(September 8 – 10:15 ET) – The global payments business is finding itself under “commoditization and competitive pressures” due to the Internet, according to a new report from the Boston Consulting Group.
These transaction, clearing and settlement services have been traditionally centered in the U.S. and dominated by the so-called “Money Center and Super Regional” banks. They have dominated the industry because of their unique access to settlement systems and their data-mining ability. However the Internet is opening these systems and eroding the banks’ advantage in favour of telecom companies, Internet firms and others.
BCG says that the volume of non-cash payments was up 18% from 1994 to 1997, while the average price per transaction fell from US$1.17 to US$1.11 in that time. Cross-border prices fell from US$20.55 to US$13.52. That volume is also increasingly migrating from banking to electronic channels.
BCG recommends that banks can defend their market share of the business by:
– building electronic trading platforms
– seeking the role of transaction certifier (as Royal Bank is doing in helping build the Global Trust Authority)
– figuring out how to benefit from electronic billing
– using electronic relationship with the consumer to position themselves as providers of secure Internet payments
– focusing on business to business services
-IE Staff
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