New Digital Payment Methods to Account for 30% of Non-Cash Transactions by 2027

A recent study conducted by Capgemini’s Research Institute, the World Payments Report 2023, reveals a significant shift in the landscape of non-cash transactions. According to the report, new digital payment methods are set to represent approximately 30% of the total volume of non-cash transactions by 2027, while traditional methods will maintain a substantial share of 70%. This shift signifies a paradigm change in the way businesses and consumers conduct financial transactions.

The study forecasts a rapid acceleration in non-cash transactions, primarily driven by the widespread adoption of new digital payment methods. It is estimated that the number of non-cash transactions, excluding physical currency, will reach around 1.3 thousand million (1.3 billion) by the end of this year. By 2027, this number is expected to skyrocket to 2.3 thousand million (2.3 billion) transactions, marking a growth of 19.8% in Asia and the Pacific, 10% in Europe, and 6.5% in North America.

This surge in digital payment transactions is attributed to the expansion of digital payment infrastructures, regulatory changes, and the advent of open banking, which have collectively catalyzed a swift transformation in how goods and services are paid for.

Among the emerging digital payment methods gaining ground are instant payments, real-time transactions, digital currencies, digital wallets, account-to-account transfers, and QR code payments. These innovative approaches are increasingly replacing traditional methods such as checks, direct debits, credit cards, and wire transfers.

Corporate Dissatisfaction Spurs Demand for Efficient Cash Management Services

The World Payments Report 2023 also sheds light on the challenges faced by businesses, especially multinational corporations, in managing their finances. More than half of the surveyed financial managers believe that the growing globalization of trade and continuous disruptions in supply chains have fueled the need for more efficient cash management services (CMS). Approximately one-third of respondents consider geopolitical risks and cybersecurity threats as critical factors, making CMS a vital service. Additionally, a similar proportion attributes the demand for enhanced CMS to rising inflation rates.

However, the study highlights a major concern – many multinational companies are dissatisfied with existing CMS offerings. On average, these companies interact with 27 or more financial institutions to obtain satisfactory solutions. Alarmingly, over 70% of managers report encountering issues such as negligence in dispute resolutions with banks, inadequate credit risk assessment, and delays or duplications in payment processing.

Revolutionizing CMS through Digital Innovation

Jeroen Hölscher, Global Head of Payments Services at Capgemini, emphasizes the urgent need for reevaluating the current CMS model. He advocates for embracing digital advancements to streamline operational and IT complexities, enabling banks and payment service providers to enhance the productivity and performance of their clients’ CMS.

In conclusion, the World Payments Report 2023 paints a vivid picture of the dynamic shifts occurring in the realm of financial transactions. The projected surge in non-cash transactions, fueled by the rapid adoption of digital payment methods, signifies a monumental transformation in how commerce is conducted globally.

As we hurtle towards a future dominated by digital currencies, instant payments, and innovative transaction modes, the report signals not just a change in technology but a revolution in the very fabric of financial interactions. The statistics, forecasting a 2.3 billion transaction milestone by 2027, underscore the urgency for businesses and financial institutions to adapt to this evolving landscape.

However, amidst this digital revolution, the report also shines a light on the challenges faced by corporations in managing their finances efficiently. The dissatisfaction among multinational companies with current Cash Management Services (CMS) is a clarion call for the financial industry to reevaluate its offerings. The call from Jeroen Hölscher to embrace digital innovation for a streamlined CMS model serves as a roadmap for navigating the complexities and inefficiencies highlighted in the study.

In essence, the World Payments Report 2023 not only captures the present state of financial transactions but serves as a compass guiding the financial ecosystem toward a future where digital innovation is not just an option but a necessity for staying relevant and efficient in a fast-evolving global economy.