Security issues are hindering innovation, but customers want more choices and financial institutions are the most capable of delivering them, according to the new Ovum Global Payments Insight survey.
Ovum, which is a research and consulting firm based in London, joined with Florida-based payments firm ACI to ask 1,119 retailers, financial institutions and billing organizations around the world about their experiences, perceptions and expectations of payments. About 44% of the respondents to the 19-point questionnaire were in the Americas, the study said.
Financial institutions are perceived as the most capable providers of all payment technologies, according to the survey, though the numbers varied by payment technology. For example, when it comes to contactless cards, 68% said financial institutions were the most capable provider, but 17% said third-party entities such as PayPal were. Another 9% said telecom providers and 7% said startups. Only 46% and 48% said financial institutions were the most capable providers of dedicated apps and mobile QR codes, respectively.
The field also seems to be open to more competition, according to the survey. A full 79% said they think consumers want more payment-tool choices, but only half said they think launching new payment tools is easy and straightforward. A full 50% are evaluating at least eight new bill-payment methods.
Money is flowing into payment technology, though somewhat nervously, the study also found. Close to 56% of payment players said they expect to increase their investments in payments technology in the next 18-24 months; only 12% expect to decrease it.
However, 52% said security risks hinder innovation when it comes to payments technology – and that wasn't the only thing giving respondents heartburn about investing more in their payments infrastructure: 42% cited the high cost of maintaining existing legacy systems, 38% said consumer protection requirements, and 38% said they were unclear about the benefits to their organization. Only 20% said lack of visibility at the senior management level was holding investments back.
Despite the demand for more choices, cutting out the middleman was a rising priority for the respondents. According to the survey, 44% said they want to cut out fee-collecting intermediaries and simplify the global payments value chain.
“In light of the forecast increases in payments investment and a backdrop of rising payment costs in recent years, a key priority for lowering costs over the long term is to reduce the complexity of payments,” Gilles Ubaghs, a senior analyst for financial services technology at Ovum, reported.
It appears to be anybody's game at this point, though, according Ubaghs.
“At the moment many industry players remain understandably focused on their own particular niche in the payments ecosystem while missing the opportunities and benefits that greater collaboration could bring,” Ubaghs wrote. “This window of opportunity, however, remains limited in a market that is currently facing such high levels of disruption. Incumbent players who are slow to adapt will quickly lose a potential competitive edge, even as their payment costs continue to rise. For FIs, their position as the natural provider of payments won't last without constant development. Retailers and billing organizations meanwhile will quickly lose out to the competition if their customer experience does not exceed that of their rival.”
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