Instant payments and e-money will account for 25% of all non-cash transactions by 2025
Payments enter a new experience-driven era (Payments 4.X), ushered in by an accelerated transformation timeline due to COVID-19 and the growing digital appetite of customers, according to the 2021 World Payments Report released today by Capgemini.
With the Asia-Pacific region leading the global pack, demand for digital payment options is greater than ever, along with expectations for fast transaction settlements, instant payments, e-money, security at all times. mind-blowing experience and customer experience.
The report found that nearly 45% of consumers frequently use mobile wallets to make payments (> 20 transactions per year), up from 23% in the 2020 survey. Continuing this trend, global B2B non-cash transactions will increase to reach nearly 200 billion transactions by 2025, compared to 121.5 billion in 2020, according to Capgemini estimates.
“As digital payments and mobile wallets become the norm rather than the exception, payment providers must find ways to meet consumer expectations for speed and ease of use,” said Anirban Bose, CEO of Capgemini Financial Services and member of the Group Executive Board. “To embrace the next generation of payments, banks need to create a complementary partnership ecosystem to keep pace with change. “
As spending rebounds, next-gen payments will drive growth in non-cash transactions
The report found that spending is set to rebound in 2021, non-cash transactions will increase, with instant payments, e-money and next-generation payment methods – Buy Now Pay Later (BNPL), invisible, biometric and cryptocurrency. – driving the growth of non-monetary transactions. After eight years of double-digit growth, overall global growth in non-monetary transactions slowed to 7.8% in 2020 from 16.5% in 2019, fueled by reluctance to face uncertain market conditions due to the pandemic . However, global non-monetary transactions are poised to grow at a CAGR of 18.6% (2020-2025 forecast), driven by next-generation payments, and are expected to reach $ 1.8 trillion in volume by the next year. end of forecast period.
Globally, APAC is leading the digital payment revolution. By 2025, the region will account for more than half of global non-monetary transactions with a CAGR of 28% from 2020 to 25. More than half a billion Europeans say they shop online in 2021, including 25, 5% cross-border. In Europe, mobile payments and cross-border e-commerce will increase and propel the region beyond 400 billion transactions in 2025 at a CAGR of 13% (forecast 2020-2025). North America is expected to stabilize non-cash payment volumes due to the capping of card transaction growth and slow adoption of mobile payments.
With increasing customer expectations, legacy payment infrastructure is stretched
As digital adoption continues to accelerate, increasing volumes and instant processing requirements are straining the existing payment infrastructure. About 55% of executives surveyed said their technology investment priorities are payment infrastructure modernization (real-time payment system implementation, API integration, ISO 20022 migration, cloud transformation). Suppliers must prioritize digital capabilities to stay competitive. COVID-19 has driven retail and B2B payments to digitalization. The big gap in meeting customer expectations as well as the growing digital appetite of retail and B2B customers continue to evolve and redefine customer engagement in the payments industry. The report found that compelling loyalty and rewards, a frictionless transaction experience, alternative payment options and sustainable payment products are key areas where gaps exist between customer expectations and payment managers. .
Regulators strive to strike a balance between innovation and security Payment service providers have benefited from a new balanced approach to key regulatory and industry initiatives (KRIIs) to promote and facilitate an enabling environment for payments. For the first time since monitoring KRIIs, regulators have supported balanced action across all key objectives (risk reduction, standardization, competition and transparency, innovation) to maintain balance in the payments landscape.
KRIIs are on a cyclical journey through efficiency, customer focus, innovation and efficiency. By ensuring a level playing field through anti-monopoly measures and transparent data sharing, policymakers are heralding a favorable future for open finance. According to the report, payment providers should focus on the benefits of this approach to regulation as they continue to innovate to meet consumer demand.
Payment companies must stand the test of time with Payments 4.X
With spending expected to rise and non-traditional payment methods poised to grow, future-proof businesses will embrace the elements of Payments 4.X, including data, shared infrastructure, platform and integrated financing to deliver a superior customer experience. When it comes to profitability plans, most of the payment companies surveyed opted for operating model measures such as investing in third parties to develop innovative proposals (52%), orchestrating a API-based ecosystem and shift to a platform-based business model (45%). The most successful payment companies will work with PayTech and ecosystem partners to build solutions based on customer experience rather than product. API maturity, data prowess and increased processing capabilities, coupled with cloud-based agility, will be the catalyst for Payments 4.X to move beyond the traditional mindset of customers. transactions towards new monetization approaches.
Methodology of the report
The World Payments Report 2021 provides information on 44 payments markets in various geographic regions. For the global macro-descriptions, we have defined five regions: Europe, North America, Asia-Pacific, Latin America and MEA, grouped by geographic, economic and maturity criteria of the non-monetary payments market. The report is based on research results from a customer voice survey that interviewed 6,300 customers around the world and interviews and surveys of more than 210 payment managers.