Payments are a substantial part of the overall revenue for financial institutions: in less than a decade, the top 25 U.S. bank holding companies' payment-related revenues have grown from 35 to 45 percent of total revenues.1,2,3 However, the industry is in a state of flux. Market variables are changing, and significant market share will be up for grabs in the next few years. Shifting relations between banks, intermediaries, and merchants, as well as consumer preferences, will dictate not only the share of revenues financial institutions will reap as future retail payments scenarios unfold, but which individual financial institutions will grab the dominant portion of those revenues. Who will have the upper hand as the retail payments market evolves? By researching current market trends, IBM identified four possible scenarios for the evolution of the retail payments market. Beginning with a base case that models the slow decline of check payments as electronic payments gain traction in the marketplace, and ending with the possible impact of a significant decline in signature-based debit card transactions on the traditional retail payments market, the resulting research yielded valuable insights for players in the retail payments arena, with implications for revenue capture over the next ten years. To read the entire report, download the pdf file at the top of this page. |
