What the growth in cashless payments means for banking

Blog | 22 May 2015


The total number ofcashless payments has overtaken that of notes and coins in the UK for the first time, according to the Payments Council. The increasing sophistication and ubiquity of smart phones, along with heightened consumer expectations, is driving more consumers towards cashless payments. In addition, retail and wholesale payments are maturing into highly automated and interactive eco-systems which will heighten the use of traditional electronic mass e-payments in the retail sector, ultimately displacing cash and cheque transactions.

It’s not just happening in the UK; numerous economies are moving away from cash or cheque-based transactions in favour of cards, as well as web-based solutions and increasingly, smartphone or tablet-based mobile solutions. So-called advanced economies are shifting to debit card solutions, while developing markets are leapfrogging to mobile payments, electronic currencies and other digital modes of commercial interaction and settlement.

Geographically, there is a clearly discernible growth trend in non-cash payments, driven primarily by emerging markets (even when accounting for the reality that growth is determined from a smaller baseline or starting point) where the demand for such solutions is strong, and the absence of legacy technology and infrastructure both enables, and requires, adoption of these new payment options. For example, India's e-commerce business jumped by more than 80% in 2013 and the momentum is likely to continue for at least the next ten years.

So what does this growth in cashless payments mean for banking? The opportunities offered to banks are extensive, with the value of global non-cash transactions expected to rise from approximately US$377trn in 2012 to US$712trn by 2022, according to The Boston Consulting Group. Such huge levels of growth represent significant opportunities for organisations operating across the payments spectrum, such as banks, technology companies and service providers that are entering the payments space.

Banks must ensure their technology investments are not only geared to meet the growing needs of today, but are fit to adapt to the future. In order to not just navigate, but rather to thrive in this environment, flexibility is of utmost importance. This is the thinking behind the continued investment and commitment to the rollout of our new global payments infrastructure. The infrastructure is capable of processing payments in 120 currencies today and has the flexibility to expand in the future to meet the growth of cashless payments in the UK and beyond.

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