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State of the Payments Industry: Q2 2014

THE STATE OF PAYMENTS QUARTERLY UPDATE AS THINGS PROGRESS INTO THE SECOND QUARTER, momentum in payments and associated technologies continues to scale at a rapid pace. As the market evolves, consumers and businesses will begin to coalesce around technology solutions and individual preferences, with early front runners potentially being surpassed by new entries that deliver the specific options consumers value. CREDIT CHECK: How Much are Consumers Spending and Borrowing? INDEX OF CONSUMER SPENDING 2012 2013 2014 04 Q1 02 Q3 Q4 01 g1% 8.1% 8,5% 8.0% NON-REVOLVING 7.3% 6,5% 6.6% 6.3% 6.1% 5.5% 5.7% 5.3% TOTAL PERCENT CHANGE (ANNUAL RATE) 2.0% 1.3% 1.0% 0.9% 0,3% REVOLVING -0.4% 3,056.7 3,097.4 3,141.3 3,009.1 TOTAL DOLLAR CHANGE 2,924.3 2,968.4 (ANNUAL RATE) 2.284.6 2,157.6 2,203.4 2,239.8 2,078.5 2,118.9 NON-REVOLVING 845.8 849.4 851.5 853.3 857.5 856.7 REVOLVING Q4 Q1 Q2 Q3 Q4 Q4 2012 2013 2014 THE Q1 2014 CONSUMER CREDIT INDEX reveals that revolving credit fell in the first quarter from 858.3 BILLION TO 855.8 BILLION. CONSUMER SPENDING SPEEDS UP. The majority of this drop was seen during FEBRUARY, with consumer spending accelerating during the month of MARCH, increasing by 1.6%. March marked the 32nd consecutive month that overall consumer debt increased, a trend that has been in effect since August of 2011. CLIMBING CREDIT CARD DEBT. In a recent study from the Fed, more than 50% OF THE EXPERTS SURVEYED said that new federal regulation on credit card interest rates and fees, along with increasing consumer preferences for using debit cards, held back credit card lending during 2013. However, they do expect credit card debt to climb as lenders become more comfortable with the new regulations. THE MOBILE WALLET: Trends and Highlights in Mobile Payments SMARTPHONE ADOPTION 35% 1 Smartphones continue to 70% of global mobile phone sales are expand with shipments expected to surpass 1.3 BILLION IN 2014, A expected to be captured by smartphones. This surge is a result of the vast number 70% of options available to consumers, as well 35% INCREASE. as forecasted sales for the iPhone 6. MOBILE WALLET CAVEATS SQUARE WALLET, once considered a major player in the mobile wallet space, has recently been pulled by Square. Moving away from a singular focus on instore payments, Square is now focusing on a new application that will allow consumers to place orders and purchase items from local businesses before even arriving. ONLY 16% of mobile device owners have made instore purchases with their phones as of early 2014, according to a March 2014 report from the Yankee Group. 16% MOBILE SHOPPING PREFERENCES: BEYOND PAYMENTS: The top items that consumers are looking to access while using their smartphones during the shopping experience are: 78% of respondents are 78% interested in using their smartphones during their shopping experience. ABILITY TO QUICKLY ACCESS COUPONS ABILITY TO VIEW ABILITY TO TRACK THEIR SPENDING SHOPPING LISTS SECURITY IS PARAMOUNT According to a recent study, the primary concern for over 28% of merchants is security, when asked why they had not incorporated mobile payment options into their business – up from 20% IN 2012. INFORMED INSIGHT: Predictions for the Coming Months SMALL BUSINESS GROWTH IN THE U.S. SINCE THE 1970S, SMALL BUSINESSES REPRESENT: There are more than 23 MILLION SMALL BUSINESSES IN AMERICA, accounting for 54% of all U.S. sales. 55% of 55% all jobs 66% of all 66% net new jobs THE TOP 5 CITIES FOR SMALL BUSINESSES* ARE: 1 SAN JOSE-SUNNYVALE- 2 DETROIT-DEARBORN, MI 3 DENVER, CO SANTA CLARA, CA 4 LOS ANGELES-LONG BEACH- SAN FRANCISCO-OAKLAND, CA ANAHEIM, CA "By annual revenue, credit score, age of business months), cash flow, debttoincome ratio, incorporation (CCorp or LLC vs. sole proprietorship), and business owners' personal credit scores. LOCAL SEARCH DRIVES SALES Small and medium businesses would be extremely well served to focus on improving their local search listings. 96% 80% 96% of PC owners and 80% 20% of respondents said that the of smartphone and tablet reason for their search was to find 20% owners have used their a local business with the product devices for local searches. or service desired. 80% OF LOCAL SEARCHES ON MOBILE DEVICES TURNED INTO PURCHASES. Of those purchases. 11% occured 16% were via phone 73% took place in a physical store online RETAILERS LOOKING TO INCREASE INSTORE SALES HAVE INCREMENTAL OPPORTUNITIES BY IMPROVING THEIR LOCAL SEARCH RANKINGS. INDUSTRY PULSE: Trends and Regulatory Updates BITCOIN AND THE IRS TAXED PROPERTY. The IRS has recently issued guidance that Bitcoin will be taxed as property. This means if Bitcoin is sold at a profit, it's subject to capital gains tax, potentially requiring users to track their purchase and sale price for each Bitcoin. EMV'S IMPACT ON ECOMMERCE With EMV migration ongoing and deadlines for retailers to implement active EMV readers by October 2015, it is important for eCommerce retailers to prepare themselves as well. 69% 1 From 2002 to 2012, card However, in the initial present fraud dropped 67% years of the rollout card 67% as the UK rolled out their not present fraud saw a adoption of EMV. 69% increase in fraud. As eCommerce merchants instituted new policies to avoid fraud and the processing companies updated their algorithms, card not present fraud has since dropped to its LOWEST LEVELS EVER. As the US begins rolling out EMV it is important that eCommerce merchants prepare themselves for an increase in fraudulent purchase attempts and institute checkout policies and technology to help avoid these purchases. Merchant Warehouse SOURCES: WalI Street Journal, Business Insider Intelligence, Business Insider, CatalinaMarketing.com. Kount.com, SearchEngineLand.com, Bloomberg THE STATE OF PAYMENTS CHANGES QUICKLY. WE'RE HERE TO KEEP YOU UPDATED.

State of the Payments Industry: Q2 2014

shared by merchantwarehouse on Oct 16
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A look at the state of the payments industry during the first quarter of 2014. Focuses include smartphone adoption, mobile shopping preferences, US Small Business growth, as well as information on Bit...

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