The issue of liquidity management for banks was for many years relatively minor. Regulators and bankers relied on outdated procedures, monthly liquidity reports, and ignored the deterioration of asset quality and risk concentrations that were unsupportable in the long run. Regulations, on an international scale (but with a variety of national twists) are being enacted and the effects are already being felt across banks worldwide. The shift in the speed, granularity and scrutiny expected of liquidity management will bring about deep changes in the payment industry. Payment IT vendors that can support these changes will enjoy a noteworthy advantage

This Research Note focuses on TowerGroup’s analysis of the overall noncash payment trends found in the 2010 Federal Reserve Payments Study and their implications for FSIs and technology providers. This study was the fourth in a series of triennial studies conducted by the Federal Reserve. The study and its subcomponents, released in December 2010 and April 2011, examined payment volume and value for the following noncash payment vehicles: check, automated clearing house (ACH), online (PIN) and offline (signature)debit card, general-purpose credit card, prepaid cards and emerging payments including bill pay and P2P.

This Research Note summarizes and explores the results of a TowerGroup online survey of transaction banking executives in all regions across the globe. This survey, conducted in July 2011, focused on investment priorities relateding to transaction banking technology and processes for both regional and /or global businesses. It captures high-level organizational technology priorities for the next 2 years in transaction banking (including delivery channels, back-office systems, risk management applications to support cash/treasury management, and trade finance).

This TowerGroup ViewPoint explains how gift cards transformed from an unreliable, fee intensive product into a leading form of stored value. The ViewPoint looks forward and explains how the product will help accelerate the electronification of cash as e-gifting becomes socialized and mobile payments take hold in the United States.

Debit card transactions are subject to price controls that reduce interchange revenue by 40%. Under Dodd-Frank, the gap between credit and debit interchange widened from a 125 basis point (bp) spread to 175bp. Credit cards are inherently more profitable because of higher interchange and the revenue dynamics of risk based interest.

This Note discusses card issuer revenue challenges and illustrates significant portfolio differences between high-margin credit cards and those dominated by low-margin debit accounts.

The commercial cards business has recovered from the 2008-2009 dip in travel expenditures in North America and Europe, caused by the global financial crisis (GFC). Global volumes continue to rise but are driven by varying dynamics based on regional economic growth, market maturity and to some extent government driven priorities. This TowerGroup Research Note reviews the current market in each of these regions, and projects spending volumes forward through 2014. For purposes of this Note, TowerGroup defines commercial cards as commercial credit cards, as opposed to prepaid or debit cards, which are covered in separate Research Notes.

This TowerGroup Research Note examines vendor technology solutions that support the shift in new credit card account acquisition and retention strategies to ones that rely less on the direct mail channel. Instant new account decisioning is the real-time acquisition process of a credit card that can occur when a consumer is surfing the internet or at a bank branch or the sales counter in a store. Instant new account decisioning attempts to optimize, in real-time, the likely acceptance of the credit card offer by the prospect.

Although SEPA has unified the European market in significant ways by creating a single market for payment systems users and allowing them to choose a payment services provider from another country, the payment markets that make up Europe are far from homogeneous. Countries in Europe show strong preferences for certain payment types over others. This report examines these trends, how banks in the European market are responding to them and provides guidance to technology providers interested in selling into Europe.

Near field communication (NFC) is a popular and often mysterious topic in the payments market because of its multiple forms and its ability to extend existing contactless payment technologies. This TowerGroup ViewPoint provides a high-level understanding of NFC and the inherent opportunities and challenges it presents for financial services institutions, which include increasing the existing footprint of participating issuers, and possible disintermediation by other market participants as firms including American Express, AT&T, Discover, Google, MasterCard, PayPal, T-Mobile, Verizon, and Visa vie for a piece of the mobile payments pie.

Debit cards provide consumers with electronic access to current funds maintained in checking or other bank accounts. US consumer spend volume now exceeds $1.3 trillion annually after eleven years of mass adoption; more than one out of every three transactions are made with these payment forms.

This Note discusses the demise of debit reward programs in reaction to Dodd-Frank price controls and recommends card issuers consider the original objectives of reward programs as they redefine their debit card offerings. They must ensure products stimulate transaction volume, protect against account attrition and reinforce the importance of a lasting financial relationship.