While the payments industry has seen its fair share of division, many players are increasingly willing to work together.
Ninety percent of financial institutions report wanting to work closer with merchants and billers, according to a recent Global Payments Insight Survey published at ACI Worldwide and Ovum. The want for more collaboration is higher in the Asia-Pacific region than in the Americas and in Europe, the Middle East and Africa, but not by much.
While what is said and what is done are sometimes quite different, Paul McMeekin, director of market intelligence at ACI Worldwide, said disintermediation has reached a point where legacy players are seeing its effects.
How many financial institutions have the marketplace presence to [work with retailers]? asked McMeekin. Working directly with retailers might be especially challenging for the thousands of smaller banks in the U.S. These institutions might see more benefit from partnering with a payments provider that has a more established brand, he said.
Case in point, many community banks in the U.S. will likely support Apple Pay and other mobile payments initiatives, using the migration to EMV-chip cards as a catalyst for acceptance. Partnering with a premier consumer brand such as Apple will give them significant clout.
Apple has forged partnerships with several thousand banks since the October release of Apple Pay in the U.S.
It makes sense to work with banks since those institutions hold an advantage and are seen as the most capable providers of payment services, McMeekin said.
According to the survey, banks or payment acquirers are seen as the most capable providers of a whole host of payment-related products and services, including contactless cards, EMV, real-time clearing and settlement, mobile Near Field Communication (NFC), tokenization and loyalty programs.
But banks, struggling to move fast while being highly risk-averse, might find it helpful to partner with technology startups that focus on niche areas. Banks have begun working with startups more closely through accelerator programs and hackathons. And even if the banks are only doing this for publicity, there are some who argue that setting these programs up is a step in the right direction.
Enabling Apple Pay and other new payment projects can be beneficial for the banks as well, since 79% of respondents (billers, retailers and financial institutions) said they think consumers want a broader choice of payment types.
More than half of the respondents said security risks are holding back investment in payments innovation. However, 73% expect that new payment technology will benefit their organization.
This is a key insight for payment startups looking to partner with banks. While showing consumer and merchant adoption momentum is important, security should not be an afterthought.