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February 26, 2009

VRL’s Alternative Payments and Asia-Pacific cards reports out now

VRL, publisher of Cards International, is releasing two new reports which look at two very different areas of the cards and payments markets, set to play important roles over the next few years. Alternative Payments, written by Ray Cain, is a comprehensive overview of payments in the retail banking sector, and looks at the growth of alternative payment channels such as online and mobile payments Cains report examines the role of the transaction account, which is at the core of the customer and bank relationship, and also examines how payment services play a critical role in customer acquisition and retention

By Verdict Staff

VRL, publisher of Cards International, is releasing two new reports which look at two very different areas of the cards and payments markets, set to play important roles over the next few years.

Alternative Payments, written by Ray Cain, is a comprehensive overview of payments in the retail banking sector, and looks at the growth of alternative payment channels such as online and mobile payments. Cain’s report examines the role of the transaction account, which is at the core of the customer and bank relationship, and also examines how payment services play a critical role in customer acquisition and retention. Payments are also an important source and driver of revenue. At the same time banks’ traditional role in retail payments is coming under growing threat from a plethora of alternative payment providers.

Alternative players are establishing themselves in market niches consistent with the classic model of disruptive innovation and are looking to expand from there into the mainstream payments space. Cain’s report cites the examples of PayPal and Neteller, which have successfully expanded into new areas and are now in a position to challenge the status quo.

Also contained in the report is an analysis of the importance of the underbanked consumer segment, which represents a significant niche market that is not well-served by bank-based payment methods. In many emerging markets, mobile phone networks are a low-cost and efficient platform to extend payments to the hundreds of millions of consumers without bank accounts or credit cards. A proliferation of initiatives providing mobile payment services in these markets have sprung up in recent years driven by telecoms or third parties.

Online alternative payments are being embraced by merchants as a way to reach new customers, reduce checkout abandonment, and increase sales, and by shoppers as a convenient and secure alternative to credit cards. Alternative providers are also enhancing payments for consumers and merchants by linking them with marketing capabilities.

Alternative payment providers will continue to innovate – providing new solutions in underserved market niches and enhancing payment services in existing markets. The threat of disruption is very real, states Cain’s report, and banks must work together in order to compete effectively. This is hindered however by a lack of private incentives to do so and coordination problems. While Visa and MasterCard are the natural candidates to perform a coordinating role, their new status as publicly-owned companies means they cannot be expected to reliably serve banks’ interests if these do not coincide with their own. The most pragmatic option may be to partner with alternative payment providers.

Cards and Payments in Asia-Pacific

The second new report from VRL, Cards and Payments in Asia-Pacific, written by Truong Mellor, examines the usage of payment cards in the Asia-Pacific region. It predicts that several key markets will continue to see significant consumer base and spending growth.

According to the Asian Development Bank, more than 300 million households in the Asia-Pacific region lack access to basic financial services, and it remains a very cash-dominant region. Additionally, issuers remain very cautious about growth in the Asia-Pacific region given the current global economic downturn. However, each market brings with it its own unique set of circumstances.

The report covers both macro and microeconomic factors that will be responsible for influencing the growth and profit of the industry, and analyses market demographics, the structure of the acquiring industry, the regulatory environment, developments in technology and risk management infrastructure.

The report will look at the challenges of applying these to the payment cards industry in the Asia-Pacific region – some of which will clearly drive growth and profitability more than others in different markets.

Mellor’s report states that the most successful players in the payment card space across the Asia-Pacific region will be those institutions that take advantage of an economy of both scale and scope and a strong distribution network.

In all likelihood, this will be the major retail banks, as they already have the required branch presence, customer base and comprehensive financial information. However, the onus is on them to move quickly in order to establish themselves in the payment card market.

To purchase either report, please contact Joseph Alvarez, head of sales at VRL, on 020 7563 5650 or at joseph.alvarez@vrlfinancialnews.com.

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