The future of consumer payments is electronic, secure, easy to use, and right around the corner. With that prospect in mind, Wells Fargo® has sponsored this Javelin Strategy & Research White Paper to help merchants think through current and future decisions related to payment options, and distribution channels. Wells Fargo is committed to continuing to partner with merchants in the implementation and processing of existing as well as new payment options.
Evolving merchant needs, technology innovation, government regulations, fraud and security, and demographic trends are converging to accelerate the pace of payment electronification. Payment electronification is defined here as the migration from cash and checks to electronic alternatives. These trends are leading to a period of rapid growth of electronic payments while at the same time shrinking the number of checks written each year.
Over the next ten years, new electronic payments will be introduced, including innovative types of debit products, many with loyalty benefits, some which utilize the less expensive Automated Clearing House (ACH) infrastructure, others that provide real-time account-to-account transfers and mobile payments. Pre paid cards will continue their rapid ascent from near-obscurity only three years ago. Checks will become to the next generation what 8-track tapes are to today’s consumers – relics that their parents used to use. Unlike the payment failures of the past ten years that required the simultaneous consumer and retail adoption, the most successful payment products of the next decade will likely be extensions of existing products.
Continued evolution toward electronification will also require vigilance and innovation in security. The growth of personal identification number (PIN) debit versus cash that can be pilfered, checks that can be faked and kited, and signature-based cards that can be forged, will inevitably lead to less fraud. But the increase of PIN debit alone will not be sufficient to mitigate the growth of fraud. Containing identity theft and fraud will also require improved customer-facing authentication both at the point of sale (POS) and on the Internet, using software, hardware and potentially, biometrics. Banks, processors and merchants need to continue to refine back-office fraud prevention and detection screening technologies, catching a greater number of fraudulent transactions before they are settled.
Payment electronification will also enable further innovation including wireless payments, universal multi-payment cards and services, lower cost real-time payment transfers, the capability for payors to specify payment routing and timing, and new security products and services. This white paper is designed to stimulate original thinking required for the next generation of electronic payments. This document does not promote or predict specific payment method adoption, or suggest particular security alternatives.
Contents
EXECUTIVE SUMMARY
CONSUMER DEMOGRAPHICS AND PAYMENT PREFERENCES
KEY PAYMENT TRENDS
POINT OF SALE
ECOMMERCE
BUSINESS TO BUSINESS
BILL PAYMENT
SECURITY – MORE INVESTMENT AND VIGILANCE NEEDED
ON THE ROAD FROM PAPER TO ELECTRONIC PAYMENTS
CONCLUSIONS
ABOUT WELLS FARGO
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PDF Ebook White Paper Merchant Opportunities The Road From Paper To Electronic Payments
