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News
World Payments said institutional banks are dealing with more and more
Report 2016 released regulations and security mandates and need to adopt
a spirit of cooperation, open-mindedness and pricing
C apgemini and BNP Paribas published the transparency to deal with increasing competition from
World Payments Report 2016 Sept. 22, 2016. The well-known fintechs like Uber Technologies Inc. and
12th annual comprehensive global payments Airbnb.
study found continued growth in noncash and
electronic payment transactions. Authors James Methe of "The ISO 2002 Standard is old news for Europeans, but
Capgemini and Jan Dirk van Beusekom of BNP Paribas U.S. banks have been rushing to get up to speed on ISO
attribute growth to a number of factors, including eco- standards," van Beusekom said. "Interbank cooperation
nomic progress in key regions and rising costs of cash will enable financial institutions to compete with closed
management. loop systems that facilitate instant fund transfers from one
account to another."
The report substantiates key trends in the World Payments
Report 2015, co-authored by Capgemini and the Royal Bank Despite a series of initiatives designed to eliminate paper
of Scotland, which cited growth in noncash transactions, currency, the authors expect cash to remain "a significant
as well as in the regulatory and fintech sectors. Last payment instrument in the near future, even in markets
year's report estimated an 8.9 percent increase in noncash that offer advanced digital payments." They expect
payments for a total of $389.7 billion in 2014. The noncash immediate payment services to accelerate the migration to
transaction growth forecast for 2015 was adjusted to 10.1 digital payment methods, particularly in entertainment,
percent and $426.3 billion in the current report. dining and peer-to-peer payments.
Noncash, fintech, regtech growth The authors additionally noted that Sweden's central bank,
Sveriges Riksbank, mandated that all banks must offer
According to the report, noncash transactions have been their customers at least one form of free payment service,
highest in emerging Asia (Taiwan, Korea, Singapore, such as cash. This and similar initiatives led the authors to
Indonesia, Malaysia, Philippines, Thailand and Vietnam). conclude that "while there is a drive towards decreasing
The report also stated, "The accelerated rate of growth cash usage, the persistence of cash has prompted some
in global non-cash transactions in 2015 will have been countries to prioritize their efforts on reducing the cost of
driven by a variety of factors, including improved U.S. cash, rather than its elimination."
economic growth, stronger security measures such as
EMV, biometrics, and Host Card Emulation, increased Following are additional key findings cited in the report:
penetration
of smartphones and POS terminals, and moves
by governments in developing markets to encourage • Immediate payments may displace cash and checks
digital payments." in many markets but must overcome challenges to
take market share away from traditional payment
The authors expect the banking industry to face multiple card brands.
challenges from regulators and fintech innovators. They
urged banks to collaborate with fintechs to improve and • Banks have expanded product offerings beyond
enlarge their value proposition and digital transformation, payment processing, some through partnerships
which is the focal point of this year's report. with fintech firms, in an effort to compete in the
digital arena.
James Methe, Principal of Payments and Transaction
Banking, Financial Services at Capgemini, said rapidly • Banks face numerous challenges related to the
changing regulatory environments have prompted ever-changing regulatory environment. Fintechs
numerous corporations to evaluate how much of their and regtech firms can help financial institutions
budget is spent on regulatory items. "Corporations are achieve a holistic compliance vision.
updating the capacity and capabilities of their existing
infrastructures," he said. "Implementing multiple • Developing markets experienced the highest non-
compliances can be costly and time-consuming, and many cash payment growth rates, but mature markets
have begun outsourcing to regtech [regulatory compliance still hold the largest volumes of noncash payment
and reporting technology] providers." transactions.
Greater cooperation, faster payments • The Asia-Pacific region held the highest growth in
noncash payments and noncash transaction vol-
Jan Dirk van Beusekom, Executive Director of Advisory umes.
& Strategic Marketing Cash Management at BNP Paribas,
• Latin America is the only region where payment
card use is not expected to grow.
For a full copy of the report, visit www.worldpaymentsreport.
com/.
