New World Payments Report 2013
Strong growth in non-cash transactions signals two-speed recovery for global payments industry
Dubai, Paris, London – September 16, 2013
Global non-cash payments volumes are expected to top 333 billion transactions in 2012 after transactions grew by 8.8 percent in 2011, according to the latest available data from the World Payments Report 20131 published by Capgemini and RBS.
Central Europe, the Middle East, Africa (CEMEA) and Emerging Asia are leading the charge with growth in transaction volumes of more than 20 percent, while Latin America recorded growth of 14.4 percent. Growth in these emerging economies outpaced that of the developed markets of North America, Europe and Mature Asia (covering Australia, Japan, Singapore and South Korea), which recorded single digit growth rates, though mature markets still account for more than two-thirds of global non-cash transaction volumes with a 76.9 percent share. Forecasts show, however, that for all the growth in the surging economies of Asia and Latin America, it will still take at least 10 years for emerging markets to overtake mature markets in transaction volumes.
“The unabated rise of non-cash payments is a sign of the interconnected lives we live today. With estimates showing 8.5 percent growth in 2012 non-cash payment transactions, that’s nearly 47 transactions per year for every man, woman and child on the planet. In the developing markets, mobile payments are giving more people access to financial transactions, while customer-centric innovation has helped prepaid cards and virtual currency gain traction in the more developed markets,” said Kevin Brown, Managing Director, Global Head of Transaction Services, RBS International Banking.
Debit and Credit Cards Still Leading Electronic and Mobile Payments
Debit and credit cards continue to be the most popular non-cash payment instruments, ahead of e- and m-payments. Debit card use grew by 15.8 percent (to 124 billion transactions) globally during 2011 and credit cards grew by 12.3 percent (to 57 billion transactions). Industry estimates suggest online and mobile payments will grow at 18.1 percent and 58.5 percent respectively through 2014. E-payments are expected to reach a total of 34.8 billion transactions by 2014, alongside 28.9 billion mobile payment transactions in the same year. However, the World Payments Report 2013 raises some important questions about the veracity of these estimates.
A statistical ‘black hole’?
Assessing non-cash instruments such as e-payments (digital payments made over the internet for e-commerce activities) and m-payments (using the mobile phone as a payment method in real time), prepaid cards and virtual currency (offered by banks and non-banks) and growing transaction volumes in regions such as Africa, the World Payments Report has uncovered a significant statistical ‘black hole’ due to inconsistent reporting of payments. This inconsistency is emerging as new regions become more active and non-banks take an increasing share of the market via instruments such as e- and m- payments. Analysis in the report suggests that industry estimates of the size of the mobile payments market could be optimistically inflated by a factor of up to 50 percent, raising the question of whether reliable, centralized data collection is needed. The Report calls for more statistical accountability in the industry and urges regulators to facilitate such a move. Improved statistical data collection would help payment services providers (PSPs) make more informed investment decisions as well as help combat future market risk.
“Reducing market risk and regulatory complexity continues to be a challenge for banks and other PSPs alike, particularly as regulations proliferate and the overlap between individual initiatives continues to increase,’ said Jean Lassignardie, Chief Sales and Marketing Officer, Capgemini Global Financial Services. “PSPs can ‘cluster’ how they implement individual regulatory initiatives to take into account cascading effects across geographies, complementary reinforcement effects and competing effects.”
In North America, most new regulation is focused on transparency and customer convenience. In Asia Pacific, the regulatory focus is on standardization and bringing new participants into the financial system. While in Europe, SEPA regulations are dominating the landscape as regulators concentrate on increasing competition and improving transparency.
Driving fragmentation and innovation in payments acquisition space
Payments acquisition has emerged as the area with greatest potential for customer-centric innovation. Drivers for innovation in payment acquisition for PSPs include: desire for proximity to customers, need to meet new and changing demands, and the fragmentation of the value chain. Through payments acquisition innovation, PSPs can offer both retail and corporate customers’ choices between instruments, locations, channels and currencies which is increasingly being demanded. Innovation is evolving in consumer-to-business (C2B) acquisition towards ‘any form,’ ‘anywhere,’ and ‘anytime’ payments which can be found in alternative models from PayPal (Order Ahead application with Jamba Juice) and WorldPay (accepting multiple instruments.) In business-to-business (B2B) acquisition, innovation is seen in the SWIFT (3S Key security solution) and ErsteConfirming (supply chain solution).
“Both new and legacy payments providers recognize that not all players need to provide end-to-end services and are focusing on the four ‘Innovation Value Hotspots’ of origination, acceptance and capture, security and fraud, and value-added services,” said Lassignardie.“In choosing one or more of these hotspots, payments providers have an opportunity to differentiate and meet the new and changing needs of both retail and business customers.”
The Report concludes that the trajectory of change in the payments acquisition space is too steep for PSPs to stand still. Strategies must be revisited and reformed in order for PSPs to stay in the game and to benefit from the changes innovation will deliver.
The report is available for download here.
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‘Payments acquisition’ refers to enabling sales/commerce by bringing buying and selling entities together in both Customer-to-Business (C2B) and Business-to-Business (B2B) contexts, allowing the acceptance of any payment instrument based on customer choice, and facilitating sales agnostic to location, channel, or currency
About the World Payments Report 2013
The World Payments Report 2013 is an annual report which examines the latest developments in the global payments landscape, including payments volume trends, payment instruments (such as cards and checks), key regulatory initiatives and their impact on strategic considerations and options for banks.
With more than 125,000 people in 44 countries, Capgemini is one of the world's foremost providers of consulting, technology and outsourcing services. The Group reported 2012 global revenues of EUR 10.3 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model. Learn more about us at www.capgemini.com.
Rightshore®is a trademark belonging to Capgemini
About Capgemini’s Financial Services Global Business Unit
Capgemini’s Global Financial Services Business Unit brings deep industry experience, innovative service offerings and next generation global delivery to serve the financial services industry. With a network of 21,000 professionals serving over 900 clients worldwide Capgemini collaborates with leading banks, insurers and capital market companies to deliver business and IT solutions and thought leadership which create tangible value. More information is available at: www.capgemini.com/financialservices
About Markets & International Banking (M&IB)
RBS Markets & International Banking (M&IB) is a leading banking partner to major corporations, financial institutions, government and public sector clients around the world. M&IB provides an extensive range of products and services in debt financing, global markets, risk management, investor products, financial advisory and transaction services. The division focuses on long-term client relationships and excellence in product execution underpinned by global insight, local knowledge and a prudent and sustainable banking model to meet the evolving market and regulatory backdrop. Committed to serving clients’ needs internationally, M&IB has on-the-ground operations in 38 countries.
The Royal Bank of Scotland Group (RBS)
The RBS Group is a large international banking and financial services company. Headquartered in Edinburgh, the Group operates in the United Kingdom, Europe, the Middle East, the Americas and Asia, serving over 30 million customers worldwide. The Group provides a wide range of products and services to personal, commercial and large corporate and institutional customers through its two principal subsidiaries, The Royal Bank of Scotland and NatWest, as well as through a number of other well-known brands including Citizens, Charter One, Ulster Bank, Coutts, Direct Line. Visit: www.rbs.com
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