Global payments remain strong

Global payment volumes continued to see growth in 2009, despite the financial crisis, according to initial data compiled by Capgemini U.S. LLC, the Royal Bank of Scotland PLC, and the European Financial Management & Marketing Association in the 6th annual World Payments Report 2010. The report examines emerging payment trends and discusses the potential impact of payment-related regulatory initiatives on global banking.

The study found that cards remain the preferred noncash payment instrument globally, accounting for over 40 percent of payments in most markets, 58 percent worldwide. While the average value of card transactions in North America dropped to $57 in 2008, down from $63 the previous year, consumer debit card usage for everyday purchases rose by 13 percent for the same period.

The growth of noncash payment volumes in developing economies, such as China, South Africa and Russia, is expected to outpace mature markets like North America, which saw a gain of 4 percent in 2008, accounting for more than 38 percent of world volume at 102.5 billion payments. Total combined global electronic payments and mobile payments accounted for approximately 20.3 billion transactions valued at $1.15 trillion in 2009, according to the report.

Challenges to banks

Nontraditional payment providers like PayPal Inc. are making inroads into revenue and markets traditionally held by financial institutions. About 75 percent of U.S. online shoppers maintain an alternative payment account, of which 70 percent use the accounts for online purchases.

"Banks are currently facing a variety of challenges from the rapidly changing payments landscape," reported Brian Stevenson, Chief Executive, RBS Global Transaction Services. "These challenges also present significant opportunities for banks that are able to adjust their strategies and move quickly to take full advantage of new ways of working in the global payment industry."

The report suggests banks will need to cooperate with third parties on revenue-focused opportunities to speed time-to-market, spread investment expenses and reduce operating costs of new payment initiatives. One trend seen in banking is the integration of bank operations into centralized payment hubs that optimize costs and leverage the profitability of each payment instrument, creating a more flexible and scalable model. For a download, visit www.wpr10.com .

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