Report: Digital payments volumes continue to rise in Australia

Australia sees almost 10% growth, on road to a cashless future

Global digital payments volumes are predicted to increase by an average 10.9 percent through to 2020, reaching nearly 726 billion transactions, according to the World Payments Report 2017 (WPR 2017). Released on the 10th of October 2017, by Capgemini and BNP Paribas, the WPR 2017 estimates that volumes generated by emerging economies will grow by 19.6 percent, or three-times the rate of mature economies. Emerging Asia[1], led by China and India, is projected to grow 30.9 percent in volumes. Worldwide non-cash wholesale transactions by corporates, mid-sized enterprises[2] and public authorities are estimated to record a CAGR[3] of 6.5 percent from 2015 – 2020, or more than 122-billion wholesale transactions.

“World Payments Report 2017 infographic-Click to enlarge”

Global non-cash transaction volumes grew 11.2 percent to reach 433.1 billion during 2014-2015, the highest growth in a decade. Developing markets drove this growth with a 21.6 percent increase. Mature markets increased by 6.8 percent, a nominal rise of over 6 percent in 2014.

“Australia powers ahead of both US and Europe with 9.9 percent growth in non-cash transactions as we increasingly switch from cash to electronic payments. Low value payments in particular have been shifting to electronic payments, with mobile wallets look now to be positioned for substantial growth.

“Card issuing banks and major retailers are all looking closely at how best to compete in the domestic low value, high volume payments game, as transaction values continue to reduce and transaction volumes increase and digital wallets become our preferred method of payment. Recognising these market transitions, BPay now plan to introduce their new faster payment service Osko in 2018, on the back of the Australian New Payments Platform (NPP), likely to compete with branded solutions from major providers,” said Phil Gomm, Banking and Capital Markets Industry Practice Director at Capgemini Australia.

Despite increased adoption of digital payments, cash remains in the mainstream, especially for low-value transactions. This year’s WPR states that mobility, connected homes, entertainment, and media are expected to boost non-cash transactions in the future, as will alternate channels, including contactless, wearables, and augmented reality.

Increased digitisation of corporate B2B payments is affecting regional trends. In Mature APAC[4] markets, small and medium-sized businesses are using digital invoicing, virtual cards, and cloud-based finance and accounting. In Emerging Asia, charge cards are popular among corporates to simplify and secure supply-chain payments.

“From our analysis non-cash transaction volumes hit an all-time high of 9.6 billion transactions in 2015, up from 8.7b transactions in 2014. Australia continues to rank amongst the highest non-cash transaction users per capita globally, making us a litmus test for new and innovative solutions.

“This does not argue well for ATMs where we expect to see ongoing consolidation, despite the recent fee free initiatives designed to encourage take-up, the reality will be an ever decreasing population of these machines. For many of us, cash will become a thing of the past as we migrate from plastic cards to our preferred digital wallets, with incentives provided to encourage our loyalty,” adds Gomm.

World Payments Report 2017 Methodology:
This year’s World Payments Report offers insights on the payments markets in the following regions grouped by geographic, economic, and non-cash payment market maturity criteria: North America: Canada and the United States, Europe, Mature Asia-Pacific, Emerging Asia, Latin America and CEMEA[5]. Primary research for WPR 2017 included an online survey that was distributed to industry participants across banks, FinTechs, non-bank FSIs, and corporates in June 2017. Executive interviews were also conducted. Findings from the survey and interviews have been incorporated into analysis throughout the report.

[1] Emerging Asia includes China, Hong Kong, India, and other Asian markets
[2] Mid-sized enterprises refer to businesses that are not as large as corporates but larger than small businesses.
[3] Compound Annual Growth Rate (CAGR) measures the average rate of an investment’s growth over a variable period of time.
[4] Mature Asia-Pacific includes Australia, Japan, Singapore, and South Korea
[5] CEMEA includes Poland, Russia, Saudi Arabia, South Africa, Turkey, Ukraine, Hungary, Czech Republic, Romania, and other Central European and Middle Eastern markets