Payment providers must meet digital consumers’ need for speed
Payments are entering a new experience driven era, ushered in by an accelerated transformation timeline due to Covid-19 and the growing digital appetite of customers, according to research by Capgemini.
This covers 44 payments markets within various geographical regions and draws on a survey involving 6,300 customers worldwide and interviews and surveys of more than 210 payments executives.
It found that nearly 45% of consumers frequently use mobile wallets to make payments (>20 transactions a year) up from 23% in the 2020 research.
“As digital payments and mobile wallets become more the norm than the exception, payment providers must find ways to meet consumer hopes for speed and ease of use,” says Anirban Bose, CEO at Capgemini’s Financial Services and Group Executive Board Member.
“To embrace the next generation of payments, banks must build a complimentary partnership ecosystem to keep up with the rate of change.”
With spending expected to rebound in 2021, non-cash transactions will rise, with instant payments, e-money, and next-gen payment methods − buy now pay later invisible, biometric, and cryptocurrency − driving the growth.
After eight years of double digit growth, overall global non-cash transaction growth decelerated to 7.8% in 2020 down from 16.5% in 2019, fuelled by hesitation around uncertain market conditions due to the pandemic.
However, global non-cash transactions are poised to grow at 18.6% CAGR (2020-2025 forecast), driven by next-gen payments, and are projected to reach 1.8 trillion in volume by the end of the forecast period.
Globally, APAC is leading the digital payment revolution. By 2025, the region will represent more than half of global non-cash transactions with 28% CAGR from 2020-25. More than half a billion Europeans say they will shop online in 2021, (25.5% of which is cross-border).
In Europe, mobile payments and cross-border e-commerce will ramp up and drive the region beyond 400 billion transactions in 2025 at a CAGR of 13% (2020-2025 forecast).
North America is predicted to stabilise non-cash payments volumes due to plateaued card transaction growth and slow mobile payments adoption.
As digital adoption continues to accelerate, increased volumes and instant processing requirements are stretching legacy payments infrastructure.
About 55% of the surveyed executives said their technology investment priorities were payments infrastructure modernisation (real-time payment system implementation, API integration, ISO 20022 migration, cloud transformation).
Providers need to prioritise digital capabilities to remain competitive, Capgemini says. Covid-19 drove both retail and B2B payments to digitalisation.
The wide gap in meeting customer expectations along with growing digital appetite of retail and B2B customers continues to evolve and redefine customer engagement in the payments industry.
According to Capgemini, attractive loyalty and rewards, frictionless transaction experience, alternate payment options, and sustainable payment products are the key areas in which gaps exist between customer expectations and company executives.
