The Bankers Roundtable report on the future of payment systems lists electronic benefits transfer and stored value cards among future business opportunities for banks.
The report, previewed last week and due to be published within a few weeks, was designed as "a wake-up call" for senior banking executives who may have been neglecting the industry's payments infrastructure, said Edward E. Furash of Furash & Co., which prepared the report.
The section on business opportunities thus could open bank chief executives' eyes to technologies that some of their business units have begun exploring in recent years.
In the study commissioned by the Bankers Roundtable, which represents the nation's biggest banking organizations, Washington-based Furash & Co. predicted significant growth for credit cards and debit cards, at the expense of cash and checks.
Electronic Bill Payment
Within those categories, "point of sale and electronic bill payment will be more prominent," said Mr. Furash, chairman of the consulting firm.
Debit cards, which are just beginning to take off, should account for almost 10% of consumer payments by the end of the decade, Mr. Furash said in a speech to the American Bankers Association's national operations and automation conference.
Debit and credit cards together, now at 18% of consumer expenditures, will rise to about 25%.
Mr. Furash said debit cards are about seven years into their "takeoff phase," and therefore a few years away from mass acceptance. Automated teller machines took 11 years to achieve that status, he said.
Along with wholesale growth areas like electronic data interchange, the study said, banks can capitalize on likely demand for health-care payments processing and electronic benefits transfer.
Mr. Furash cited a survey by Bank Network News showing that the major automated teller and point of sale networks are especially keen on electronic benefits transfer, which involves replacing welfare checks and food stamps with debit cards and automatic cash dispensing.
The networks also showed some interest in health claims - even though the Exchange ATM network in the Northwest recently discontinued its venture in that area. Bill payments also registered high on the diversification scale, and there was somewhat less interest in automated clearing house services.
ACH Processing Volume
In competition with the Federal Reserve System, the Arizona and New York automated clearing houses have about 10% of ACH processing volume, and Visa U.S.A. has another 10%. Several ATM organizations, including those in Iowa and Wisconsin, administer regional ACH associations, and the Payment Systems Network, an alliance of southeastern ACH groups, is exploring the possibility of private-sector processing.
Mr. Furash said one of the card industry's current hot buttons - prepaid, or stored value, cards - could be a mixed blessing. While they could generate new fee income, "they could be a threat to bank-issued payment cards."
Prepaid cards are increasingly common in public telephone and transit systems. They could exacerbate banks' loss of control over payment systems, Mr. Furash said, which is the overall theme and warning-cry of the Bankers Roundtable report.