Reading the Payments Radar
Scanning for emerging opportunities and potential threats in the global payments market
Once considered a very stable industry, many payments players are facing a period of significant change.
The short-term revenue picture for the payments industry, in particular credit card issuing banks, is unclear. On the one hand, card issuers revenue is increasing due to improvements in consumer credit quality and decreasing consumer charge-offs, both of which are driving improvements in revenue and net income for issuers.
However, there are obstacles ahead and uncertain market dynamics that could derail a return to historically "normal" revenue performance. Such as a double-dip recession, stagnant or rising unemployment, interchange fee, commoditization or regulation, and systemic market disruption, such as consumer de-leveraging, or shifting to other payment platforms.1
With shifts in the traditional payments market, including economic and credit downturns forcing voluntary and involuntary migration across products, converging industries, the entry of nontraditional competitors, and emerging new models and innovations, the field has become more active and uncertain, with no clear path to leadership and no sure bets.
The pace and scope of change may be very significant. For those who are prepared to respond appropriately, the rewards could be equally significant. The race will go to the nimble and well informed — the leaders and fast followers with the information and insights to move quickly on smart, well-executed strategies.
1 Deloitte Consulting Banking and Payments team, July 2011.