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Market Study
Published: April 2008
Pages: 122
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 1437.00   Buy Now!
Research from: Business Insights
Sector: Mobile Content & Apps

The Future of Payments
Prepaid cards, contactless and mobile payments

As we move towards the so-called ‘cashless’ society, and consumers increasingly want the ability to make payments online and on their mobile phones – safe in the knowledge that transactions are secure – the face of the payments landscape is changing. Card payments have increasingly become an important part of our everyday lives, especially as more and more people utilize the Internet and financial institutions offer various payment services that preclude writing checks or using cash. From a business standpoint and despite growing transaction volumes, financial institutions are facing margin pressures on their payments businesses as competition has grown. From a technology standpoint, there has been little change in the past two decades. However, there are indications that suggest the next few years will yield interesting. This report considers the current market for payments technologies and provides an analysis of how the sector could evolve.
The Future of Payments: Prepaid cards, contactless and mobile payments is a new report published by Business Insights that examines the current market for a range of existing payment technologies and processes, and how this will drive the future of payments. This report predicts how payments trends will change in Europe, the US and Asia Pacific as well as examining potential marketing strategies. It also considers the drivers and risks for each key technology including mPayments, contactless payments, and co-branded and prepaid card schemes.

Some key findings from this report...
• The European retail banking market will become increasingly consolidated and the product market increasingly open, beyond the 2010 SEPA deadline.
• The advantages of prepaid cards versus other payment cards allow for them to be used for all transactions, in spite of being mainly suited to small value transactions.
• Speed drives the contactless payment proposition. Contactless payments are considerably faster than standard card transactions, and offering significant benefits to certain types of merchant.
• Marketing aimed at teenagers should be subtle and empathetic. There is an additional appeal from brands including Visa and MasterCard that are regarded as ‘adult’.
• Only the most optimistic forecasts have suggested that the value of global mPayment transactions will reach N50 billion by 2009. However, there are a large number of potential applications for mPayments, ranging from payments for digital content through to P2P transactions.

Key questions answered by this report...
• How will the Internet change the face of the payments landscape in the next few years?
• Where are the biggest opportunities for co-branded cards?
• How can banks, merchants and card issuer’s best appeal to the youth market?
• What is the expected potential for the mPayments industry?
• How will SEPA affect the evolution of the payments industry in Europe?
• What are the risks involved in contactless payments?

This new report will provide you with...
• Analysis of the current market conditions for payments, and how these will impact their evolution in coming years.
• An examination of the likely success of mPayments, and the drivers and inhibitors on the market.
• Analysis of the strengths and weaknesses of co-branded cards, and their future growth potential.
• Key success factors for contactless payments and an assessment of their future potential.
• An understanding of prepaid cards key benefits and why these will drive success in the Asia-Pacific region.

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Table of Contents

Table of Contents
The Future of Payments
Market context: The US and Europe 8
Market context: Asia Pacific and pre-paid cards 9
The future of co-branded cards 10
Contactless payments 11
Mobile payments 12
Chapter 1 Market context: the US and Europe 16
Summary 16
Introduction 17
Prepaid cards 18
Contactless payments 19
Market issues 20
SEPA 23
Future strategies 24
Payments fraud 26
Chapter 2 Market context: Asia-Pacific and pre-paid cards 30
Summary 30
Introduction 31
Definitions 31
Affinity cards 31
AAGR 31
Balances outstanding 32
Branded prepaid cards 32
CAGR 32
Co-branded cards 32
Private-label cards 32
Prepaid cards 33
Pre-paid markets 39
The European market vs the US and Japan 39
The youth market 39
Corporate market 41
Unbanked customers 42
Conclusions 43
Teen market 43
Corporate and government sectors 47
Chapter 3 The future of co-branded cards 52
Summary 52
Market context 53
Loyalty schemes 56
Types of co-branded card programs 57
Benefits to card issuers of co-branded programs 59
Benefits to merchants of co-branded card programs 61
Risks 62
Conclusions 63
Product differentiation 65
Co-branding relationships 66
Market share in growing markets 66
Co-branding profitability 67
High costs 68
Chapter 4 Contactless payments 72
Summary 72
Market context 73
Market sizing 78
Conclusions 80
Potential obstacles and solutions 81
Interoperability 81
Security 82
Cost 82
The future 83
The Americas 85
Asia-Pacific 86
Europe 86
Chapter 5 Mobile payments 90
Summary 90
Defining mobile payments 91
Market context 91
Costs and risks 93
Market drivers 95
mPayment trials 98
Mobipay – Europe’s great mPayment success story? 98
NTT DoCoMo – turning the mobile phone into a contactless e-wallet 101
The collapse of Simpay 106
Problem 1: Premium SMS is a highly inflexible means of payment 107
Problem 2: A lack of common standards makes life difficult for merchants and restricts cross-border sales 108
Conclusions 110
Payment and billing structures 113
Interoperability and acceptance 115
The cost of accepting mPayments 117
The future 120
Index 122
List of Figures
Figure 1.1: European retail banks’ payment project priorities 22
Figure 1.2: European retail payment players 25
Figure 1.3: Retail banks’ fraud priority areas 27
Figure 2.4: Prepaid cards have their place in the current payment card landscape 35
Figure 2.5: Asia-Pacific target youth market, 2007 40
Figure 3.6: Defining card partnership models 54
Figure 3.7: Combining brand and expertise in a co-branding relationship 55
Figure 4.8: Global market opportunity for contactless payments 78
Figure 5.9: Cash is the dominant payment mechanism for transactions up to the value of £10.00 in the UK 96
Figure 5.10: NTT DoCoMo has taken the traditional mobile phone proposition and added extra functionality 101
Figure 5.11: Applications for mobile payments 111
List of Tables
Table 2.1: Forecast prepaid card spend by country ($bn), 2010 39
Table 2.2: Asia-Pacific target youth market (0-17 years), 2007 40
Table 2.3: Youths and their aspirational ages 45
Table 3.4: forecast for pay later card numbers across five markets, 2006–2010 64
Table 5.5: The aspects of the mPayment value chain that interested parties are keen to secure or avoid 94

For full details, please email keithw@cmsinfo.com

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