Consulting firm Capgemini released its World Payments Report late last week, drawing on surveys and commentary from banking executives, corporate treasurers and payments industry experts.
Unsurprisingly, it found non-cash transactions are expected to continue their rapid upward trajectory as consumers and businesses adopt digital payment methods.
"Our estimates suggest that from 2022 to 2027, non-cash transaction volume growth will continue accelerating at a 15 per cent [compound annual growth rate] due to expanding digital payments infrastructure and a proliferation of new payment instruments," the report says.
Capgemini further predicts that, by 2027 new payment methods will make up around 28 per cent of overall non-cash transaction volumes, up from 17 per cent in 2022. A big part of this is due to the development of real-time systems across most of the 17 financial services markets covered by the report: Australia, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, the Kingdom of Saudi Arabia, the Netherlands, Singapore, Spain, Sweden, Switzerland, the UAE, the UK, and the US.
The payments report goes further, suggesting that cross-border payment are already being tested, with the standardisation of systems in the European region simplifying the process.
"A key trend in payments since 2020 has been the bilateral and multilateral integration of real-time and instant payment systems between different jurisdictions."
In the section on the Asia-pacific region, the report notes that "during the last decade, government-backed (or led) development of instant and real-time payment infrastructure across critical jurisdictions (including India, China, Singapore, Australia, and Thailand) has been driving adoption of digital payments."
APAC is now on track to comprise more than 50 per cent of global non-cash payment volumes and will likely register an accelerated 19.8 per cent compound annual growth rate for 2022–2027, according to Capgemini.
To further improve domestic and cross-border digital payments’ convenience, efficiency, cost, and acceptance, APAC markets are also building bilateral and multilateral payment infrastructures.
These promise to open some systems to greater efficiencies in international payments.
"However, cross-linking is complicated because of foreign exchange conversion, compliance checks, heterogeneous messaging, and varying technical standards," the report says.
This is being simplified through a network prototype, Nexus Gateway, built by the Bank for International Settlements. This aims to standardise the multilateral linking of instant payment systems. In 2021, this system was tested when Singapore's PayNow real-time payment infrastructure was connected with Malaysia’s DuitNow.
In addition, BIS aims to connect instant payment systems in five Asian markets – Indonesia, Malaysia, Philippines, Singapore, and Thailand – during a 2023 testing phase.
"Singapore and India (UPI) also aim to join real- time payment infrastructures," Capgemini’s report says.
Australia, for its part, seems to be sitting on the sidelines. A spokesperson for Australian Payments Plus (AP+) told Banking Day: "We are not currently doing any trials of links with other national payment systems. Our focus is on enabling inbound cross-border payments. We see this as a pre-requisite to any further activity in this space."