Now in its sixth year, the
World Payments Report from Capgemini, The Royal Bank of
Scotland, and the European financial marketing association looks at
the payments business as it faces challenges from economic and
competitive conditions, technology advances, increased regulatory
pressure and customer demands.

 

Payments and other transaction
banking services have proved resilient during the economic crisis,
but the rapidly changing external environment will require banks to
decide to what extent payments are core to their business
strategies

The World Payments Report
estimates that global e-payments and m-payments collectively
accounted for approximately 20.3bn transactions valued at some
€832bn ($1.16trn) in 2009.

“Admittedly, there is a significant
lag in global payments data, so it is premature to conclude what
effect the crisis will ultimately have had on payments flows,” the
report said.

But the data showed there has been
no significant impact on emerging-market payments flows in 2009,
and that the mature markets of Europe and the US continued to grow
overall, though the mix of payment instruments may be changing.

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By GlobalData

The size of the US and European
payments markets increased slightly in 2009 in terms of the number
of transactions and the aggregate value of those payments flows.
Interim data from the UK and other developed economies suggest
there is every reason to believe payments were still growing as of
mid-2010.

The report said this resilience in
payments demonstrates why retail payments remain a critical source
of stable revenues for many banks.

Optimising the payments business,
however, is becoming increasingly difficult as regulatory
compliance becomes more onerous.

Bar chart showing the number of worldwide non-cash transactions by region - 2001 vs 2008Nearly all
European Economic Area Member States had transposed the Payment
Services Directive (PSD) into national law by August. However,
certain inconsistencies in interpretation still remain, and these
ambiguities will need to be resolved to help ensure SEPA can
progress as planned.

Moreover, banks are likely to see a
growing challenge from non-bank payment service providers (PSPs),
which have proved willing to innovate on technology and business
models to migrate existing and new customers to their payments
services.

Alternative PSPs have made
significant strides in m-payments and e-payments, even though they
still account for a small percentage of total worldwide transaction
volumes.

Of the estimated global e-payments
and m-payments, almost 8.6% of the volume was conducted via
alternative (non-bank) providers and channels, rather than
traditional banking providers. With card payments representing some
158bn transactions, another sizeable proportion of these were
captured by alternative providers.

Bar chart showing a comparison of non-cash transactions by region and change in payments' mix - 2001 vs 2008

What lies
ahead

Payments trends show the volume of
payments is expanding, but usage patterns continue to evolve.

Moreover, there is still a distinct
disparity in behaviour among different countries and regions around
the globe, and this partly reflects longstanding user preferences
and the growing availability of modern alternatives such as m- and
e-payments.

Industry and some government initiatives are also encouraging
electronic payments but the use of cash is still growing,
representing a significant cost for global economies.