Global digital payments volumes are predicted to increase by almost 11% by 2020, reaching nearly 726 billion transactions, according to the World Payments Report 2017 (WPR 2017). The study, released by technology and outsourcing company Capgemini and global bank BNP Paribas estimates that the volumes generated by emerging economies will grow by nearly 20%.
Global non-cash transaction volumes grew 11% to reach 433 billion during 2014-2015, the highest growth in ten years. However, cash remains in the mainstream, especially for low-value transactions. The study states that mobility, connected homes, entertainment, and media are expected to boost non-cash transactions in the future.
The report also highlights the development of a new payment ecosystemas a result of a number of factors including: the dynamic regulatory landscape including the requirements of PSD2 compliance; fintechs; changing corporate and customer expectations for value-added services; and an increase in payments-enabling technologies.
“Within this new and dynamic ecosystem, payments industry participants must strategically reassess their roles,” said Anirban Bose, head of global banking and capital markets for Capgemini. “Banks must embrace this opportunity to enhance their offerings in collaboration with fintechs and third-party developers. Breakthrough technologies and significant industry advances, such as open APIs, instant payments, blockchain, and regulatory standardisation, will encourage collaboration.”
The report also looks into the value proposition and challenges for corporate treasurers from the new ecosystem. Corporate treasurers’ demands for more reliable end-to-end services impact the payments ecosystem. In this time of intense competition, banks can seize the opportunity to work with businesses with existing corporate clients and acquire new clients.
The report also highlights a key challenge in the new payments ecosystem, mainly the lack of standardisation caused by national regulators’ different standards and individualised interpretations.
“Multinational banks and corporations seek better industrywide standardisation and harmony among regulations,” said Bruno Mellado, global head of payments and receivables, BNP Paribas.
“As security issues are overcome, increased collaboration and partnership within the new payments ecosystem will create business value for corporates, banks and fintechs. The new ecosystem may diminish most, but not all, challenges faced by banks and corporates. Industry participants can prepare for uncertainties as the payments ecosystem develops by working with banks and partners with the appropriate expertise.”
To download the report, click here.