The PAYTECH Book

The Convergence of Card Payments and Bank Payments

By Mark McMurtrie

Director, Payments Consultancy Ltd

Current Position

For the last 50 years, card and bank payments have been managed as if they existed in parallel universes. It is as if card payments are from Mars and bank payments are from Venus. There is little dialogue between these two worlds, even within the same financial institution; they talk different languages, have limited understanding of their parallel universe and run their own payment systems. Terms such as “payment service provider” and “mobile payments” have very different meanings depending on which tribe you are speaking with.

But things are starting to change, mainly due to technological advances, regulatory action, competitive pressure, standards and consumer preferences. Bank payments tend to be used for large-value transactions, and scheduled bill payments to regular payees which are processed as batches. Card payments, in contrast, offer payment in real time for goods purchased at shops, when travelling and for e-commerce purchases, and have lower average transaction values, particularly since the introduction of contactless cards.

Types of Payment Systems

Historically, three types of payment systems have been operated in most countries:

• Large-value payment systems (LVPSs) and real-time gross settlement (RTGSs) systems. Used by corporations, small and medium enterprises, governments, central banks and individuals to handle very high transaction ...