Comments on cashless evolution, suggesting that by 2015 a “substantial share of consumer payments globally will have moved from cash to other payment mechanisms,” said Theodore Iacobuzio, managing director in TowerGroup.

CRM Today: Momentum Building Towards a Cashless Society

Highlights of the research include:

• Over time, TowerGroup believes payments will move increasingly toward a “pay-as-you-go” model, where consumers buy what they want wherever they are. But while payments will be made increasingly through clicks and texts rather than cash or even traditional plastic, the majority will still be fueled by traditional bank relationships and run through established payments networks and infrastructure.
• TowerGroup expects the total market for micropayments in the United States to reach US$11.5 billion by 2009, with almost US$5 billion of that amount transacted via mobile phones. The global mobile commerce market is expected to become a major industry with revenues of US$50 billion to US$75 billion by 2009 – with global micropayments generating about US$40 billion in revenue.
• As payment mechanisms shift away from cash and traditional card forms, stronger authentication methods will become increasingly critical – particularly to move beyond micropayments in the mobile realm to allow the purchase of high-value items. TowerGroup expects to see aggressive movement in the financial application of biometrics authentication technology over the next 10 years, fueled in part by government adoption.
• TowerGroup notes that financial institutions dismissing evolving payments models as quirky or meaningless to their current business strategies risk being supplanted by more nimble and far-sighted competitors. They must also consider the impact of non-traditional payments players, such as telecommunications companies looking to grow their share of the nascent mobile payments space.

Relevance to Bankwatch:
As customers rely on alternative payment mechanisms Bank deposits are increasingly at risk, and banks will lose non-interest revenue to new entrants.

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