Rapid growth in digital payments

The global payments industry is experiencing rapid growth as more people turn to digital and card payments.

Global digital payments growth will increase on average by 10.9 per cent through to 2020 with emerging economies growing at 19.6 per cent according to Capgemini’s latest World Payments Report.

Emerging economies are expected to grow at three times the rate of mature economies with emerging Asia projected to grow 30.9 per cent in volumes, led by China and India.

Figures from Capgemini show the number of non-cash transactions jumped 11 per cent in 2015 to USS433 billion, the highest growth in a decade.

Developing markets drove this growth with a 21.6 per cent increase over the period with volumes for mature markets increasing by 6.8 per cent, said Phil Gomm, Banking and Capital Markets Industry Practice Director at Capgemini Australia.

Worldwide non-cash wholesale transactions by corporates, mid-sized enterprises and public authorities are estimated to record a compound annual growth rate of 6.5 percent through to 2020, or more than 122 billion wholesale transactions

Despite increased adoption of digital payments, cash remains in the mainstream, especially for low-value transactions, according to the report.

Australia powers ahead

The study also 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.

“Australia powers ahead of both US and Europe with 9.9 per cent growth in non-cash transactions as we increasingly switch from cash to electronic payments.

“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 and transaction volumes increase and digital wallets become our preferred method of payment."

Recognising these market transitions, he went on to say, BPay now plans to introduce its new faster payment service Osko in 2018, on the back of the Australian New Payments Platform, likely to compete with branded solutions from major providers.

Increased digitisation of corporate B2B payments is affecting regional trends, the consultant found.

In mature Asia Pacific markets, small and medium-sized businesses are using digital invoicing, virtual cards, and cloud-based finance and accounting

On Capgemini’s analysis non-cash transaction volumes in the region hit an all-time high of 9.6 billion in 2015, up from 8.7 billion transactions in 2014.

“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," added Gomm.

"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.”

Open banking

The report also looked at new payments ecosystem enablers which include open APIs, instant payments, blockchain and regulatory standards that encourage collaboration and data sharing.

When the revised PSD2 is rolled out in January 2018, Europe will take an important step toward becoming a fully interoperable digital market.

However, Capgemini claimed that a lack of regulative coordination and integrated data management among Eurozone banks may create conflicting objectives and competing agendas while diminishing expected standardization and transparency.

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