Payment Systems Blog : Predictions for 2009


I got out my Crystal Ball and Tarot Cards out and thought it would be fun to share some 2009 Payment Systems Predictions.


Here they are in no particular order:


Reduction of number of Stores for retailers: "The Economy" will not be kind to retailers and speciality shops in 2009. We will see stores closing; as the economy expanded retailers expanded, and the inverse will be true.  This means that companies will be looking to the expense side and looking for innovative ways to reduce operating costs that have a fast ROI and payback. This will be in systems and back-office standardization and migration from expensive legacy platforms and large maintenance agreements. Decrease in jobs means decrease in spending. Any governmental based stimulus program needs to ensure that monies provided for "kick-starting" the economy are controlled in a manner that they are spent and not saved or used to pay down existing debt.


Gift Cards: You or someone that you know will have a gift card, merchandise credit/refund card for a merchant that is no-longer is business in 2009. Gift givers will take note of this and consider giving cash rather then gift cards in holiday 2009 season.


Issuing Banks: When the "times were good" people could live with negative savings rate, and see the value of their home increase, this increasing equity plus mortgage refinances allowed people to live beyond their means. Many consumers’ behaviors will not change, and we will see a run up of credit card debt. Credit Card Issuers will be trying to mitigate this risk, and will reduce credit lines, increase fees and rates, and be more restrictive in their underwriting processes.  For some issuing banks we may see similar bailouts to that of mortgage companies and consumers are unable to pay.


Interchange Rates: There will be continued pressure by merchants to the Card Brands to lower interchange rates, and Issuers lobbing to increase them to cover increased losses on bad debt.  Alternative payment structures and card types and acceptance and Cash Discounts will be offered to consumers and driven by merchants to reduce cost of accepting payments.


End-to-End Encryption: We will continue to see a proliferation of "End-to-End" encryption options that are based on or mirror Mag Tek’s MagneSafe offering – More Terminal Manufactures will be using capable devices, and payment gateways solutions here as well. PCI Council with notice this and consider making this a requirement in a future version of the PCI DSS.


PCI Data Security Breaches: There will be data breaches of cardholder data in 2009. We will see more innovative attacks that replace those that were effective before PCI compliance was a wide spread.  Even organizations that are validated "PCI Compliant" will not be exempt. We will see attacks that adapt and change around current PCI Controls.


Mobile Payments: 2009 will be the year of push of mobile payments, with many new entries in this space and those fighting for mass acceptance. The contact-less infrastructure that has been put in place will be used and leveraged by mobile phones at card acceptor locations using Near Field Communication (NFC).


Cloud Computing / Hosted Payments Platforms: 2009 will see more applications that are typically ran in the back-office of certain types of companies to the "cloud" – the proliferation of virtualization and commodity servers allowing this, and Amazon EC2, Microsoft Azure and others including vendors that provide cloud based access to their software solutions. IT Security Buffs and PCI Auditors will debate PCI and Cloud Computing.


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