Lessons from Across the Pond

by Patricia Hewitt 0

By Patricia Hewitt, Director, Mercator’s Debit AdvisoryService

A number of stories from around the UK and Eastern Europe cameout this week, all having to do with electronic paymentinitiatives.

  • A consortium of Dutch banks, including ABN Amro, ING, KPN,Rabobank, T-Mobile, and Vodafone has formally agreed to cooperatein the creation of a uniform system for mobile transactions in theNetherlands. This agreement is the result of research undertaken bythe consortium which demonstrated that it is both “technically andcommercially feasible” to create a national infrastructure formobile payments at the check-out.
  • Data released by the UK payments council shows a 10 percentdecline in check usage from 2Q 2009 to 2Q 2010, a 3.2 percentdecline in ATM withdrawals, and a 12.4 percent increase in the useof debit cards for the same period.
  • The National Irish Bank released a study that calculated theannual cost savings of migrating from cash and check usage toelectronic systems would be approximately EUR1 billion or EUR680per household, per year.

The primary catalysts of all this paper-to-electronic paymentmigration activity are the involvement of the government inestablishing mandates or guidelines as well as the ability offinancial institutions and processing partners to work togethertowards a common goal.This is not a “let’s make the world a betterplace wish,” but rather a strategy that serves everyone’s selfinterest and, at the same, creates an infrastructure that is moreefficient, more secure, and more readily available to themarket.

Consider the impact on cost as EFT networks in the US migratedfrom proprietary systems, to regional networks, to nationalsolutions – it went down because efficiencies and scale went up.Itis time for the stakeholders in the US payments industry (and yes,that includes the government whether we like it or not), to do thesame.We are seeing some glimmer of this in emerging mobilestrategies, such as that taking place between Bank of America,Wells Fargo, U.S. Bank, Visa, microSDpayment, and DeviceFidelitycoming together to create and pilot a smartphone paymentapplication.More Sir, thank you.