Payment developments seem to be quite slow. Major changes in payment habits need five to ten years to be implemented. One reasons for the slow pace is probably the lack of transparent price and cost information.
I realise that I sound like a broken recordscratched CD on this topic, but it seems to me to be a question of rudimentary economics: no price information, no working market. If the European Commission wants to make the European payment market work better, they could do worse than start by actually turning it into a market in the first place by insisting on better price signaling. One inevitable consequence: the cost of cash will go up, the cost of cards will go down.
The six key trends that Harry outlines are
- Non-cash payments are steadily replacing cash payments. A few days ago I was working with a bank in Iceland where more than nine in ten retail payments are non-cash (in the U.K. it’s one in four).
- Electronic payments are taking over from paper payments. One particular form of paper payment, the personal cheque, will likely vanish in my lifetime.
- Within electronic payments, direct debits are losing market share. It’s possible that this may change once the SEPA transition kicks in. As the potential for pan-European payments is realised then perhaps the market may begin to use them. The pieces are coming into place here. For example, several big processors (Equens, Iberpay, Seceti Stet and VocaLink — who together handled 18 billion direct credit and debit transfers last year) have agreed to establish bilateral interoperability using the European Automated Clearing House Association (Eacha) Technical Interoperability Framework over SwiftNet FileAct for the exchange of SEPA payments. I’m not so sure though: will Finnish consumers give direct debit mandates to Greek utilities? If I had to guess I would think that pushed e-billing triggering a credit transfer will become the consumer’s preferred mechanism.
- Self-service is replacing branch banking. Oddly, the number of bank employees has been surprisingly stable (and surprisingly invariant when normalised). I don’t know what this implies, but presumably call centres, IT, marketing and so on have all grown even as the number of “front line” staff has declined.
- Debit cards usage is growing faster than credit card usage, both in terms of payment volumes and values. In several countries, credit card payments are less than a fifth of all card payments.
- ATM withdrawals are getting steadily more expensive. The average number of withdrawals per ATM per month has fallen by a third in recent years.
In all of these statistics, new “alternative” online payment mechanisms and mobile payments are essentially still invisible. I doubt this will be true a decade from now.
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]