Driven by a rapid and permanent customer shift to digital payments, non-cash payments are poised to grow at 18.6% CAGR (2020–2025F) to reach 1.8 trillion in transactions volume by 2025. APAC is expected to be the frontrunner in the race and, by 2025, the region will represent more than half of global non-cash transactions. In Europe, mobile payments and cross-border e-commerce will drive the region beyond 400 billion transactions by 2025. Latin America and the Middle East and Africa (MEA) represent a favorable environment for digital payments growth due to the strong demand for e-commerce, mobile payments, and a flourishing FinTech ecosystem.

Worldwide non-cash transactions volume (billions), and YoY growth (%), 2020–2025F

Note: *Non-cash transactions data for 2020 is sourced from the countries’ central banks. In case of data unavailability, forecasted figures are used.

Sources: Capgemini Financial Services Analysis, 2021; ECB Statistical Data Warehouse, BIS Statistics Explorer, countries’ central bank annual reports. Figures are forecasted for 2021 and beyond.

According to our estimates, global B2B non-cash transactions will increase at a 10.2% CAGR during 2020–25F to reach nearly 200 billion transactions by 2025. In Europe, rapid migration to ISO 20022 will drive the growth. In APAC and Latin America, MSMEs offer enormous potential for digital B2B payments to make inroads. Legacy transaction methods remain prevalent in North America leading to slow adoption of non-cash B2B payments.

Worldwide B2B non-cash transactions volume (billions) by region, 2019–2025F

Source: Capgemini Financial Services Analysis, 2021.

We analyzed the global non-cash payment instrument mix in two ways: (1) traditional payments alone and (2) traditional + new payments. Cards dominate the traditional payments mix, but their share is stagnant. Other conventional payment methods such as direct debits and checks are moving out of the payments game. We predict that by 2025, new payment methods (instant payments + e-money payments) will account for more than 25% of global non-cash transactions, from 14.5% in 2020.

Comparing traditional vs new: global non-cash payments’ instrument mix, 2016–2025F

The pandemic fast-tracked emerging digital payments trends that were gaining ground even before the crisis. The unprecedented need for contactless payment options, faster transaction settlements, top-level payment security, and a better payment experience accelerated the shift to digital payments. And now, we see enthusiastic adoption of a range of next-gen payments options − buy now, pay later (BNPL), invisible, biometric, and cryptocurrency.

Emerging payment methods are becoming popular, yet many customers still seek a more fulfilling payments experience

With the pandemic delivering an unprecedented push, digital payments have changed customer engagement forever. Consumers are jumping on the digital payments bandwagon, primarily due to the e-commerce boom. Banks and payment service providers offer solutions to support SMBs and penetrate underprivileged populations from a business perspective. Additionally, businesses enthusiastically adopt cloud-native, real-time, API-first, and platform-based payment solutions to deliver a top-notch customer experience.

Digital payments are growing thanks to rapid customer adoption and payment firms’ focus on a seamless experience

Unfulfilled customer demand for advanced payment methods indicates that a significant percentage of customers are not happy with their payments experience. There is a wide gap between what customers expect and what banks and payment firms prioritize. Banks and payment firms need to rapidly accelerate their transformation efforts to tackle unmet customer demands and plug the gaps.

Wide gap between customers’ expectations and executives’ priorities