Over 25% of non-cash transactions to be instant and e-money payments by 2025

A report by Capgemini on world payments who found that instant and e-money payments will make up over a quarter of all non-cash transactions by 2025.

The World Payments Report 2021 harvested opinion from 44 payments markets across Europe, North America, Asia Pacific, Latin America and the Middle East and Africa. The report quizzed 6,300 customers globally and surveyed over 210 payments executives.

Capgemini found that as spending is expected to rebound in the coming months, non-cash payments will rise – with next-gen payment methods, instant payments, e-money, buy now pay later, biometric, invisible and cryptocurrency all expected to drive the growth.

While global non-cash transaction growth saw growth slow to 7.8% in 2020 due to pandemic-related market hesitancy, it is anticipated by Capgemini that the market will swing back to strong growth, with 18.6% growth forecasted between 2020 and 2025.

Globally, the Asia Pacific market is currently leading the digital payment race – with the region set to represent over half of worldwide non-cash transactions by 2025 at 28%. The European market is set to push over the 400 billion transaction mark by 2025 and grow by 13% by the aforementioned year. North America is anticipated to stabilise non-cash payments volumes due to slow mobile payments adoption and stagnant card transaction growth.

Around 55% of the executives surveyed for the report said their technology investment priorities centered around payments infrastructure modernisation. Capgemini remarked that if providers want to remain competitive long term, they need to prioritise digital capabilities – with Covid-19 further driving both retail and B2B payments to digitalisation.

The report also found that attractive loyalty and rewards, frictionless transaction experience, sustainable payment products and alternate payment options are the key areas in which gaps exist between payment executive priorities and customer expectations.

It was also discovered in the Capgemini report that payment service providers have been the biggest beneficiaries of a new approach to key regulatory and industry initiatives to promote and facilitate a payments-friendly environment.

Many regulators have supported balanced action across all primary objectives – risk reduction, competition, transparency and standardisation – to maintain stability within the payments industry. The report mentioned payment providers should focus on benefitting from this approach to regulation as they continue to look towards meeting customer demand.

In terms of profitability plans, many PayTech respondents said they opted for operating model measures including investing in third parties to develop innovative propositions, orchestrating an API-based ecosystem and moving into a platform-based business model.

Another key finding in the report was that almost 45% of consumers regularly use mobile wallets to make payments – up from 23% last year. It is also expected that global B2B non-cash payments will increase to almost 200 billion transactions by 2025, up from 121.5 billion last year.

Capgemini Financial Services CEO Anirban Bose said, “As digital payments and mobile wallets become more the norm than the exception, payment providers must find ways to meet consumer hopes for speed and ease of use. To embrace the next generation of payments, banks must build a complimentary partnership ecosystem to keep up with the rate of change.”

Copyright © 2021 FinTech Global

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