Non-cash transactions to reach 2.3 trillion by 2027

Non-cash transactions look set to continue their meteoric rise in the coming four years – over which time their volume is are forecast to pass 2 trillion per year. Suppliers may struggle to keep up with consumer demand, however, with many companies finding their budget for digital innovation has been held back by the global economic slowdown.

Even as many experts continue to hype an approaching ‘cashless-society’, physical currency remains a dominant payment method for consumers around the world. At the turn of the year, an Accenture survey of 16,000 customers in 13 countries spanning Asia, Europe, Latin America and North America illustrated this, with average of 66% using cash to pay for things at least five times per month – ahead of 64% who used debit card at the same rate.

However, the rate at which non-cash transactions are being deployed is continuing to grow. Amid the rise of e-commerce, which obviously cannot facilitate cash transactions, and fears around hygiene and public health lingering from the pandemic, a new study from Capgemini suggests non-cash transactions are still growing rapidly – and could almost double by 2027.

In 2017, Capgemini found that around 548 billion transactions every year were cashless – with Europe’s use for card and digital wallets leading the way at 166 billion transactions. In the six years since, however, Capgemini estimates this has ballooned to 1.3 trillion transactions. In particular, this has been buoyed by uptake across APAC, which is now the dominant market for non-cash use, accounting for 637 billion transactions.

If that rate of growth continues, Capgemini anticipates that cashless payment could see its deployment pass another major milestone by the end of 2027. According to Capgemini, there could be an annual 2.3 trillion non-cash transactions by then, with APAC still accounting for the bulk of it – around 1.2 trillion in its own right.

This may be due to an enhanced capacity for the deployment of cashless payment systems across the region. Thanks to a sustained reputation for technological innovation, APAC has been able to roll out cashless payment much more quickly than any other regional economy – while former leader Europe plateaus at around 482 billion transactions.

Outside of APAC, however, non-cash payments look to be hamstrung by a lack of innovation investment. Capgemini found that the companies processing payments – banks and payment service providers – were struggling to support corporate treasuries and commercial enterprises, as they found their revenues were under pressure, stifling their ability to sponsor innovation.

Around 27% found their IT maintenance and modernisation costs had risen, while 36% added risk compliances management had also risen – leaving less for payment processing or payment innovation projects. This threatens to develop into a vicious cycle, with 13% of banks and payment service providers finding their incomes are flat, and 29% finding their fee-based income is under pressure. Being unable to handle demand for non-cash payments, they are less able to afford improving their services for non-cash payments.

Jeroen Hölscher, Capgemini’s global head of payment services, commented, “This presents a foundational struggle for the industry which is trying to manage innovation, competition and back-end optimisation against the background of a highly-regulated environment.”