There is a positive outlook for the coming years in the payment industry and energy is set to be directed towards investments in marketing and business restructuring. A survey by Timetric identifies stakeholders’ bets on the best strategy to pursue
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Payment companies are optimistic about the future of the industry and the financial crisis is not stopping them from investing. Marketing strategies are high on the agenda and many businesses are adjusting their structure to the changing economic conditions.
These are the main conclusions of the Global Payments and Cards Industry Outlook Survey 2012-2013 by data and analysis company Timetric. Respondents of the survey included fifty representatives of the industry: half of them were either chief executives and presidents or directors and vice presidents. Other respondents included managers, professional and technical staff.
Key findings of the survey showed that, within the global cards and payments industry, 60% of survey respondents are "more optimistic" about revenue growth for their company over the next 12 months. 11% of respondents are instead "less optimistic" about revenue growth and 25% expect "no change".
Companies are planning on introducing new products and services and improving operational efficiency. Companies have also expressed the intention of "hiring and retaining talent" and to "expand operations internationally".
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By GlobalDataA total of 42% of the industry respondents anticipate a maximum 5% increase of their current workforce in 2012.
Executives from the global cards and payments industry expect increased levels of consolidation over the next 12 months, with 60% of respondents predicting either a "significant increase" or an "increase" in M&A activity over the next 12 months.
Collaboration
Recent developments in the fields of e-commerce, "swipe and go" payments, micropayments, stored value cards and mobile payments have encouraged growth in the cards and payments industry.
According to Ecommerce Europe, an online services provider, the global revenue of e-commerce reached $680bn in 2011, an 18.9% rise from 2010. This value is expected to reach $963bn by 2013. The trend is driving business for payment processors and e-commerce fraud detection companies, such as CyberSource and Ethoca, as well as payment collection networks. As a result, many companies are collaborating with one another to develop innovative solutions.
For instance, in March 2012 Brazil’s biggest payment processor Cielo entered into a partnership with CyberSource, a Visa-owned online payments management solution provider, in order to offer a complete global e-commerce fraud prevention solution.
The solution enables business establishments to increase their customer base and identify fraudulent transactions; this will, in turn, lead to an increase in sales at a lower operating cost.
Advanced payment technologies, including currency conversion and mobile payments software, are encouraging many low-volume retailers to perform online transactions. However, many still prefer offline transactions such as "swipe and go" cards and stored value card transactions.
Consequently, many payment processors are now focused on introducing newer solutions to strengthen their global presence. For example, in April 2012, Visa Europe announced the forthcoming release of its new digital wallet service, V.me, to a niche group of customers across the UK, Spain and France in autumn 2012.
Marketing is a priority
As trust increases, companies are keen to invest: customer acquisition, customer retention and brand building or awareness, are the three main marketing aims identified by companies operating in the cards and payments industry.
In the difficult global economic environment, companies operating in the industry are keen to undertake all possible measures to maintain their existing customer base as well as acquire new customers, says the Timetric report. Some companies identify the period of economic uncertainty as a perfect time for increasing brand awareness, as most competitors are expected to decrease their marketing expenditure.
Timetric highlights that industry respondents are optimistic regarding revenue growth in 2012 and plan to "focus sales efforts on generating new business". The majority of respondents intend to expand their marketing activities in order to counteract the effects of the global economic instability and to gain business from their weakened competitors. ‘Strategic and tactical consulting’, the ‘ability to generate leads or setup customer meetings’ and ‘ability to target specific audience niches’ are identified as important attributes in selecting marketing vendors.
Of all respondents, 45% consider "strategic and tactical consulting" as an important factor when sourcing marketing vendors, while for 32% the crucial stage is the "ability to generate leads or setup customer meetings". An additional 30%, highlight the "ability to target specific audience niches" as important attributes when selecting marketing and advertising vendors for their companies. Strategic and tactical consulting is a niche and growing field in the cards and payments industry.
Consultation in business strategies, advice in project management and operational excellence, mobile payments consulting, risk and security audit reviews and technology acquisition consulting – including vendor selection advice – are all areas investment is steadily growing in.
Future Developments in Business Structure
The survey stresses that companies are being forced to adjust their business structures due to the changing economic conditions. Respondents were asked what their top priorities are in developing their company’s business structure over the next 12 months and if they will expand or diversify into specific regions or product types.
The main business priorities identified by companies in the cards and payments industry for 2013 are to "introduce new products and services", "improve operational efficiency", "hire and retain talent" and "expand operations internationally". "Introducing new products and services" helps companies strengthen their competitive edge and expand their market coverage.
Therefore, many companies are coming up with innovative solutions to compete in the market effectively. For example, MasterCard introduced its inControl Family Solutions in May 2012, which enables families to manage, view and control their purchases. The solution comes with merchant category controls, geographic controls, budget and usage controls, as well as day and time controls that can be managed online and in real time. The solution helps to prioritize spending to avoid over-spending.
Similarly, Identive Group introduced a cloud-based near field communication (NFC) tag management platform in May 2012 that will enable advertisers, retailers and organizations to provide targeted content and services to customers NFC enabled mobile devices. The tag management solution will initially support Android devices, followed by Windows Mobile, iOS, and BlackBerry handsets.
Many companies in the cards and payments sector are working to "improve operational efficiency" through investment in IT solutions in order to stabilise its business processes and reduce operational costs. In August 2011, Rapid Investments, a payment solution provider in the US that owns brands such as RefPay, RodeoPay and OutPay, deployed the fully managed PCI Compliance service from ControlCase, a supplier of IT governance, risk and compliance software solutions and managed compliance services. The new software will enable Rapid Investment to achieve compliance with the payment card industry data security standard (PCI DSS). The move will also enable Rapid Investment to manage its data intelligently, speed up processing time and streamline its business processes.
Talent comes first
The need to "hire and retain talent" is another focus area for many companies nad innovative solutions are being considered to hunt and retain these talents. For example, in May 2012, Globoforce, a US-based management consultancy in the payments field, unveiled a new employee recognition tool, Talent Maps. The new tool uses crowd sourcing technology for better performance reviews that sources data from various peer-to-peer recognition interactions throughout the company. The tool therefore enables management to offer performance remuneration to employees, based on a wider amount of information gathered about individual employees. A total of 31% of respondents plan to "expand operations internationally".
Increasing internet and smart phone penetration rates in developing economies, a growing affinity towards online transactions, an availability of unexplored markets and the opportunity to market new products in new regions are some of the factors prompting companies to expand operations internationally.
It is evident from the results that a significant proportion of respondents from companies operating in the cards and payments industry expect to increase their spending on ‘internet’, ‘mobile’, and ‘direct sales’ channels, as well as ‘social networks’. ‘Internet’ emerged as the most favoured channel for investment by companies operating in the cards and payments industry, as online payment was the most popular with individuals and businesses alike. Many banks have also started to provide internet banking facilities to their clients and started to offer a whole range of online payment options to their account holders.
