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Customers of all ages and across all times - myself included - have wanted the best possible product at the cheapest possible price and the least amount of headache. But the point is, there are no service providers who are able / willing to deliver such products for many types of payments. Let me take, for example, the very common use case of B2B fund transfer from USA to INDIA between two small businesses, and look at what payment products are available that are not necessarily cheap but are trustworthy and simple to use. Western Union and its equivalents won't handle payments to a business and are ruled out. PayPal tends to freeze merchant accounts arbitrarily and hence is not trustworthy. Wire transfer is not suitable since it's too complex for most SMBs and their community banks / credit unions. Against this very real backdrop, I was forced to settle for cheque - yes, paper cheque sent by FedEx and taking 45 days to clear - to receive a customer payment from USA a couple of years ago. By all counts, this is a huge market waiting to be disrupted. However, I don't know of a single PSP who has been willing / able to do it. Given my personal interest in such payments, I'd love to be proved wrong.

With the proliferation of social intelligence platforms and interesting business models that together expose - in near realtime - brand advocates, feature wishlists, disgruntled competitor customers and so on, increasing amount of actionable insight is already available, thereby enabling banks to take concrete steps to engage customers and go beyond listen and learn.

@KillianC:

I'd rather believe what corporate treasurers do than what they say. And on this, I'll point to my comment here to avoid repetition.

Just to clarify, in the airline COD example I've cited, I don't think the airline has ignored any cost: The third-party COD provider in question bears all the costs you've specified including cash collection, transport, deposit into the airline's bank account, cash-in-transit insurance, reconciliation, etc., and charges one flat fee to the airline, which is no higher than MDF / MSC. For the airline, this is the total cost of getting "cash in its bank account" and I don't see any extra costs being applicable relative to card payment. In fact, at no extra cost, the airline has also received a bank guarantee from the COD provider indemnifying the airline from the possibility of the COD provider going bankrupt during the T+2 day settlement cycle. 

Maybe the COD provider has underestimated its total cost and has quoted an unrealistically low fee to the airline but that's not the airline's problem. On second thoughts, I'll rule out the possibility of any gross underestimation since the same COD provider has been providing this service to at least 100 other OTAs and e-tailers over the last two years and it has managed to survive so far.

No. Moving money is still fraught with several issues around complexity, convenience, security, trust, regulatory compliance, and so forth. Unlike many industries dealing in physical goods, the payments business is far from commoditized. Companies who address these fundamental issues satisfactorily still stand a good chance of achieving fame and fortune. Cost is far from being the sole determinant of success in moving greenbacks. With no disrespect to the retail industry, let me paraphrase the words of a veteran retail IT program manager when he was put in charge of his first ever BFSI project: A few minutes of downtime only means the loss of a few t-shirts in retail whereas it could place the whole bank at risk, especially if it happens close to a payment cutoff.

Not sure why cash collection should be so costly. In this Finextra post, I've cited the example of an airline in India that has recently launched cash-on-delivery as a new mode of payment for booking air tickets. It has outsourced the cash collection to a third-party at a cost that is no greater than the MDF / MSC it incurs for accepting credit / debit card payments.

In these times, we've seen heightened interest for solutions that provide business value while achieving compliance. 

I remember NCR doing something like this last year. As a security boosting measure, this is a solution seeking a problem. While it plugs one arguable vulnerability, it introduces other concerns, as @Jan-OlafB points out. However, if the recipient doesn't need to have an account in the same bank as the sender, this is a highly convenient realtime P2P payment method.

I never knew that bankers thought it was their role to connect their business banking customers with one another but even if this B2B portal helps in introducing this new KRA, it's a case of better late than never. Kudos to RBS / NatWest for this initiative. 

@ChrisF: TY for your comments. Let me assure that these are not past performance but clear and present trends. Having launched COD less than a month ago, the airline has probably heard about mobile payments and the like for several years. To avoid an even longer post, I consciously refrained from repeating my oft-expressed belief that only third-parties like banks and the digerati seem to attach a lot of costs to cash usage. Even if some of the underlying risks and issues with cash usage are genuine, they don't translate to transaction costs as long as the two key players in the transaction - buyer and seller - treat them as overheads of doing business. (And it's not as though a failed electronic payment has no cost for the payer.) I started leaning towards this view when I realized that I haven't come across a single merchant who refused to accept cash whereas so many of them - including cabbies in many cities in the world - go to great extent to avoid accepting card payments. My belief was further reinforced when I learned that the airline incurs the same cost for processing COD or card payments.

Why Deutsche Bank? Why not the Vatican Bank?