As the payments market evolves, we continue to see momentum with electronic and mobile payments, although the growth in this area is beginning to slow somewhat. While we look at these trends it's important to understand how they're impacted by different geographies with different regulatory requirements and economic conditions.
In established and mature markets such as North America, Europe and Australia where fraud is a primary concern there's a lot of momentum behind electronic and mobile payments in these areas, and we're seeing them all shift towards EMV.
In Europe, EMV is already well established and merchants don't take your card away from you when you're making a purchase. The US is rapidly approaching its October 2015 deadline to implement EMV as well.
Contrasting that, there are emerging markets in places like China and similar established economies that used to be very much cash-based and are now rapidly shifting to a high percentage of electronic payments. Additionally, there are economies that are just starting to emerge such as in parts of Africa. Organizations are now scrambling to make cashless transactions available to them. This doesn't just apply to large institutions, but also to the general consumer.
As we've spoken about in previous posts, every time we innovate (The Dark Side of Innovation) we're opening up another door where attacks can enter. As a result, industry standards to help minimize fraud are slowly and surely being rolled out globally. Europe adopted EMV very early on and it's now mandatory in a lot of countries. I still don't have a chip and pin in the US, but I'm told that I'll have one by October. This will certainly have a big part to play in fraud prevention.
Not a day goes by where there isn't a new article about Apple Pay. While it is more secure from an EMV payment standpoint, the biggest risk of fraud takes place during the actual card registration. People are misleading the issuing institution into thinking that a stolen card really belongs to them. They can then go around and use it very easily once it's registered to the device. Even though the payment system itself is secure, the registration process involving humans is being exposed.
I think that growth is slowing in many of the major economic engines for payments. The North American and European market account for close to two-thirds of all electronic payments. There is some good data to be gleaned from the RBSreports: What we're seeing is an increasing number of transactions in micropayments where debit transactions are outnumbering credit transactions two-to-one. I think we're also seeing a saturation point being reached. While growth is still very strong, it is not at the same level we have seen in recent times.
Over the next twelve months, I think we're going to see growth levels at least maintained as mobile payments become more popular and vendors across areas like North America install payment terminals that are capable of receiving EMV. Not only will EMV make it easier for people to tap-and-go rather than hand over cash, it will also mean that anybody with an Android phone or iPhone will be able to make an EMV payment using tap-and-go. The availability of this payment option will steadily increase.
I think electronic payments are definitely on the move. The volume both in terms of transactions and dollar values is going to increase. Although historically there has been some declines, I think retailers are being forced to be able to take electronic payments in the way people want to make them, as a result we'll be seeing strong growth in the immediate future.
Author: John Dunne, VP of Products
