Wednesday, May 21, 2008

More on Alternative Payments

Alternative ways to pay for goods online are on the rise, driven by online merchants looking for more consumer-friendly options and consumers looking for greater security and choice. New research from TowerGroup notes that the alternative payment method known as the "nonbank wallet" is one area to watch in 2008.

Within the last two years, the nonbank wallet category has seen a flood of new entrants. TowerGroup defines a nonbank wallet as an Internet-based storage service of consumer financial data, which helps facilitates online purchases without exposing consumers' financial information directly to the online merchant. These nonbank wallets do not replace traditional payment processes, but rather provide merchants and consumers with a secure integration layer that connects multiple payment methods and processes.

TowerGroup projects overall U.S. e-commerce retail sales reached $232 billion in 2007, though they remain a relatively small percentage of total retail sales at 5.6 percent. A graphic on these statistics is below, on the left.

Despite the fact that nonbank wallets process, settle, and fund transactions made by consumers through existing payment infrastructures, the banking industry continues to express concern over their growth and acceptance. TowerGroup believes that the concern nonbank wallets engender among financial institutions is warranted, yet more on an individual bank or provider basis than as a macro financial services industry "threat."

The challenge that nonbank wallets present to the traditional payments system will ultimately be countered by the overall value that they will provide to the financial services industry as both clients and partners. This is in addition to the value they will drive among consumers, by continuing to build confidence around and drive transaction volume of e-commerce.

The TowerGroup research report is titled "Online E-Commerce Nonbank Wallet Payment Alternatives: Bankers' Friends or Foes?" and is authored by Jennifer Roth, a senior analyst in the TowerGroup Global Payments practice. It reviews four nonbank wallet providers currently facilitating purchases over the Internet and analyzes the impact and potential threat of these offerings for bank-driven traditional payment methods.

Accenture Payments Innovation Showcase

Accenture today announced it has opened a new facility at its research and development technology lab in Sophia Antipolis, France, dedicated to innovation in the rapidly growing global payments industry.

The facility, called the
Accenture Payments Innovation Showcase, focuses on original research and development in all facets of the payments business, including mobile communications and other point-of-sale technology, bank-to-corporate connectivity, processing, process models, biometrics, regulation such as the Single Euro Payments Area (SEPA) initiative, and security. The Accenture Payments Innovation Showcase, combining Accenture's deep industry experience and leading technology capabilities, will demonstrate how businesses can drive innovation, reduce costs and improve the quality of products and services to their customers by using cutting-edge technologies

Technology innovation is a key driver of high performance, said Martin Illsley, director of research at Accenture Technology Labs in Sophia Antipolis, France. In combining technology expertise with business acumen, our researchers apply new and emerging technologies to create prototypes and cutting-edge solutions that help clients maximize future performance.

Every year, 150 leading global organizations attend technology workshops hosted by Accenture at its four technology Labs, in Sophia Antipolis, France, San Jose and Chicago in the United States, and Bangalore, India. The Payments Innovation Showcase will tap into this program, hosting payments executives for one- and two-day applied-technology programs that immerse participants in the payments business and current technology, as well as foster discussion of how their businesses and customers can benefit.

The payments business faces massive change driven by increased competition, disruptive regulation, declining margins and revenues in traditional lines, rising transaction volume, and greater need for technology, scale and actionable information, said Antonio Iglesias, an Accenture Financial Services senior executive who leads the payments business in Europe and Latin America. Now is the time for Accenture to devote even more resources to helping clients better understand and benefit from this change. And it makes sense to base this work in Europe, where so much innovation is taking place.

The Showcase currently includes industry prototypes that draw on a number of new and emerging technologies including:
  • Mobile payments provisioning
  • Accenture Near Field Communications Wallet, which enables mobile payments with ATMs
  • Biometric identification
  • Point-of-sale scenarios
  • Mobile banking, including in-branch applications
  • Accenture High Performance Bank Business Process tool, which can be used to design the most appropriate and efficient processes for specific tasks
  • SAP Payment Engine, a high-scaling payment processing solution for banks, shared-service centers and automated clearinghouses

About Accenture

Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With 178,000 people in 49 countries, the company generated net revenues of US$19.70 billion for the fiscal year ended Aug. 31, 2007. Its home page is

Editors note

  • Accenture will host journalists and industry analysts for programs at the Payments Innovation Showcase. The programs will include payments researchers and business experts. For more information, please contact one of the Accenture representatives listed below.

Francois Luu, + 33 1 53 23 68 55 Financial Services or: Accenture Technology Ed Trapasso, +1 917 452 3555

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