Capgemini released its annual World Payments Report in conjunction with RBS this past week at Sibos. The report, which tracks worldwide payments trends, found that non-cash payments increased 8.8% to 307 billion transactions in 2011, and predicted that number increased 8.5% to 333 billion transactions in 2012. That increase was driven by big upticks in non-cash payments in emerging markets. Additionally, a wide variety of payments forms, including credit cards, mobile payments and prepaid products, contributed to the growth in non-cash payments. Here we look at four factors featured in the report that are changing how payments are made around the world.
Emerging vs. Developed Economies
Emerging markets experienced big jumps in non-cash payments in 2011, according to the report. Non-cash transactions in Central Europe, the Middle East and Africa each increased by more than 20%; China and the Ukraine grew by more than 30% each. Latin America also experienced strong growth of more than 14%.
"You have the speed with which these emerging economies are developing economically and the huge populations they have in some of these regions that is driving this growth," explains Jean Lassignardie, Capgemini's chief sales and marketing officer.
Growth in non-cash transactions was slower in developed markets, the report found, with North America and Europe both recording single-digit growth rates in 2011. However, these two regions still account for nearly two thirds of the non-cash payments made worldwide.
Cards, Cards, Cards
Credit, debit and prepaid cards all experienced strong growth across the globe in 2011, driving down the use of cash, according to the report. Credit card transactions grew by 12.3% globally, while debit card transactions increased 15.8%. North America remains the strongest cards market, with cards accounting for 65% of non-cash transactions, the report said.
"Our report last year found strong debit card growth, but now we are seeing strong growth in debit and credit cards. We think it shows that the appetite of consumers is now more aggressive," Lassignardie says.
Prepaid cards were one of the fastest growing payments instruments, with 20% growth in transactions to 16.9 billion, the report found. While much of that growth has occurred in the U.S., Lassignardie also mentioned that use of prepaid products is also going up in developing countries where consumers are attracted to their convenience and ease of use.
Mobile Payments Speed Ahead
Mobile payments reached $256 billion in 2012, and are expected to increase threefold to $796 billion by 2014. P2P mobile payments in emerging markets and consumer-to-business payments in developed are the biggest factors driving that growth, the report said.
"Individuals' lives are being disrupted by technological innovation in mobile, social media, the cloud, etc. Payments need to be embedded into the lives of digital consumers conveniently, and mobile offers a way to do that. Everyone now has a mobile device in their hands," Lassignardie notes.
[To learn more about new opportunities in mobility in financial services, check out the agenda for the New Opportunities for Mobility: A Financial CIO/CTO Roundtable session at the upcoming Interop event in NYC.]
Opacity In Emerging Payments
Although the report expected mobile payments to grow significantly, it also noted that industry estimates of mobile payments volumes vary widely. This is because there is a significant need for better and more reliable data as new players and regions join the market, it said. Analyzing the difference in mobile payments volumes estimates across the industry, the report found a volume gap of more than 50%, raising doubts about the size of market estimates.
"Key institutions have to work together in developing a new way to ensure that these transactions are captured," Lassignardie urges. "The mobile payments market is big enough that we have to collect this information and make sure it's accurate."
Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio