Case Studies

ACI Commissions Global Insight Study to Size Electronic Payments Market, Forecast Global Growth

Background
ACI Worldwide, a leading international provider of software solutions for electronic payments, needed a detailed market study of transaction volume by type and by country for 79 countries (representing 97% of the world's GDP). They required a forecast of expected volume growth for the coming 5- and 10-year periods beginning in 2004 to serve as a reusable model and strategic planning baseline. Study results provide a valuable road map for the coming decade to help ACI and its customer banks, payment processors, and retailers develop their business expansion strategies.

Challenge
Payment providers are anticipating unprecedented increases in payment volumes and need to ensure that worldwide electronic payment system capacity is capable of meeting skyrocketing demand. They are also under extreme pressure to lower business costs wherever possible, and to find ways to manage risk more efficiently. Among the strategies being adopted for streamlining payment systems is the elimination of redundant capabilities and the reuse of core functions across multiple payment products and channels.

The challenge was to determine and measure the linkages between electronic payment transaction volumes and such growth drivers as consumer spending, real GDP, and import/export levels, among others. Making this information available to payment providers in a reliable, accurate, and comprehensive way helps them more confidently and more effectively pursue appropriate streamlining strategies—and receive a unique window into future growth opportunities.

Solution
Global Insight is uniquely qualified to fulfill ACI's project requirements. As the world's most consistently accurate forecasting company (as testified to by such respected sources as the Wall St. Journal, Reuters, the Federal Reserve, and others), Global Insight has the expertise, historical data, and forecasting models to reliably predict the growth in various types of electronic payments across multiple regions and countries. Global Insight examined electronic payment types, ranging from ATM transactions to credit and debit card payments, direct debit, electronic bill payments, large-value money transfers, and bulk file transactions.

Global Insight worked with ACI to collect historical and current data spanning the 79 countries under study from a number of sources, including the Bank of International Settlements, industry databases and reports, and the client's own internal customer and market data. The research findings were integrated into a state-of-the-art econometric model that related payment transactions to various attributes of economic performance, allowing Global Insight to translate these relationships into growth and volume forecasts.

The payment model output was then combined with Global Insight's extensive, up-to-date country forecasts of economic conditions and the investment climate to develop reliable, independent, and accurate payments forecasts.

• The annual number of global electronic payment transactions—approximately 210 billion in 2004—will more than double by the end of the decade.
• A compound annual growth rate of 12.9% is forecasted globally for all forms of electronic payments from 2004 to 2009. This compares to forecasted 3.2% growth in real GDP in the 79 countries during the same period.
• The Eastern Europe and the Asia-Pacific regions will lead the world in electronic payment transaction growth, at 21.6% and 19.2% respectively, for 2004 to 2009. In the Middle East, growth is forecasted to increase 15.9%, and in the NAFTA region, by 12.3%, confirming significant growth even within economies with well-established electronic payment infrastructures.
• From 2004 to 2009, the worldwide forecasted volume for electronic payments is expected to double, with China and India doubling volume at an even faster, three- to four-year rate.
• Conversely, the use of checks as a form of payment will continue its rapid decline, from about 20% of all payments in 2004 to only 10% by 2009. With this information, ACI will continue to build its worldwide client base, helping them focus and evolve their systems, marketing, and infrastructure to take full advantage of the payment industry's expected growth.