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The Changing Face of Payments – Free Research Report

In the spring of 2015, the Financial Services Club ran an online survey, in collaboration with Cognizant and VocaLink, about the nature and state of the world’s largest payment processing infrastructures and whether they are fit for purpose.

The survey reviewed the areas influencing payments; the technologies that have the most impact; the ability of institutions to respond to change; the institutions that are most influential in the payments mix; and the likely trends that will most impact payments infrastructures over the next ten years.

Here are the key results and, if you would like a copy of the final report, just ask.

The main headline for this year’s survey is that, in terms of the change drivers for the payments industry, cryptocurrencies, the blockchain and bitcoin has developed fast since last year’s survey to become the third highest active force for change behind mobile and alternative payments such as PayPal.  Last year, virtual currencies did not even get one vote as a leading driver of change.  This demonstrates the speed at which cryptocurrencies has developed from new kid on the block to a major change agent.

In other areas, as in our previous surveys, regulatory factors are the strongest influence on payments today although this year showed an equally influential factor is innovation.  In previous years, innovation had been a longer term focus but, for the first time, this has now come to the fore on an equal footing with the regulatory drivers in the payments industry.  This may well be because of so many new firms focusing upon this space.

As technology is a fundamental component of processing payments, we looked at which of the technology areas have the highest priority in the retail and wholesale payments areas.  In the retail payments processing arena, where automated clearing houses (ACHs) are most likely to be involved in the central processing of payments, mobile payment services are still the highest ranked impact on the industry closely followed by security. In fact, these two areas so dominate the retail payments area that they are the only two factors that really matter right now.

Wholesale payments are a different matter, with the focal point still on security, security, security.  Interestingly, the least important factor in wholesale payments is outsourcing, according to the banking respondents.  This illustrates the importance of this area to the industry.

Notably, all respondents were more positive about their ability to adapt to change this year, with almost half of the bank respondents stating that they would see few issues with dealing with major shifts in the volume of transactions processed.

Equally, another notable trait this year is a more certain view of the future state of the industry.  For example, we ask participants to rate each year how much they agree or disagree with certain statements about the future.  This year, the top two predictions that Mobile devices will be a mainstream option for retail payments and that Payments processing will be a key business for innovators and new entrants met with far more approval than last year.  Equally, the least popular statements that Core payment infrastructure systems, such as SWIFT, will have been replaced and that Plastic cards will have disappeared met with far less approval that ever before.

The Future

At the end of the survey, we asked respondents to provide a view on the number of infrastructures they use today versus in the future.  

Asked how many retail and wholesale payments infrastructures were in use today and how many respondents expected to exist ten years from now, the great majority of respondents consider that there are between 2-5 payment infrastructures in use now and that this will remain the case over the next 10 years. However, there was a divergence of opinion regarding consolidation and fragmentation of infrastructures. 

For example, bankers see more consolidation with a focus upon a few or even a single retail ACH (Automated Clearing House) being used whilst definitely using fewer wholesale processors thanks to TARGET2 and similar initiatives.  The non-banks were not as clear in their feedback with, if anything, a view that more processors would be needed rather than less.  Perhaps this is the bankers’ aspiration rather than the reality therefore?

It was also clear from this year’s survey that mobile has taken off big time, with almost every participant (90%, up from 85% last year) stating  that Mobile devices will be a mainstream option for person to person or person to business payments within the next five years.  As a result, a majority (81%, up from 77% last year) also agreed that Payments processing will be a key business for innovators and new entrants and (65%) that New payments processors will be more successful than current incumbents.      

Intriguingly, no-one believes that core payment infrastructure systems, such as SWIFT, will be replaced in the near-term.

Meanwhile, this year’s survey highlighted that respondents are less impressed with the progress of SEPA than they were last year.  53% of survey respondents consider that SEPA will be fully adopted across the Eurozone within the next five years, down from 62% a year ago, with banks being more confident (58%, down from 65%) than non-banks (47%, down from 60%).

We also added a new question about the future in this year’s survey which highlighted a major new movement.  In answer to the statement Google and Apple will dominate mobile payments, over a third of participants (39%) believed this would be the case within the next five years, although banks (36%) were less optimistic than non-banks (42%).     

Finally, our statement that PayPal will be the largest payments processor on the planet is proving less and less popular, with 69% saying this will never happen in this year’s survey compared to 61% last year.  Ah well.  At least there are cryptocurrencies.

Four key highlights

Mobile payments has peaked in terms of being just another payment system this year, rather than something new and interesting

The launch of Apple Pay and other movements towards mobile wallets from Samsung, Google and Microsoft is creating a strong drive for banks to be part of this new ecosystem

Cryptocurrencies and the blockchain are gaining mainstream recognition and adoption in all aspects of the payments system, particularly in the back office infrastructures

The development of the regulatory framework of SEPA and the Payment Service Directive has lost some support in the past 12 months, and may be because the mandating of this service is not gaining traction amongst the corporate community it intends to serve


In our previous surveys, mobile has been nascent in context and has been viewed predominantly as an emerging technology.  It is gratifying to see that this year it has emerged and is now mainstream.  This is demonstrated clearly in all aspects of this year’s survey but, particularly, in the question around growth and driving change.  For example, almost all respondents see major growth in mobile related payment services such as Square and PayPal in the near-term.

As a result of these developments, along with the launch of Apple Pay and related payments innovations in the retail space, innovation has risen far higher upon the agenda this year compared to last year, whilst regulation is taking a diminishing role and focus.   Of course, regulation is still important, but it is clearly no longer seen as the main driving force for change in payments infrastructures.  Instead, the wealth of start-ups focused upon the payments space has driven a very different change in attitude in just the last eighteen months.

If you would like a copy of the final report, just ask.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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  • ger heffernan

    Hi, great report. The automated clearing house should cover any arising problems in new currency & payment methods, expand (ach) teams world wide like a net & pull data, opinions & concerns back to HQ. Looking forward updates 🙂