Just under three quarters (71%) of European banks and retailers are planning to boost their spending on payment tech within the next two years amid mounting pressure in the market and demand for faster, more secure payments tech from customers. That’s according to a new report from ACI Worldwide and Ovum, at least, which surveyed more than 1,600 execs working in the space and says financial institutions and merchants are feeling “under siege” in the current market conditions.
“For all of these organisations, the key takeaway is that competitive pressures are driving up spending in the marketplace. Spending small, incremental amounts will only lead to an erosion of market share, says Paul Thomalla, SVP, ACI Worldwide. “The payment initiators of the world want to work directly with payment operators. By doing so, they will be able to lower payment costs, reduce complexity and increase investment to stave off the threat of new competitors.”
The rise of new fintech companies, combined with growing competition in the wider finance industry is one of the key factors that will drive up spend in the next 18 to 24 months according to those polled in the report.
While they plan to increase spend, security, unsurprisingly, remains a big concern among retailers. Some 70% of respondents from this sector said that the theft of customer payment information is a major concern. High profile cyber attacks such as that the one on US retail giant Target, which went undetected for months, remain top of mind for merchants. Meanwhile the growth of e-commerce is also inflating the opportunity for card not present fraud, which is fast-becoming the most pressing issue for 59% of retailers polled.
“The payments industry is undergoing radical change that will have far-reaching consequences for banks, billers and merchants, as well as for the consumers and business customers to which they provide services,” says David Bannister, principal analyst at Ovum. “How all of the players in the industry adjust to these changes and interact with each other will be a crucial factor in their future success.”
Meanwhile, the demand for faster payments continues to build, with 57% of European execs saying they think consumers will benefit directly from Immediate Payments.
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