Capgemini’s annual 2014 World Payments Report showed that in 2013:

• non-cash payments volumes are expected to grow 9.4 percent to reach 366 billion transactions in 2013, fueled by strong growth in developing markets and the use of credit (up 9.9 percent) and debit cards (up 13.4 percent)
• the continued acceleration of electronic (e-) and mobile (m-)payments growth and ongoing regulatory pressures, has lead the payments industry to look for new and innovative ways to support customer demands..

Developing markets continue to be pivotal to growth

Overall, more than 50 percent of global non-cash payment growth comes from developing countries despite them only making up one quarter (25.5 percent) of the market size at 93 billion transactions. China remains a relatively underdeveloped market for non-cash transactions but its population and growth rate suggest in certain conditions that it could soon outstrip the US and Eurozone within the next five years. Currently, one in five people in the world that are using mobile banking, lives in China.1

Alongside China, growth rates for Central Europe, Middle East & Africa (CEMEA) followed closely at 23.8 percent, emerging Asia at 22.8 percent, and Latin America at 11.0 percent.

Despite high growth in developing markets, the U.S. and the Eurozone are still ahead in the number of non-cash transactions made per inhabitant. Finland, with 448 transactions per person per annum, continues to be a clear leader and recorded growth of 10.6 percent during 2012, outstripping other nations in Europe and North America. The U.S. has the second highest number of non-cash transactions per inhabitant, at 376, but grew by only 2.6 percent for 2012.

E- and m-payments are converging and changing the payments playing field

Increased use of tablets and smartphones is creating a convergence of e- and m- payments, posing new challenges for Payments Services Providers (PSPs). In 2015, m-payments are projected to grow at 60.8 percent while e-payments growth is forecast to decelerate to 15.9 percent annually over the next year, as more people use mobile devices to make payments. This trend is adding to the pressure on PSPs to modernize their payments processing infrastructures to support the wide-range of customer-facing innovations.

The report also cites medium and longer term transformation priorities as having a single integrated payments platform (with a common base for both retail and corporate payments), applying the concept of payments hubs to all areas of payments, and addressing cards/payments convergence as essential support for customer-facing innovations.

The industry is struggling to meet consumer demand

The growth of the industry coupled with the fast pace of new regulation requires flexibility from PSPs to adapt.  More than 50 percent of new Key Regulatory and Industry Initiatives (KRIIs) are focusing on innovation and some of which also play a significant role to reduce risk, improve transparency and competition and facilitate standardization. As these new KRIIs are created, there is a tendency for them to cascade across the globe spreading regulatory initiatives across regions. Initiatives such as real-time payments, pressure on card interchange fees and improved payments governance are examples of cascading regulation.

The report also highlights that many new KRIIs augment the scope of existing initiatives, leading to a complementary reinforcement effect which occurs when new regulation appears across regions correlating to existing regulation and improves the industry's propositions as a whole. Recognizing these trends will be critical for operational efficiency for PSPs operating across multiple territories.

(The report is available for download at www.worldpaymentsreport.com.)