Now in its seventh year, the World Payments Report from
Capgemini, Royal Bank of Scotland and the European Financial
Marketing Association assesses the state of the payments business
as it faces challenges from more regulation, economic and
competitive headwinds, technology advances, and customer
expectations.
Go deeper with GlobalData
The overall conclusions from the latest World Payments
Report are that non-cash payment volumes continue to rise,
despite the major challenges of more regulation and the unavourable
economic conditions.
Growth in global payments volumes
during 2009 and 2010 is proving the continued resilience of
payments to the effects of the global financial crisis.
This growth was sustained by strong
performance of the emerging and more mature markets in the
Asia-Pacific region according to findings from the World
Payments Report 2011.
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By GlobalDataNow its seventh year, the survey,
published by Capgemini on behalf of Royal Bank of Scotland (RBS)
and Efma, reported that non-cash payments volumes, such as cards
and cheques, grew by 5% in 2009 to 260bn.
In the prior 12 month period,
non-cash payment volumes grew by 9% and in the period prior to the
economic crisis (2001-2007) the average annual gain was 7.2%.
The growth rate in the past year
was lowest in North America and Europe (less than 2% and 5%
respectively), compared to over 10% in emerging markets and the
Asia-Pacific region.
In Europe, Poland bucked the trend
of low growth, with an increase of 19%, boosted by government
initiatives designed to facilitate adoption of non-cash
payments.
The outright volume of non-cash
payments remains heavily concentrated in developed markets, with
North America, Europe and mature Asia-Pacific accounting for a
combined 83% of non-cash payments volumes in 2009, with 89% of
global volumes concentrated in ten payments markets.
Strong growth was witnessed in
South Korea and Singapore, where economic growth has remained
strong and technology adoption has helped to drive non-cash payment
innovations and usage. In Japan, volumes jumped 12.6%, the highest
rate of growth among the mature payments markets, fueled by
increased card usage.
In developing markets, the increase
in volumes remained strong in 2009, up 22% in Central Europe,
Middle East, Eastern Europe, and Africa and 15.4% in Latin America
excluding Brazil.
Globally, cards remain the
preferred non-cash payment instrument, with global transaction
volumes up almost 10% and a market share of more than 40% in most
markets, with the high being 68% in Canada.
As the volume of card usage
increases, the average value of each transaction is steadily
declining.
This trend is consistent with the
broader use of cards even for lower-value transactions.
In the UK or instance, the average
value per card transaction dropped in 2009 to €57 ($78) from €66 in
2008, though the number of card transactions rose 8%.
In the US volume rose 5% while the
average value per transaction dropped to €40 from €43.
Regionally, the average value per
card transaction is now highest among Europeans (€52), after a
larger-than-average (12%) decline in value per transaction among
residents of Mature Asia-Pacific.
However, mobile payments are
growing even faster than predicted in the 2009 annual report.
Mobile Payments
soar
The number of m-payments
transactions totaled 4.6bn in 2010, and is expected to grow 48.8%
per year until 2013 to 15.3bn.
Non-bank providers handled about 6%
of m-payments (272m transactions) in 2010 and are expected to
handle 1.2bn or 8% of all m-payments in 2013.
The value of global m-payments
reached €62bn in 2010, and is expected to grow aggressively at a
sustained annual rate of 52.3% from 2009 to 2013, putting global
m-payments at €223bn.
This growth is likely to be led by
workers’ remittances and retail purchases using mobile phones.
Electronic Payments
growth
The number of e-payments
transactions totaled 17.9bn in 2010, and is expected to grow at a
sustained 19.1% a year to total 30.3bn in 2013.
Mainstream payments cards (credit,
debit, prepaid) dominate e-payments, but alternative (non-bank)
providers are gaining traction.
Non-bank providers accounted for
about 6.5% of the total in 2010 and are likely to account for
nearly 9% or 2.7bn transactions in 2013.
The aggregate value of global
e-payments was €824bn in 2010 and is expected to reach €1.4trn in
2013. The average value of each non-bank e-payments transaction is
nearly €45, far higher than for m-payments.
Cheques continue to
decline
The use of cheques continues to
lessen, accounting for just 16% of all non-cash global transactions
in 2009, down from 22% in 2005.
However, these figure masks
tangible differences among markets. Cheques are obsolete in Sweden
and Norway, and rarely used in countries such as Germany, Austria,
the Netherlands, and Belgium.
However, cheques still account for
24% of all non-cash payments in the US where businesses favour them
for a variety of reasons.
Cheques written by consumers to
businesses for household bill payments and POS transactions
represented 44% of all cheques written in 2009 – after a 10%-per
year decline since 2006.
Cheques also account for a
relatively high percentage of non-cash payments in France, Ireland
and the UK (20%, 14%, and 8% respectively).
Increased
regulation
Key regulatory and industry
initiatives are combining to gradually transform complexities in
the payments landscape.
Through analysis of a wide range of
global and regional regulatory and industry initiatives, the report
identifies five key industry transformation trends which together
are reshaping, or soon will, aspects of the payments market and the
positioning of the players who operate within it:
- Systemic-risk
reduction and control: In the wake of the financial
crisis, regulators are seeking to reduce systemic risk by asking
for stricter requirements on capital and liquidity; - Standardisation
initiatives aimed at improving efficiency, streamlining processes
and reducing costs continue: Some payments instruments and
aspects of the value chain are commoditised in the process, making
it more difficult for banks to differentiate
themselves; - A drive for higher
levels of transparency: Several initiatives are
concentrating on making service fees to clients more transparent,
with potential implications for current business models, such as
cards; - Convergence:
developments in technology and evolving user and regulatory
requirements: These are contributing to a gradual blurring
of the lines between traditional payments activities supplied by
infrastructure providers and automated clearing houses for certain
types of low-value payments; - Innovation: this remains a critical
success factor within the payments industry, allowing players to
harness emerging technologies and trends, such as
mobile.
