PARIS — The global recession has reshaped key aspects of the payment card industry, executives participating in a roundtable discussion here said, but most of the panelists said the worst of the economic downturn is past and that there is some room for cautious optimism about 2010.
Ken Howes, a director of the consultancy Edgar, Dunn & Co., who moderated the World Card Summit panel last week at the Cartes and IDentification conference, said the economic crisis has wrought some fundamental changes.
"Let's face it, there has been a significant banking crisis and steep cutbacks," Howes said. Card industry players must "prioritize" their technology development efforts, he said.
Howes ruffled some feathers when he asked why it is taking so long for companies involved in mobile phone payment projects to agree on technology standards, which could hasten a wide rollout of payment technologies such as mobile handsets equipped with near-field communication.
Josh Peirez, MasterCard Inc.'s group executive of innovative platforms, said the recession has helped the industry clarify its objectives.
The "crisis has forced us all to be a little bit smarter about where we invest our dollars," he said. "We were reminded that, above all, the products we develop must be absolutely relevant to consumers — the easiest, most usable concepts."
Elizabeth Buse, Visa Inc.'s global head of product, agreed that the downturn has changed the payments industry. She said that "economically, things have begun to turn around globally," but the mainstream credit card market "may never" return to its pre-recession growth rates.
Credit card purchase volumes have generally declined throughout the downturn, while debit volumes rose, and Buse said she expects future card-industry growth to come from "new constituents" who will use debit, e-commerce and mobile transactions more heavily. Such growth will gradually supplant consumers' cash and check transactions around the world.
"There is a tremendous opportunity in our business to penetrate new and emerging markets" with new payment technologies, Buse said.
Helmut Gassel, the president of Infineon Technology's chip and security division, said the downturn has forced companies to come up with new ways to use payment technologies.
"We are [getting] more value out of cards not by capturing more revenue, but making those [existing] card products more cost-effective," he said.
Philippe Tartavull, the president and chief executive of the terminal maker Hypercom Corp., said payments companies that have managed to survive the economic downturn are the better for it. The worst of the global crisis "is behind us, and our visibility ahead is much clearer," he said.
Axel Deininger, the head of the payments division at the card vendor Giesecke & Devrient, was more skeptical. The economic crisis is not "completely over," he said. And though his company has seen some signs of "stronger growth rates" in 2010, "it would be naive to say we were not hurt by the crisis," he said.
Philippe d'Andrea, the CEO of the smart card provider Sagem Orga GmbH, said the recession will continue to cast a heavy shadow on the industry.
He said he is "not as optimistic" as some of his peers. Worldwide declines in payment volume, banks' cost-cutting measures and general industry "pricing pressure" have caused delays in payments projects and hampered development of smart card programs overall, d'Andrea noted.
Howes got mixed reactions when he asked panel participants to discuss the need for cohesive contactless and mobile payment standards among card networks, wireless carriers and other players trying to develop mobile payments.
"We are not going to win" in mobile payments "if each of us competes in a different language," Buse said. "We need a global contactless standard that works for all of us."
But Visa itself "has not been a very good supporter of telco standards," said Olivier Piou, the CEO of the smart card provider Gemalto NV.
In many regions, including Kenya and Uganda, various payments companies have settled on common standards to develop successful mobile-payment pilots, Piou said.
But elsewhere in the world, he said, "we have seen problems" resulting from competing standards. "Let's stop making it complicated."
In an interview after the roundtable discussion, Buse rebutted Piou's assertion that her company is thwarting development of cohesive payments standards. Visa has a strong track record of supporting common standards among a diverse group of companies in contactless payment and mobile payment, she said.
For example, she pointed to Visa's establishment of an EMV standard for contactless payment cards. (The EMV Integrated Circuit Card Specification security standard is widely used abroad, but there are no plans to introduce it in the United States.)
Buse also said the partnership Visa forged early this year with GSMA, the 750-member alliance of mobile operators, has furthered the goal of developing a global money-transfer standard.
"We have made it clear that we don't care how anyone gets there, whether it's magnetic stripe or EMV or phones. We want to see broad interoperability and a common standard for all players, not just Visa," Buse said.
Tartavull agreed that broad participation in creating common standards for contactless and mobile payments systems is the next step to advancing the payments industry.
"It is no longer a question of which technology or the cost," he said. "Now it's a question of putting everyone together" for a common standard. "Until we resolve that, we will be here talking every year" about when NFC and other mobile payment technologies will take off, he said.
