World Payments Report indicates jump in digital payments

Wednesday, 11 October, 2017

World Payments Report indicates jump in digital payments

It is predicted that global digital payments will rise by around 10% in the lead-up to 2020, according to a new report.

The World Payments Report 2017 also estimates that volumes generated by emerging economies will grow by 19.6%, which is three times the rate of mature economies.

Global non-cash transaction volumes grew 11.2% to reach 433.1 billion during 2014–2015, the highest growth in a decade. Developing markets drove this growth with a 21.6% increase. Meanwhile, mature markets increased by 6.8%, a nominal rise of over 6% in 2014.

“Australia powers ahead of both US and Europe with 9.9% growth in non-cash transactions as we increasingly switch from cash to electronic payments,” said Phil Gomm, banking and capital markets industry practice director at Capgemini Australia.

“Low-value payments in particular have been shifting to electronic payments, with mobile wallets look now to be positioned for substantial growth.”

Card-issuing banks and major retailers are all looking closely at how best to compete in the domestic low-value, high-volume payments game as transaction values continue to reduce, transaction volumes increase and digital wallets become the preferred method of payment.

Despite increased adoption of digital payments, cash remains in the mainstream, especially for low-value transactions. This year’s WPR states that mobility, connected homes, entertainment and media are expected to boost non-cash transactions in the future, as will alternate channels, including contactless, wearables and augmented reality.

Increased digitisation of corporate B2B payments is affecting regional trends. In mature APAC markets, small and medium-sized businesses are using digital invoicing, virtual cards, and cloud-based finance and accounting. In emerging Asia, charge cards are popular among corporates to simplify and secure supply-chain payments.

“From our analysis, non-cash transaction volumes hit an all-time high of 9.6 billion transactions in 2015, up from 8.7 billion transactions in 2014. Australia continues to rank amongst the highest non-cash transaction users per capita globally, making us a litmus test for new and innovative solutions,” said Gomm.

“This does not argue well for ATMs, where we expect to see ongoing consolidation. Despite the recent fee-free initiatives designed to encourage take-up, the reality will be an ever-decreasing population of these machines. For many of us, cash will become a thing of the past as we migrate from plastic cards to our preferred digital wallets, with incentives provided to encourage our loyalty.”

This year’s World Payments Report offers insights on the payments markets in the following regions grouped by geographic, economic and non-cash payment market maturity criteria: North America (Canada and the United States), Europe, Mature Asia–Pacific, Emerging Asia, Latin America and CEMEA. Primary research for WPR 2017 included an online survey that was distributed to industry participants across banks, FinTechs, non-bank FSIs and corporates in June 2017. Executive interviews were also conducted.

The report was released by Capgemini.

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