World Payments Report 2010: Payments Volumes Resilient in the Crisis

I am very excited about the launch of the sixth annual World Payments Report 2010, outlining the latest global trends and competitive strategies.

Many have wondered if payments businesses would suffer from the world economic decline.  Global non-cash payments growth increased to 9% in 2008 from 7% in 2007, and early indications show growth continuing in 2009.  This growth rate was far faster in developing economies like China (at 29%) than in mature ones like North America (at 4%). Cards remain the preferred non-cash payment instrument, accounting for more than 40% of payments in most markets.

However, the economic crisis did impact consumer behavior.  The average value of card transactions in North America dropped in 2008 to $57 from $63.  U.S. consumers transacted less on credit cards in 2008 as they sought to reduce spending and borrowing. At the same time, U.S. debit card usage rose 13%, as consumers preferred “pay now” strategies for everyday purchases.

Figure 1: Number of worldwide non-cash transactions by region (€ billions), 2001 vs 2008

I see many new entrants gaining ground with innovative, flexible payment offerings.  Players such as  Zoompass, PayPal, Jibun Bank, docomo, Amazon and M-PESA are experimenting quite successfully in payments.

Figure 2: Global Mobile Payments Number of Transactions (Millions), 2008-2012 Forecast

I also see several innovative banks collaborating. Emerging examples include the widely reported NFC payment partnership between AT&T, Verizon, T-Mobile, Discover and Barclays. The mobile payments ecosystem is expanding so that banks may no longer be able to go it alone.  Collaborative business models can help banks extend their footprint, speed time-to- market, and share investments.

How much things change in a year.  A year ago, we didn’t know how payments would fare as the global economy faltered. In fact, the payments business has proved resilient, although ongoing regulatory pressures will require further investments. The landscape is changing fast, and bank executives will need to consider strategic decisions about the future of their payments businesses in the coming year.

The World Payments Report can be downloaded from Capgemini website. For more information or to share commentary on this article, send an e-mail to Deborah.baxley@capgemini.com.