The transformation of the global payments market continues to gather pace, with the emergence of a growing number of technologies offering consumers more choice than ever when it comes to choosing how they pay for goods and services.
Indeed, the latest World Payments Report, published by Capgemini and BNP Paribas, found the number of non-cash transactions is enjoying its highest growth rate for a decade, with volumes growing by 11.2 percent globally in 2014-15. However, it is in emerging markets in Asia, Africa and the Middle East where the most significant progress is being made.
Emerging markets set for non-cash payments boom
According to the 2017 edition of the study, the likes of China and India will be among the biggest drivers of non-cash payments in the coming years. In China, for example, the number of such transactions is expected to increase at a rate of 36 percent between 2016 and 2020.
In India, the figure for the same period is 26.2 percent, helped by initiatives from the National Payments Council of India (NPCI) and the country’s government, which has set an ambitious target of reaching 25 billion non-cash transactions in 2017-18. Demonetization efforts that began in November 2016 have helped increase the adoption of e-payments infrastructure, while the next focus for the NPCI will be increasing the use of contactless payments on public transport, which could help boost familiarity and acceptance of digital payments across the wider economy.
Elsewhere in the world, African and Latin American markets are also poised for strong growth. In Africa, it is expected there will be an extra 400 million smartphones in use by 2020 which, coupled with a large increase in the number of young adults aged 15-24 in the region, will drive mobile money and digital payments schemes. In Brazil, meanwhile, central bank and regulatory initiatives are helping accelerate non-cash transactions, despite the backdrop of a difficult economic forecast.
Mobile payments key driver of new transactions
A common theme across many of the emerging markets studied by Capgemini for the report was the booming demand for mobile payments. In Africa, for example, specialist mobile money providers are increasingly partnering with traditional banks to reduce the costs associated with these transactions, which is leading to greater adoption of these services.
This is a trend being seen across the continent. While Kenya has long been a regional leader in mobile payment solutions with initiatives such as M-Pesa, the likes of Ethiopia, Nigeria and South Africa were all highlighted by the report for their efforts to boost e-payments and m-payments.
“Mobile technology plays a central role in addressing a range of socio-economic developmental challenges across the region, particularly digital and financial inclusion,” Capgemini stated.
Meanwhile, in China, the reach of mobile solutions is also growing. While this technology has a strong hold on urban areas, more rural parts of the country have until now been largely untapped. However, it is expected that these areas will record higher growth rates in the coming years, while the market in larger cities stabilizes.
Last year, China’s mobile payments market increased by 85 percent, with 25.71 billion transactions taking place. While future growth is unlikely to match those highs as the market becomes more saturated, a rate of 68 percent is still expected for the next two years.
The report highlights how emerging markets around the world are able to take advantage of rapidly-developing economies and greater user adoption of technology to transform their payments landscape. With the potential for tens or hundreds of millions of new consumers to get on board with this technology, these nations could lead the way for innovative payments technology for years to come.