Emerging Markets drive growth of Non-cash Payments

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Global non-cash payments, which include mobile payments, credit cards, debit cards, and cheques, are seeing robust growth due to the BRIC countries. These emerging economies have significantly contributed to the growth of total non-cash transactions to above 300 billion USD in 2011 which can be seen here.  According to the Economist, Brazil is now the second-largest country behind the US in terms of non-cash payment transactions.

These statistics have been outlined by the World Payments Report 2012 compiled by Capgemini, RBS and the European Financial Management and Marketing Association, which assesses the latest developments in the global payments landscape. The report emphasizes that more consumers are embracing electronic, mobile and debit card payments, with most industry innovation focusing heavily on these channels. It is estimated that electronic and mobile payments could grow annually by 20% and 53% respectively between 2009 and 2013. Beyond growth in the consumer market, the report also highlights the rise of mobile payments in the corporate banking side.

For both China and Russia, the growth of non-cash payments are growing at more than 30% a year. This growth has been driven by increased card penetration resulting from government initiatives. For example, in Russia, the government created a new legal entity to increase payment options for rural customers. Similarly, the Chinese government’s directive on e-payments have been conducive to the growth of card penetration in China. The robust non-cash payments sector in Brazil has also flourished due to Brazilian regulatory directives that have promoted the development of retail payment systems since 2005. Evidently, government regulations have been of key importance in pushing for the shift toward non-cash payments in the BRIC countries.

Despite its potential for future growth, India has been somewhat of a laggard compared to Brazil, Russia and China.

Aside from growth, the report also notes that innovation has had more impact in emerging countries. According to Jean Lassigardnie, the chief sales and marketing officer of Capgemini, due to a lack of existing infrastructure, the speed of acceptance and deployment of alternative payment technology is accelerated. Innovation in European banks, on the other hand, have been somewhat stifled due to the focus on complying to regulations like the Basel III objectives.

 

The 18th Cards & Payments Asia conference to be held on April 24-25, 2013 in Singapore will be focusing on payments in emerging markets in greater depth. If you have some key insights to share and would like to get involved as a speaker, contact alyssa.reinoso@terrapinn.com.

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