Emerging Markets Fuel Non-Cash Payments Growth

By Chanel Smith (@PYMNTS_EMEA)

Non-cash payments are rising steadily and are predicted to exceed 2012’s results by reaching volumes of at least 333 billion transactions by the end of the year.

New research from Capgemini and RBS points out that global non-cash transactions have had stable growth in recent years. In 2011, cash alternative payments grew by 8.8 percent, and in 2010 both debit card (15.8 percent) and credit card (12.3 percent) transactions were at record highs. The study argues that the rise and the high probability of future growth of non-cash payments are largely due to the increasing financial involvement in developing markets.

Capgemini and RBS report that non-cash payments in Central Europe, the Middle East, Africa and the emerging parts of Asia each increased by over 20 percent. Established markets across Europe had a mid-single digit growth rate, yet still reign as among the most substantial non-cash payments markets, alongside North America. The two continents combined account for nearly two-thirds of all non-cash transaction volumes around the world.

Developing markets, such as those found across the MENA region, are becoming more active with mobile money transfers, electronic payment initiatives, prepaid cards and even virtual currency. The payments industry predicts that mobile payments and electronic payments will increase by 58.5 percent and 18.1 percent annually through 2014.

However, the report discusses there is “statistical black hole” that is growing. This represents new markets that are becoming more active in the financial sector and account for an increasing share of the global payments market.

The black hole raises many questions as to whether future predictions will be accurate. Yet, the study reports that as statistical data collection becomes more mature and more reliable, firms will be better equipped to make adequate investment decisions. Ideally, firms will also be able to develop new ways to fight growing market risks.

“The unabated rise of non-cash payments is a sign of the interconnected lives we live today,” said Kevin Brown, managing director and global head of transaction services at RBS. “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.”

To read the full report at Capgemini and RBS click here.