Global market size of digital payments industry soares

29 October 2020 5 min. read

The number of non-cash transactions, or digital payments, soared worldwide last year to surpass 700 billion – adding up to nearly 100 digital transactions on average in a year for each person on earth.

Capgemini has released its World Payments Report – a comprehensive breakdown of the payments landscape in 40+ representative markets across the world, spanning the Americas, Middle East, Africa, developing Asia, and “mature” Asia. Data was gathered from the Bank for International Settlements, the European Central Bank, the World Bank and several other international sources.

The results show a very clear movement towards digital payments, continuing an already unfolding trend. By the end of last year, the world had clocked nearly 710 billion digital transactions on the back of market share growth of 14% between 2018 and 2019. According to Capgemini, this marks the largest jump in market share in a decade.

Growth in non-cash transactions across the world

Europe was the epicentre of digital payments up until 2017, followed by North America. In 2018, Asia Pacific (APAC) – already a strong contributor – burst onto the digital payments scene to marginally surpass Europe as the largest non-cash transactions market. By last year, APAC had soared ahead, exceeding the number of transactions in Europe by 30 billion.

Outside of these key markets, Latin America recorded a healthy 50 billion plus digital transactions last year, while the Middle East and Africa were among the fastest growing digital payments markets last year – booking a 18% jump from 2018. That being said, these markets are only just kicking off their cashless journey, with a total transaction volume of around 17 billion.

Even in growth terms, APAC remains dominant. Growth in Europe, for instance, has been far from sluggish. The continent powered through the 200 billion digital payments threshold last year – a jump of more than 12% on 2018. Compare this to APAC, where growth was at nearly 25%.

Going mobile

Explanations for this sheer dominance lie in the alignment of market conditions in APAC with broader trends in the global payments landscape – specifically the dominance of mobile payments. More than 1 billion of all non-cash transactions last year were made via mobile, according to Capgemini. A global population that is increasingly confident with mobile applications is a central factor here. Meanwhile, the vast pool of young, tech savvy consumers in APAC gives the region an edge.

Mobile payments take centre stage in digital transactions

Mobile payments are expected to take over the digital transactions landscape over the next few years. The researchers predict a compound annual growth (CAGR) of more than 11% for mobile payments between 2019 and 2023. No doubt, contactless cards are the go to option for several consumers at the moment. In the pipeline, however, are a sea of digital wallets and QR-code payment innovations, which will likely bring mobile to the fore of the transaction world.

Signs of this are already emerging, as consumers in key markets appreciate digital wallets for their ease, convenience, speed, security, scope for rewards, versatility, tracking and interconnectivity with other apps. As this sub-segment grows, so too will the online transactions market as a whole. Billions are being channeled into FinTech innovation around the world. Startups are looking to eat into the market share of incumbent banking giants, while the latter are investing to maintain their stronghold on the financial sector.

This has been the case for a few years now, and the upshot is that digital payments continue to get easier, quicker and more secure. Tagging along are a number of new, more immediate developments that will expand the digital transactions arena – most notably the rapid transformation of the global consumer profile due to Covid-19.

Signs of growth for digital wallets

Lockdowns, virtual working arrangements and widespread fear of infection have caused most commercial activity to move online – be it a Zoom call for business, or a look at the online grocery catalogue. The foundation for this entire transition is a quick, reliable and secure online payments infrastructure.

A Boston Consulting Group report from July revealed that Covid-19 and all its repercussions present a tremendous opportunity for the FinTech sector. Capgemini’s report notes the devastating effect that Covid-19 has had on the financial sector, but also presents it as an accelerating force for digital payments – highlighting the sheer pervasiveness of the crisis.

“The prevailing Covid-19 environment catalysed a cross-generational shift toward digital channels and digital payment methods. Even baby boomers (aged 56 and over) said they made payments through digital channels a lot more during the lockdown. Emerging as late majority adopters,” explained Elias Ghanem, Global Head of Financial Services Market Intelligence at Capgemini.