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The Green SheetGreen Sheet

The Green Sheet Online Edition

October 12, 2009 • Issue 09:10:01

Research rundown

Our industry is replete with white papers, survey findings, and research and analysis published by an array of expert advisories, consultancies and other qualified organizations dedicated to the payments space.

These publications contain current, in-depth data that can help the feet on the street identify new opportunities and adapt business strategies as the industry evolves. To spotlight this information, The Green Sheet is introducing "Research rundown," a recurring feature highlighting the many jewels found within these resources.

Security still slack

Security solutions provider Imperva Inc. and financial services research firm The Ponemon Institute conducted a survey of more than 500 U.S. and multinational information technology (IT) security practitioners in August 2009 regarding compliance with the Payment Card Industry (PCI) Data Security Standard (DSS). The survey found that:

  • 71 percent of companies admitted to not making data security a top priority, yet 79 percent have experienced a data breach involving the loss or theft of card information.
  • 55 percent said they secured credit card data but not other sensitive information such as Social Security numbers, driver's license numbers and bank account details.
  • 60 percent reported insufficient resources necessary to comply with the PCI DSS.
  • Only 28 percent of companies with 501 to 1,000 employees are PCI compliant, as opposed to 70 percent of companies with 75,000 or more employees.

To coincide with the Oct. 31, 2009, deadline for submitting input for revising the PCI standards, Imperva recommended that the PCI Security Standards Council:

  • Devise a compliance logo that helps companies articulate their security efforts to consumers and leverage their investments in PCI compliance to gain a competitive advantage
  • Modify compliance needs for larger and smaller companies, taking into account different environments and security needs

For further details, visit www.imperva.com or www.ponemon.org.

Credit union configuration

Research and advisory firm Aite Group LLC released a report in August 2009 that examines the challenges and opportunities faced by credit unions in the current economy. The report said there are approximately 7,905 credit unions nationwide. Of those, 82 percent hold less than $100 million in assets; U.S. credit unions combined have almost $900 billion in assets.

Credit Unions: Gearing Up for Success is based on a July 2009 survey of 93 U.S. credit unions done in cooperation with the Credit Union Executives Society. It analyzes the evolution of the credit union model and how these institutions must continue to leverage new opportunities.

Following are key points Aite noted:

  • 70 percent of survey participants said they were challenged by loan delinquencies and chargeoffs as a result of the recession.
  • More than 85 percent of credit unions have increased deposits over 2008 totals; 70 percent have attracted new members from larger banks.
  • 69 percent stated that mergers and acquisitions are part of their strategic plans for 2010 and beyond.
  • Baby boomers and seniors comprise more than 50 percent of a credit unions' member base; 18 percent of people in Generation Y don't know what a credit union is.
  • 90 percent of credit unions reported 2009 IT spending to date of more than 5 percent over 2008 IT budgets.

Aite's research found that, although credit unions are increasing their membership, many are still not considering such products and services as general purpose prepaid cards, branded gift cards and international money transfers. Aite recommends these institutions do the following to modernize their businesses:

  • Implement new programs that demonstrate the value-added services credit unions offer to differentiate themselves from larger financial institutions
  • Focus greater attention on changing membership demographics
  • Broaden product portfolios to better compete with larger financial institutions
  • Make greater use of business process outsourcing

Health care confusion

In September 2009, Aite published Health Care Payments: An Issue Potentially Under the Industry's Control. The report noted that U.S. health care was a $2.2 trillion market at the time of publication and is expected to grow to $4 trillion by 2016. The report also found the following:

  • In the health care market, 49 percent of payments were made through Medicare or Medicaid, 40 percent by private health insurers, and 11 percent by consumers via cash, check or card transactions.
  • 60 percent of transactions in the health care industry are still manually processed.
  • A shift is occurring in the industry toward updating technology to streamline payment systems and provide transparency in pricing, to enhance efficiency by reducing manual processes and increasing automation, and to improve service quality.
  • In 2008, the health care industry accounted for one-sixth of the U.S. gross domestic product.

According to Aite, the shortage of educational support, complexity of solutions and lack of market knowledge have created a "bad taste" among those in the health care provider community. This has led to low interest and adoption rates among small and mid-sized providers in automating their back-end settlement processes.

Aite strongly recommends that industry stakeholders "validate different methods of payments and set standards of best practices to lessen the confusion around an already complex environment."

For more information, visit www.aitegroup.com. The Green Sheet, Inc.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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