The Bankwatch

Tracking the consumer evolution of financial services

Payments, interchange, competition and … … Credit Unions?

I sense there are big changes afoot in the payments industry in Canada.  Translated that could mean changes in pricing, which in turn would mean changes for consumers.  Those changes might be positive or negative, but either way are enormously significant for Banks. 

Interac seeks shift to for-profit status

Mr. O’Connell fears Interac risks falling behind as the industry rapidly innovates. There are already products, such as MasterCard’s “tap & go” PayPass, that he would like Interac to be keeping up with. “The payments market is evolving every day,” he said. “It’s not just the U.S.-based credit card companies. You have PayPal, you have a number of unique payment companies in the marketplace, a number of new technologies. Look at mobile payments and its evolution in other countries around the world.

“Canada needs to ensure we can keep up and innovate in those areas,” he added

Payments revenues account for 30% +/- of payment related revenue.  While interest on cards is a big revenue source, interchange is the hidden secret of revenue, and the one component that is at risk.

This presentation is just terrific.  Deloitte are on fire these days, and this deck is no exception.  The data and breadth of the study is enormous, and anyone in Canadian payments needs to read this.  Statistics include how Banks make money from payments, and there is data on new competitors. 

However what strikes me the most is the source;  why am I learning about payments from the Credit Unions?  This is symptomatic of the problem that Banks in Canada <everywhere> have.  The whole “if we don’t talk about it, no-one will challenge us’ mindset is ridiculous.  Go Credit Unions, and thank you for making this kind of information available. 

Credit Union Central – Payments

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Written by Colin Henderson

September 8, 2008 at 23:40

Posted in credit unions, Payments

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