Rebecca Gibson |
Cashless transactions are predicted to rise at a compound annual growth rate (CAGR) of almost 13% until 2021 as bigtech and fintech players introduce new digital payment alternatives, according to analyst Capgemini and retail bank BNP Paribas.
Capgemini and BNP Paribas’s new the World Payments Report 2018 found that non-cash transactions grew 10% in 2015-2016, hitting a total volume of 482.6 billion. The total value of digital payments is expected to reach 598 billion in 2018 and around 876 billion by 2021.
The 2015-2016 boom in cashless payments was driven by developing markets, such as Russia, India and China. Led by Asia, these markets will continue to drive digital payment adoption at a CAGR of nearly 22% and by 2021, account for around half of all non-cash transactions worldwide. If this prediction is correct, it would be the first time that developing markets have overtaken the mature markets, whose current share stands at 66.3%.
New technologies, such as e-wallets, from bigtechs and fintechs are also providing new real-time, digital alternatives to cash payments. Hence, to remain relevant, banks must play the role of ‘anchors’ when developing new collaborative payments ecosystems with these non-traditional players.
“As demand for digital payments is strong, especially in developing markets, some banks may want to revisit their choice to not seek an anchor role in the new emerging payments ecosystem,” said Anirban Bose, CEO of Capgemini’s Financial Services and member of the Group Executive Board. “With their significant market share in the payments industry and implementation of new technologies, banks are in a unique position to shape the marketplace. They can also create new revenue streams through innovative, collaborative relationships with fintechs and active participation by the broader financial services community.”
The report also indicated that innovation and the adoption of a real-time payments infrastructure is being hindered by the lack of interoperability between schemes, weak data and authorisation standardisation, and implementation and operational challenges caused by conflicting regulatory requirements.