depository services, effectively pushing consumers out of traditional financial products and into the prepaid channel.
As productivity and efficiency remain top-of-mind business priorities, credit unions will continue to recognize and embrace the inherent benefits of image capture – including streamlined processing, lower per-item costs and reduced transportation expenses – and use this technology to seamlessly clear, settle and post to core.
The ongoing changes in the corporate credit union environment may prompt more credit unions to reconsider their item processing options and look at the value of newer technologies that feature a common Web-based platform for check processing and imaging, which further streamlines processes and mitigates risk through faster duplicate detection.
We’ll also continue to see growth in mobile capture—taking a check image via smartphone for remote deposit—as yet another self-service digital product for members.
Bruce Hopkins is general manager, Processing Solutions, Card Services, for Fiserv Inc. in Brookfield, Wis.