A series of trends in the payment and loyalty industries have been emerging over the past year, and UK-based transaction and loyalty systems provider The Logic Group has used its observations to make twelve predictions affecting payments and loyalty in 2006.
The company's twelve trends and predictions are as follows:
- The number of sectors and outlets where plastic cards can be used to pay for goods and services will continue to grow rapidly. Increasingly, these will be integrated with other IT and in-store systems.
- Organisations that process card payments will begin looking at compliance with Visa and MasterCard's Payment Card Data Security Standard as a matter of urgency. Organisations that fail to comply with this requirement run the risk of being barred from accepting card payments - or facing huge fines.
- Card fraud will migrate from an increasingly secure high street to the more vulnerable internet, as well as call centres. Inevitably, this will lead to an increased need for payer authentication programmes, such as Verified by Visa and MasterCard SecureCode, and the wider adoption of systems for card security code and address verification checking.
- New devices such as wireless terminals and self-service kiosks will be introduced to attract greater consumer spend, as well as improving customer service and business efficiencies.
- Key areas for Chip & PIN in 2006 are the hospitality sector, unattended payments, and branch counters.
- New card types, especially electronic gift cards, will also make a big impact, with research from Giftex predicting a 300% growth rate for the European E-Gift market.
- Customer loyalty card programmes will focus more on delivering insight into consumer behaviour patterns rather than just handing out reward points.
- Loyalty cards will increasingly evolve into new areas, such as combined loyalty and credit cards, and combined loyalty and electronic gift cards. Web based systems and instant rewards will become increasingly popular.
- Internet Protocol (IP) based networking will continue to grow in prominence, particularly with the removal of the requirement for banks to receive transactions through outdated X.25 systems. The increased speed, security and cost effectiveness of IP will make this an especially attractive option.
- Organisations will continue to look for areas where they can reduce operational costs through the outsourcing of non-core areas, with the increasing complexity and compliance issues surrounding transaction processing making this an good candidate.
- Corporate governance and compliance laws, such as Sarbanes-Oxley and the Turnbull Report, have already had begun to make an impact, and this trend is likely to continue throughout 2006. Companies will increasingly look toward products and services that can minimise the impact of more stringent IT governance and ease the pain of accreditation.
- With the need for business to respond quickly and effectively still being of paramount importance, an increased focus can be expected on improving business decision making through greater customer insight and management.