Debit cards steal marketshare from credit cards, mobile payments on the move

There's huge potential for further growth in mobile payments over the next few years, with only 2.1 percent of mobile users currently making m-payments, in a global payments market where debit cards continue to take marketshare away from credit cards.

Research on the worldwide payments market just released by Capgemini, RBS, and Efma, reveals that the use of electronic and mobile payments continues to show exponential growth, and confirms the resilience of payment volumes, with global non-cash payments volumes growing by 7.1 per cent in 2010, reaching 283 billion, against early 2011 indications showing an additional 8.2% growth.

The World Payments Report 2012 from Capgemini, RBS and Efma also highlights two other major themes in the payments market – the relationship between regulation and innovation, with some regulation challenging innovation, and the fact that the BRIC (Brazil, Russia, India, China) concept is no longer valid in payments, with Brazil now the second-highest ranking country by payment volumes after the United States.

There were 20 billion non-cash transactions in Brazil in 2010, compared with 13.1 billion in Russia, India and China combined, according to the report, while in 2010, payment volumes in developing markets grew at a much faster rate – 16.9 percent - boosted by a more than 30 percent increase in both Russia and China.

{loadpositon peter}According to Kevin Brown, Global Head, Transaction Services Product, International Banking, RBS, as more consumers embrace electronic, mobile and debit card payments, the industry innovation will continue to focus heavily on these payment methods.

"There were an estimated 28.3 billion electronic and mobile payment transactions globally in 2011 and in 2010 more than one in three non-cash payments globally was made using a debit card, up 15.2%," Brown says.

"But with only 2.1% of all mobile users making m-payments, the potential for additional growth is still huge, with mobile payments set to reach 17 billion by 2013 and e-payments 31.4 billion by 2013."

Brown points out that debit card transactions continue to take market share from other types of payment methods "because they easily allow people to bypass the use of cash," and he adds, "as more and more consumers move to mobile and other electronic payments, we'll continue to see the exponential growth of innovative payment solutions."

The WPR also reveals how the relationship between regulation and innovation can challenge banks' capacity to undertake customer centric innovation.

According to Jean Lassignardie, Chief Sales and Marketing Officer, Capgemini Global Financial Services, partly as a result of the Eurozone debt crisis, European banks are complying faster than originally expected with the Basel III objectives, but as a result they have less capacity to focus on innovation. 

With the report concluding that regulation can have direct – or indirect – beneficial consequences for payments innovation, but not for all cases, Jean Lassignardie, Chief Sales and Marketing Officer, Capgemini Global Financial Services, says that "regulation must not be created in regional isolation, its central goal needs to drive innovation forward, and deliver customer benefits that push industry boundaries."

Asked what is driving innovation, more than two-thirds of respondents to the survey cited customer retention and acquisition as the two most critical areas for innovation, while in customer service the report highlights the fact that banks face tougher challenges than their non-bank counterparts, which in some cases have been able to focus on being customer-centric, without the same regulatory pressures.

Globally, the WPR reveals that the volume of non-cash payments remains concentrated in developed markets, with North America, Europe and "mature" Asia-Pacific together accounting for 79.5 percent.

Efma Secretary General, Patrick Desmarès, says, however, that the BRIC block is diverging, with Russia and China boosting payment volume increases of more than 30 percent, while Brazil has become the second-largest payment country in the world, after the US.

According to the report India's payment volume grew at 10 percent and has great potential for future growth, but is still the BRIC "payment laggard," with Desmarès commenting: "The BRIC acronym no longer works in payments. Given significant differences in the stages of development within each country, the four countries should be viewed very differently. This is particularly important for Brazil, where volumes are now larger than any individual European country."