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 percent is expected for global non-cash transactions for 2019 to 2023.
Global non-cash transactions surged nearly 14 percent from 2018 to 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 percent growth).
Increased competition forces providers to evolve
Customers are migrating away from cash as affinity for digital payments grows. New players are quickly becoming more popular, with the report finding that 30 percent of consumers are using a BigTech for payment services, and 50 percent are already using a challenger bank for some payments.
Furthermore, as of April 2020, more than 38 percent of consumers said they discovered a new payment provider during the lockdown. Internet banking and direct account transfers were, and still are, the preferred payment method throughout the global health crisis, according to 68 percent of consumer survey respondents. Contactless (tap-to-pay) cards came in second, with 64 percent of saying they used them often. Digital wallets (including QR-based payments) were the preferred choice of 48 percent 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. Invisible payments, or automated payment processes such as those found in Amazon Go stores and Uber, are on pace to reach a 51 percent CAGR between 2017 and 2022.
Technology and collaboration can help payments firms
As the market continues to be disrupted and more payment options become available, payments firms must grapple with increased risk across business, regulation and operations. Payments executives say businesses are exposed to risks such as cybersecurity (42 percent), regulatory (37 percent), operational (35 percent), and business (30 percent). 87 percent of executives feel they face a high likelihood of cyber vulnerabilities, as criminals are exploiting exposures opened by the COVID-19 lockdown, which increase the risk of cyberattacks, money laundering and terrorist financing. Payments firms are actively turning to technology to help alleviate the exposure to new risks.
For corporate treasurers faced with business-to-business challenges and inefficiencies, the pandemic has required them to look to digital as the solution to address counterparty risk, connectivity solutions, payments automation and cybersecurity. Corporate treasurers now are looking for their bank and payments firms to provide enhanced API integration, risk management, and real-time payments and tracking.