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This story appears in the December 2008 issue of Cards&Payments.
The economic downturn is causing the payments industry to examine 2009 spending closely. This month's cover story explores how card issuers and others are responding to rising charge-offs and tightening budgets, particularly as they relate to jobs, marketing, technology, and new-product rollouts and tests.
According to payments executives who spoke last month during the World Card Summit, part of the Cartes and IDentification 2008 conference and exhibition in Paris, global economic problems will cause pain for the payments industry throughout next year.
But they also stressed that opportunities will remain in emerging markets and in other areas. Among those markets are contactless payment, including Near Field Communication, and mobile banking.
"We are going into a soft market in 2009," said Thomas Savare, CEO of card vendor Oberthur Technologies, reflecting comments from most of the eight other executives on the panel consisting of card, chip and terminal vendors.
Olivier Piou, CEO of card vendor Gemalto, a rival of Oberthur, sounded more upbeat, however. He said bank mergers could create opportunities for rebranding of card bases and a continued push toward payments innovation. The situation "is much better than Thomas suggests," Piou said.
None of the panelists predicted an economic rebound before 2010. Only Douglas Bergeron, CEO of payment terminal vendor VeriFone Holdings Inc., was willing to predict the problems would last for five or six quarters. Savare, meanwhile, said he was "very bullish" about the long-term prospects of the industry.
Jobs appear to be the most affected by the financial crisis, with companies such as American Express Co. and ATM independent sales organization Cardtronics Inc. announcing layoffs or planned layoffs of 10% and 8% respectively.
Card issuers also are tightening their marketing programs, looking for more-efficient ways to reach new customers. Perhaps the biggest change involves mailings of card solicitations, which during the second quarter dropped to their lowest level in five years.
With consumers tightening their spending, expect funding devoted to debit card marketing to rise next year to reflect the fact that more families will be trying to avoid credit card debts by spending only what they can afford.
