According to a recent study by management consultants A.T. Kearney, the number of cashless payment transactions in the 27 countries of the European Union will increase from about 90 billion currently to more than 175 billion by the year 2020, representing an annual growth rate of 8 per cent. Paul Alfing, chair e-Payments Committee Ecommerce Europe: “This study confirms our vision that pan-European e-payment methods are a crucial element in the future growth of the e-commerce market”. The share of non-cash payment transactions will increase dramatically and successful suppliers will have to meet the significant challenges presented by the different payment methods.
The main drivers of this growth come from e-commerce as more and more people shop online; of course this only rarely takes place using cash. A.T. Kearney also expects strong growth of alternative payment models. At the same time, higher margins can normally be maintained than is the case with classic payment methods given the regulatory framework. Alfing: “Regarding alternative payment models, Ecommerce Europe urges parties to move forward with ‘access to the account’ for third party payment providers”.
From a global perspective, about one-third of 280 billion non-cash payments are currently being made in Europe. For individual citizens, this means that the current average of 600 per capita payment transactions annually per head will rise to around 800. The proportion of cash payments will decrease to 60 per cent by 2020 according to the study and the share of non-cash payments will rise accordingly.
This will benefit banks, telecoms operators, traders as well as new entrants to the non-cash payments market-space in Europe. Their income in this segment, according to A.T. Kearney, will rise from around €37 billion in 2010 up to €65 billion to almost double in 2020. However price pressures will remain high despite the regulatory framework. At the same time, innovative online and smartphone payment methods (“e-and m-commerce”) offer new revenue opportunities.