Journal Article

Banks' payments-driven revenues

Abstract: Although many people believe that the payments area is a fairly minor business function within the banking sector, an increasing share of banks' revenue comes from fee services. To understand the full scope of the payments area, the author develops a broad definition of this business line and builds an estimate of payments-related earnings using recent data disclosed in bank holding company annual reports. Countering the view that payments contribute little to net revenue, the author finds that the payments area is one of the core activities of commercial banks. According to his estimates, payments services generate between one-third and two-fifths of the combined operating revenue for the twenty-five largest bank holding companies in the United States.

Keywords: Bank profits; Payment systems; Banks and banking - Customer services; Banks and banking - Service charges;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Economic Policy Review

Publication Date: 1999

Volume: 5

Issue: Jul

Pages: 53-70