World Payments Report 2009: Non-cash payments transactions grow to 250bn; Global Transaction services remain significant contributor to revenue
Paris- SEPA progresses despite weak market conditions
9 September 2009
Non-cash payment volumes continued to grow in 2008 after an increase of 8.6 percent globally in 2007 to 250 billion transactions, according to the World Payments Report 2009, released today from Capgemini, RBS and Efma. The use of cards continues to be the single strongest driver for this growth with Global card transactions (credit and debit) growing 14.5% in 2007 and 11.2% in 2008.
Global markets are dominated by the US and Eurozone, which together account for 61% of transactions with developing economies continuing to grow their share of global transactions every year.
Amidst weak economic conditions and a challenging time for the banking industry, Global Transaction Services (GTS) divisions were cited as a stable and profitable source of revenue for financial institutions. The report finds that while some GTS divisions suffered from deteriorating market conditions and reduced business volumes in the first quarter of 2009, GTS still accounts for 5-20%of group revenues, and remains an important source of revenue for banks, with a cost/income ratio as low as 50%.banks.
Bertrand Lavayssière, Managing Director, Capgemini Global Financial Services said, “GTS remains an attractive business even in light of economic conditions. The credit crisis has caused a shift in priorities where clients are seeking to optimise working capital as they face a squeeze in external funding amid tighter credit conditions.”
In addition, transaction banking services generate recurrent revenues as well as providing an important source of liquidity. To create successful GTS businesses Brian Stevenson, Chief Executive, Global Transaction Services, RBS stated, “Key success factors for a sustainable transaction business remain: skilled people, strength of client relationships, secure technology platforms, an effective global network strong servicing capabilities and scale to drive efficiencies.”
SEPA standardisation still on the agenda
In Europe, the political will to drive a unified financial system remained intact and efforts continued to move ahead with SEPA implementation. The risk of a mini-SEPA remains real unless stakeholders get certainty on key issues: an end-date for full migration to SEPA; evidence that SEPA solutions can provide tangible improvements in operational performance; and clarity on standards to be used for SEPA payments (e.g., around data) so participants can prioritize IT investments and SEPA-implementation plans. In response, European regulators are increasingly supportive of the need to encourage quicker implementation by setting a common end date.
Bertrand Lavayssière of Capgemini said, “SEPA is a positive initiative which should reduce costs and minimise risk for the payments process. However, banks, corporations and public authorities need to play a more proactive role in order for SEPA migration to progress. New business opportunities will come with payments standardisation and will become more apparent as competition increases in the payments industry.”
Fully realising the goals of the SEPA Cards Framework (SCF) will involve overcoming a number of potential hurdles, such as issues over scheme compliance, ongoing standardisation activities and the continuing uncertainties surrounding interchange fees.
Future growth and innovation potential: Focus on Asia
In other regions, such as Asia, innovations in payments are leading to revenue benefits according to the report.
For banks seeking to grow and enhance payments revenue streams, best practices and a range of initiatives out of Asia have demonstrated that payments innovation is a potential source of revenue, particularly with non banks. The Asian market offers valuable insights on the success factors for developing different payment tools, and the opportunities for banks to generate new revenues from emerging payment instruments.
“Emerging payment methods like m-payments, contactless payments, e-payments and biometric authentication can help banks to attract and retain new clients, reduce the use of cash, create new offers, reach unbanked markets and decrease operational costs,” said Bertrand Lavayssière of Capgemini.
About the World Payments Report 2009
Covering Europe, North America and Asia, the World Payments Report 2009 reveals
the resiliency of the payments industry amid weak global economic conditions and
a challenging time for the banking industry.
Including the latest updates on SEPA and PSD, this year’s report explores the challenges presented by new market conditions. With the evolution of global transaction services, banks are increasingly exploring: changing product mixes, improving instrument profitability, consolidating transaction processing to capitalize on scale, and reducing the cost of operations.
The World Payments Report 2009 examines these areas, drawing on 36 interviews conducted with 16 major banking players and 20 of their corporate clients.The World Payments Report 2009 is available for download at www.capgemini.com/wpr09 and www.wpr09.com .
About Capgemini
Capgemini, one of the world’s foremost providers of consulting, technology and
outsourcing services, enables its clients to transform and perform through technologies.
Capgemini provides its clients with insights and capabilities that boost their
freedom to achieve superior results through a unique way of working, the Collaborative
Business ExperienceTM. The Group relies on its global delivery model called Rightshore®,
which aims to get the right balance of the best talent from multiple locations,
working as one team to create and deliver the optimum solution for clients. Present
in more than 30 countries, Capgemini reported 2008 global revenues of EUR 8.7
billion and employs 90,000 people worldwide.
More information is available at www.capgemini.com.
Leveraging deep industry expertise, Capgemini can meet the increasingly sophisticated needs of the financial services sector. With a network of 15,000 professionals working for more than 900 clients worldwide, Capgemini’s Financial Services SBU provides transformation solutions in Banking, Insurance and Capital Markets, and provides industry recognized thought leadership.
For more information: www.capgemini.com/financialservices
About the Royal Bank of Scotland
The RBS group is a large international banking and financial services company.
Headquartered in Edinburgh, the Group operates in the United Kingdom, Europe,
the Americas and Asia, serving more than 40 million customers. The Group provides
a wide range of products and services to personal, commercial and large corporate
and institutional customers through its two principal subsidiaries, The Royal
Bank of Scotland and NatWest, as well as through a number of other well known
brands including, Citizens, Ulster Bank, Coutts, Direct Line and Churchill. www.rbs.com
Global Transaction Services (GTS) at RBS is a top-five business for international payments created following the acquisition of ABN AMRO. The business comprises three key areas: global cash and liquidity management, global trade services and merchant acquiring and commercial cards. GTS is established globally with on ground presence in over 38 countries and partner bank agreements worldwide.
About the European Financial Management & Marketing Association
EFMA is the leading association of banks, insurance companies and financial institutions
throughout Europe. On a non-for-profit basis, EFMA promotes innovation and best
practices in retail finance by fostering debate and discussion among peers supported
by a robust array of information services and numerous opportunities for direct
encounters. EFMA was formed in 1971 and gathers today more than 2,100 different
brands in financial services worldwide, including 80% of the largest European
banking groups. Visit www.efma.com for more information.
Rightshore® is a trademark belonging to Capgemini.
Capgemini press contacts:
Christel Lerouge
+33 (0)1 47 54 50 76
christel.lerouge@capgemini.com
RBS press contact:
Shamira Alidina
+44 7827 842958
shamira.alidina@rbs.com
Efma press contact:
Patrick Desmares
+33 1 47 42 69 76
patrick@efma.com
1In a mini-SEPA, legacy national instruments would continue to be used for domestic transactions while SEPA instruments are used for cross-border transactions
