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International landscape of innovation in payments

Banks can deliver value to participants of payments systems through innovation and transformation.


Innovation is transforming the payments industry globally. Be it small companies, banks, card companies, payment service providers (PSPs) or nonfinancial institutions such as retailers, all are innovating to stay competitive.

The UK Payment Systems Regulator commissioned Accenture to review the international landscape of innovations in payments. The study analyzes more than 100 payments innovations from simple consumer apps to major infrastructure changes, and reviews payments policy initiatives to identify their impact on and relevance to UK payments.

Key highlights of the study

  • Classification of innovations into two broad categories—infrastructure and end user: A majority of innovations (more than 60 percent of cases reviewed) occurs on the end user side. Examples include contactless payments, e-wallets and peer-to-peer mobile payment technologies.

  • Identification of a set of policy tools used by governments, central banks and regulators worldwide to enable innovation: These policy tools were synthesized to produce a kit of common tools, ranging from formal (changing regulations) to informal (dialogue and moral suasion).

Additionally, the study presents key lessons from innovations worldwide that deliver value to participants of payments systems, and research findings relevant to the UK payments industry.


The study evaluates more than 100 case studies in payments innovations and reviews payments policy initiatives. Accenture defined a Payments Innovation Methodology, which combines three components to analyze these cases:

  • Value chain is a framework defining users, payment services providers, devices, channels and processes in the payments and cards ecosystems.

    The value chain identifies where innovation occurs—across participants, channels and devices within the payments ecosystem. We also defined a range of thresholds for each dimension of the value chain to demonstrate how frequently it features in our case studies.

  • Taxonomy is a list of categories for classifying features of innovations including actors leading the innovation, incentives, benefits and barriers.

    Each case study was categorized within this framework, and the data gathered was aggregated to identify trends across the selected cases.

  • Prioritization is a method to benchmark and rank examples of payments innovation.

Several case studies on real-time interbanking payment systems and infrastructure innovations were included in this study on the request of the UK Payment Systems Regulator. We also included a selection of “failures” from which we could draw relevant lessons for the UK payments industry and for understanding barriers to innovation.

Key Findings

Summary statistics for value chain:
  • Payment user: C2B and C2C segments accounted for more than 95 percent of innovations.

  • PSP: More than 40 percent of innovations were launched by nonbanks; mobile payment operators and Internet gateways feature as the most active innovators.

  • Device: 60 percent of innovations involve mobile phones.

  • Payment system: 17 percent of innovations involve interbank infrastructure with initiatives launched to process payments in real time (10 percent), adopt international standards (4 percent) and support processing of online payments by banks (3 percent).

  • Channel: More than 55 percent of innovations are Internet-based.

  • Process: More than 70 percent of innovations impact payment initiation and authorization.

Summary statistics for taxonomy:

  • More than 35 percent of innovations were launched by credit institutions in the interbank or cards areas.

  • 26 percent of innovations were by payment institutions while 9 percent were from telecom companies.

  • Top three incentives for payments innovation include increasing revenues through new services and service differentiation, and achieving government goals.

  • Top two barriers cited by PSPs include “need to incentivize industry collaboration” (37 percent) and “network effects in two-sided markets” (35 percent).

  • Common barriers to adoption of innovation among payers and payees include high cost of implementation and membership, and lack of security, trust and customer protection.


Our study identifies numerous payment innovations that deliver value to participants of payments systems. The following research findings are relevant to the UK payments market:

  • Consider both end user as well as infrastructure innovations to maximize the benefits from the development of innovative offerings. The majority of innovation occurs on the end user side; in rare cases, a balance exists between infrastructure and end user innovations.

  • Innovators vary widely and range from small startups and established companies diversifying into payments to banks and nonfinancial institutions including retailers.

  • Profits are the primary incentive for innovation. Increased profits can come from additional revenues or by reducing costs, but achieving profitability is difficult. Innovations without a clear profit source are unlikely to succeed.

  • Mass adoption is important. It requires coordination among stakeholders, and a focus on delivering benefits to payers and payees.

  • Failure is an acceptable outcome of innovation and can be a sign of healthy competition. However, expensive, slow failures can be a sign of an unhealthy climate for innovation and misallocated resources.

  • A policy toolkit exists to facilitate change. The selection of policy tools depends on a number of factors, including the type of innovation and barriers. However, innovation that affects the core infrastructure requires the most intervention and policy setting from a regulator to drive change.