• Pressures on interchange are mounting, and it's becoming increasingly questionable whether or not issuers will be able to reap the profits of a higher rate.
  
  
• Alternative payment options that pose a real threat to issuers and credit are emerging. While the barriers to entry have always held strong, there are rifts that could give way to new initiatives. Nontraditional players like Wal-Mart or Google could eat into market share, and the growth of a new network that rivals MasterCard or Visa is almost certain.
  
  
• A new spin on debit cards, decoupled debit, has the potential to shake things up among the issuing community, giving credit providers the chance to capture greater wallet share but threatening profit margins for debit issuers.
  
  
• The evidence is mounting against the issuing business, and lawsuits will continue to add pressure to act. Celent believes that free rewards programs will be the first real casualty as issuers are forced to re-evaluate their card portfolios and justify high-cost programs.
  
  
• In the long run, the card industry will be forced to return to a fee-based system that aligns the cost to the beneficiary. This will likely persuade consumers to seek their free lunch elsewhere, and the door to other payment methods will be opened even more.
  
  
• Credit-only or credit-centric issuers are expected to diversify their payments mix (a necessity during this economic time and consumer trend to debit) and focus on building their debit payment options by way of decoupled debit programs.
  
  For more information, please find the press release below or at: http://www.celent.com/PressReleases/20080507/Disruption.asp
  
  HomeATM Blog readers can access the full report at:
  www.celent.com/reports/PaymentDisruption/PaymentDisruption.pdf .

Source: Company press release.