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Payments report predicts continued rise of noncash transactions

The rapid pace of growth and increasing regulatory pressure are key drivers in the transformation of payments processing, an RBS-Capgemini study concludes.

October 3, 2014

Transaction data indicate growth of 9.4 percent in noncash payments volumes in 2013, with 366 billion transactions globally. This rise was fueled by strong growth in developing markets and the use of credit (up 9.9 percent) and debit cards (up 13.4 percent), according to the 2014 World Payments Report from the Royal Bank of Scotland and Capgemini.

Accelerating electronic and mobile payments growth and ongoing regulatory pressures have combined to push the payments industry to find new and innovative ways to support customer demands, the report said.

Developing markets driv growth

More than 50 percent of global noncash payment growth comes from developing countries despite their making up just one quarter (25.5 percent) of the market size at 93 billion transactions. The growth rate for Central Europe, Middle East & Africa comes in at 23.8 percent, emerging Asia at 22.8 percent, and Latin America at 11.0 percent.

The U.S. and the Eurozone still lead in the number of noncash transactions per inhabitant. Finland, with 448 transactions per person annually, is first among them. The U.S. came in second at 376, but grew by only 2.6 percent in 2012, compared with 10.6 percent growth in Finland.

According to William Higgins, managing director of payments at RBS:

Developing markets have continued their growth story, recording an impressive 18.3 percent rise compared with 4.5 percent across more mature markets in 2012. These significant growth levels — and even higher predictions for next year’s World Payments Report — represent a huge opportunity for the industry.

China, for instance, is one to watch over the coming years, with the report showing that if growth rates remain at the current high level, it could become the largest market for noncash transactions within just five years. These soaring growth rates in key markets put pressure on the global payments arena to innovate to meet rapidly increasing consumer demand.

Changing the payments game

Increased use of tablets and smartphones is creating a convergence of e- and m- payments, posing new challenges for payments services providers. In 2015, m-payments are projected to grow at 60.8 percent while e-payments growth is forecast to decelerate to 15.9 percent annually over the next year, as more people use mobile devices to make payments.

This trend is adding to the pressure on PSPs to modernize their payments processing infrastructures to support the wide-range of customer-facing innovations, the report said.

Struggling to meet demand

The growth of the industry coupled with the fast pace of new regulation requires flexibility from payments service providers, the report said. More than 50 percent of new key regulatory and industry initiatives focus on innovation; some also play a role in reducing risk, improving transparency and competition, and facilitating standardization.

As these new KRIIs are created, they tend to cascade across the globe spreading regulatory initiatives across regions. Examples of this cascading effect include real-time payments, pressure on card interchange fees, and improved payments governance.

 Download the World Payments Report 2014.

The World Payments Report 2014 is an annual report examining the latest developments in the global payments landscape, including payments volume trends, payment instruments, and key regulatory initiatives. Data in the report is from 2012, the latest full-year data available.