Extending The PIN: Evaluating The Growth of EFT Networks Into New Markets

Extending The PIN: Evaluating The Growth of EFT Networks Into New Markets published by Mercator Advisory Group, Inc. in July, 2006. This report consists of 26 pages & 12 Exhibits. and the price starts from US $ 2950.

Introduction

Abstract

The debit industry has seen significant growth over the last eight years, while signature debit growth is down ever so slightly from 21 percent in 2003 to 18 percent in 2005. PIN debit has more than compensated with growth rates between 35 to 38 percent in the same time period. As a result of these two spectacular increases, debit transactions either already have, or will very soon, exceed credit transactions.

Despite debit's incredible growth in volume terms Mercator Advisory Group believes that the EFT networks that enable PIN debit are approaching a critical juncture. Signature debit, while currently facing a slightly slowing growth rate, is also the only debit solution fully enabled and successfully entering several new emerging markets, such as eCommerce, recurring bill payments, and those markets where cash is being displaced using Contactless and signature-less solutions. Left unchecked the increased growth in internet and mobile payments and cash replacement will occur primarily at the expense of growth in EFT transactions. This will be of some concern if these new markets grow as quickly as proponents hope. It is important to note that we are talking about future markets and the relative market share of transaction types in these emerging environments.

This report evaluates the consumer preference for debit instruments today, how these preferences can be shifted by the popular press and the payment industry itself, the targeting of three new markets by card associations for future growth: 1) online transactions, 2) recurring bill-pay environments, and 3) Contactless/signatureless environments intended to displace low-value cash transactions, and issues that make it difficult for EFT network operators to react unilaterally to enter these same evolving markets; and therefore, make co-operative plays related to technology standards and implementation a real consideration.

Tim Sloane, Director of the Debit Service for Mercator Advisory Group and the author of the report indicates that despite strong growth rates across the board for debit, EFT network operators may need to start establishing plans to target these same markets.

Table of Contents

1. Introduction

2. Evaluating Consumer Perspective On PIN Debit

• Consumers Select On Safety & Convenience
• Popular Opinion Of Debit Safety Is Changing
• Marketing
• Convenience

3. Has PIN Debit Terminal Deployment Hit A Plateau?

4. Internet Purchases

5. Recurring Bills

6. Cash Replacement and Micro Payments

• Why Low Value Transactions Challenge PIN Debit
• The Larger Contactless Market

7. Will Today's Flat EFT Environment Fragment?

8. Conclusions

TABLE OF FIGURES

• Figure 1: Signature & PIN Debit Contribute To Rapid Debit Growth Rates
• Figure 2: Consumers Prefer Debit at the POS Over Other Payment Types
• Figure 3: Consumers Pick Debit For Its Security and Convenience.
• Figure 4: Recent Fraud & Data Loss Have Generated Bad Press for Debit Cards
• Figure 5: Issuers Damage Reputation Of PIN Debit To Promote Signature Over PIN.
• Figure 6: PIN Debit Will Compete With Signature-less And Contactless Solutions.
• Figure 7: Installation of PIN Capable POS Devices Levels Off
• Figure 8: Internet Sales Are Increasing Rapidly.
• Figure 9: Consumers Greatly Prefer Credit Cards For Payments Over the Internet.
• Figure 10: $1.4 Trillion in Recurring Payments Offer a Debit Growth Opportunity
• Figure 11: PIN-Less Debit For Bill Payment Is Enabled by EFT Network Rules
• Figure 12: EFT Networks By Total PIN Volume Over Time - Interlink is Gaining!

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