ePayment technology spend growth opportunities - P2P (peer to peer) and EBPP (electronic bill presentment and payment) are high growth markets, however card payment technology spend still dominates.
Source: DataMonitor
'žWe are at the dawn of a new Internet payment era - one where security counts and where payments become truly designated for the use of this medium. Banks need to act now to remain the main players in the virtual payment space and traditional ePayment vendors are well positioned to capitalize on the shift,' says a report by Datamonitor.
The ePayment market is about to be revolutionized by the evolution of both fixed and wireless Internet technology. All of the following are driving investments in and development of ePayment technology:
'¢ the growing volume of electronic commerce
'¢ the need to leverage new payment channels such as the Internet, mobile phones and digital TV
'¢ the emergence of multi-access payments
'¢ the securing of online payments, consolidation and globalization of banks
'¢ the need for cost efficient payment processing
With $3.9bn in B2C (business to consumer) and B2B (business to business) ePayment value by 2005, merchants and banks must continue to invest strongly in new technologies in order to cope with the growing volume of transactions whilst maintaining payment and processing cost efficiency.
Datamonitor'™s new report '˜ePayment Technology in Europe and the US'™ provides research into the global ePayment market and the supporting technologies and services required.
A plethora of payment types - which will win in the end?
As ePayment volumes continue to grow and new payment methods and channels emerge, it is vital for banks and ePayment vendors to understand which of these has true market potential.
Datamonitor'™s report evaluates the size of the opportunity and the ability of various payment methods to generate massmarket uptake. Much of the media focus recently has been on emerging payment types such as eWallets and mPayments. However, in the short-term B2C payment cards and in the long-term B2B online credit transfers have most market potential and ePayment players should structure their product portfolios accordingly.
Europe catching up on US
Despite increased pressure for cost reduction and increased efficiency in back-office operations, banks need to continue investing in ePayment technology as the volume of eTransactions is set to grow. Datamonitor findings include forecasts for ePayment technology spend including:
'¢ The shrinking dominance of card technology expenditure is obvious in different geographies
'¢ Slow growth will be followed by market pick-up after 2002 as eWallets, EBPP and P2P take off
'¢ The US continues to be the largest market in ePayment technology spend, although Europe is catching up, in particular on the financial services institution side
'¢ ePayment integration remains a long-term opportunity whereas outsourcing is the short-term fad
P2P and EBPP - the sweetspot of epayment technology.
The need to maintain a differentiated service offering will lead to P2P and EBPP becoming two of the fastest growing areas of ePayments technology spend. The need for banks to provide customer loyalty building applications and the fear for being cut out from the payment value chain for these new payment methods will create a strong demand for these technologies.
Outsourcers stand to benefit from bank ePayment spend.
The transition from offline to online payments means a large shift in product portfolio, customer approach and mentality for ePayment technology vendors. There is a need for repositioning products and services, especially in the face of intensifying competition from new pureplay Internet vendors.
The years ahead will witness industry shake-out and increased partnering along the value chain in order to capture new market opportunities. For future success it is essential for ePayment technology vendors to understand what areas to target in the market.
