The number of electronic payments has grown last year with 9.4% to a total of 366 billion transactions, fueled by strong growth in developing markets and the use of credit (up 9.9%) and debit cards (up 13.4%), concludes a new research from Capgemini and Royal Bank of Scotland.
In 2009 the electronic payments market accounted for nearly 270 billion transactions. Between 2009 and last year the market has grown strongly, with a CAGR of above 7%, to 366 billion transactions in 2013. North America and Europe together represent approximately 60% of the total market.
The growth in the industry can, however, for a large part be attributed to developing countries – more than 50% of global non-cash payment growth comes from upcoming markets. For example, the Central European, Middle-East and Africa (CEMEA) region grew with a CAGR of >25% between 2008 and 2012, while Latin America booked a CAGR of just under 20%. A large difference with the ‘low’ growth rates of the more ‘mature’ European (CAGR = 4.3%) and North American markets (CAGR = 3.6%). China is, in the view of the researchers, the largest disruptor for the future. “If China’s growth rates remain at the current high level, it could become the largest market for non-cash transactions within just five years,” says William Higgins, Managing Director of Payments at RBS.
Frontrunner in electronic payments is Finland, with 448 transactions per person per annum, followed by the U.S. and The Netherlands. The UK finds itself on the 9th place, in between South Korea and France.
Opportunities and challenges
According to Capgemini and RBS, the fast-growing market is creating large opportunities for the payments industry and enterprises in its ecosystem. Yet at the same time it also brings along massive operational challenges for payment service provider (PSPs), including coping with the large rise in demand for electronic payments, managing the convergence of e- and m-payments and dealing with the intensifying competition and tightening regulatory framework.