Mar 24, 2006

How much cheaper can credit and debit card processing become?

Here is another quote that appears frequently on Tom Peters' blog, and that is very relevant to the payment card industry today:

“A focus on cost-cutting and efficiency has helped many organizations weather the downturn, but this approach will ultimately render them obsolete. Only the constant pursuit of innovation can ensure long-term success.” (Daniel Muzyka, Dean, Sauder School of Business, University of British Columbia)

How much more efficient can payment processing become? How much further can costs be driven down? How much faster can transactions become? We’re pretty close to the limits. Everyone I talk to tells me the same thing: all improvements now are small and incremental. Whether the improvements concern processing costs or the speed of transactions.

More and more banks are now trying to grow through true product innovation, because they have to. We should be seeing new things that make payment cards exciting and fun to use, and especially much more useful and valuable for merchants. Payment cards have offered merchants exactly the same service and features for the last 2 or even 3 decades. There is an opportunity for banks to grow by creating innovative new features that make cards much more attractive and valuable to merchants.

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