Will COVID-19 spark the end of cash payments?
14. October 2020 | News, Retail Technology, Shopping Today

Increased payment volume, consumer behavior shifts, and greater risk create a new landscape for payments

Payment firms are being pushed rapidly into transformation, even as they handle larger transaction volumes, face increased competition and heightened risk factors amplified by COVID-19, according to the ‘World Payments Report 2020’ published by Capgemini.

“COVID-19 has accelerated the rate of innovation within the payments space to quickly form the ‘next normal,’ requiring payments firms to be digital masters almost overnight. Now more than ever, payments providers need to deliver differentiated offerings that emphasize speed, convenience, and a superb end-to-end customer experience,” said Anirban Bose, CEO of Capgemini’s Financial Services and Group Executive Board member. “Currently, we are seeing visionary banks and payments firms diligently prioritizing technology transformation and actively adopting a ‘curate and collaborate’ approach by teaming with agile new players to create more nimble organizations.”

Before the pandemic started, payment volumes reached new heights, which are predicted to continue but at a pace reflecting both the increased reliance on non-cash transactions and the effect of a dampened global economy. The report predicts that a compound annual growth rate (CAGR) of 12% is expected for global non-cash transactions for 2019-2023. Global non-cash transactions surged nearly 14% from 2018-2019 to reach 708.5 billion transactions, the highest growth rate recorded in the past decade.

Asia-Pacific surpassed Europe and North America to become the 2019 non-cash transactions volume leader at 243.6 billion.

The increase was driven by increasing smartphone usage, booming e-commerce, digital wallet adoption and mobile/QR-code payments innovations, led by China, India and other SE Asian markets (31.1% growth).

Customers are migrating away from cash as affinity for digital payments grows. Internet banking and direct account transfers were, and still are, the preferred payment method throughout the global health crisis, according to 68% of consumer survey respondents. Contactless (tap-to-pay) cards came in second, with 64% of saying they used them often. Digital wallets (including QR based payments) were the preferred choice of 48% of respondents.

Alternative payments could continue to boost non-cash payments space as consumers seek speed, convenience and a superior customer experience. Digital wallet users are expected to jump from 2.3 billion in 2019 to 4 billion by 2024 – 50% of world’s population. Invisible payments, or automated payment processes such as those found in Amazon Go stores and Uber are on pace to reach a 51% CAGR between 2017-2022.

Source: Capgemini

Tags: card payment, contactless payment, mobile payment, payment, payment methods
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