The Electronic Transactions Association, in conjunction with consulting and research firm The Strawhecker Group, released the U.S. Economic Indicators Q3 2009 Report on Aug. 19, 2009. The document provides an overview and detailed examination of the financial services industry's recent performance and areas of opportunity.
Mike Strawhecker, Director of Marketing & Strategic Research for TSG and the report's primary author, said it is the most complete compilation and analysis of U.S. economic data available to payment professionals.
Offered free of charge exclusively to ETA members, it is the third such report published by TSG and the ETA; the first two were released in February and May 2009, respectively.
"The other reports contained a lot of similar data, but this time I took economic indicators and combined them to compare the relationships between them," Strawhecker said. "I think it's the best barometer out there of where we stand economically and how to weather this crisis. In one section I combined the foreclosure and unemployment rates, the number of failed banks and the number of banks receiving TARP [Troubled Asset Relief Program] into one ranking.
"Doing this enabled me to use those indicators to show ETA members regions that have been affected by the economy more than others. It's really a one-stop shop of economic data."
Having this data can help payment organizations evaluate risk in geographic and vertical markets as well as assist in determining the best avenues for expansion.
"Understanding regional performance of retail stores is important to any payment company management as far as where to focus new sales avenues based on regional economic health," Strawhecker said. "If an ISO or other financial institution knows that the Midwest is faring better than the rest of the country, or if restaurants and health stores are outperforming other merchants, it might be appropriate to put extra sales efforts in those areas."
The data-rich document identifies challenges merchants are facing that could actually benefit ISOs and merchant level sales people. For example, many large manufacturers are seeking new ways to cut operational costs, and they could do so significantly by switching from paper check batching and processing to automated clearing house (ACH) platforms.
And the report's analysis of consumer spending habits indicates merchants have more incentive now than previously to accept alternative payment forms at the POS.
"When you can save x number of dollars with ACH or contactless and mobile payments, I think it might be time for a company to pull the trigger and make those moves," Strawhecker said. "As larger segments, including young, tech-savvy consumers, start to use contactless and mobile payments, I see a tremendous need for merchants to evolve with that technology and embrace those customers.
"Additionally, this opens significant reseller opportunities, and I believe the data in our report reinforces the potential for those new revenue streams."
According to Strawhecker, nonpayment companies are beginning to enter the industry through mergers and acquisitions because a certain amount of insulation separates the payments sphere from industries more affected by the recession, which makes it an attractive business sector.
"This industry is different than most because we've never had a reason to retreat," Strawhecker said. "We continue to advance simply from the fact that electronic payment forms continue to gain market share over cash and checks. Overall use of electronic transactions continues to rise even as merchant sales drop. That being said, the greatest obstacle we have to overcome now, today, is the fear that prevents reaction to the changing marketplace." For information about joining the ETA, visit www.electran.org.
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