Dec 27, 2012 Dave King
New forms of electronic payments may help reduce the need for financial institutions altogether, according to a new report.
The Federal Deposit Insurance Corporation (FDIC) announced this week that as more consumers embrace mobile payments and other retail services, financial institutions could lose revenue and customers.
Traditionally, banks operate as an intermediary between consumers and merchants to process non-cash payments. However, with mobile payments, non-bank financial providers are taking over these tasks, according to the agency.
"Banks could increasingly find themselves displaced by non-banks in the mobile payments marketplace," the FDIC stated. "Non-bank mobile payment providers are devising ways to streamline the current payments system and reduce transaction costs by limiting the role banks play in mobile payments or eliminating them from segments of the payment process altogether."
According to a report from comScore, 65 percent of U.S. smartphone users make purchases on their mobile devices.