Major Changes in Payment Solutions
The Capgemini Research Institute has recently released a thought-provoking report that highlights how account-to-account (A2A) payments and instant payment solutions are poised to transform the way both consumers and businesses conduct transactions. Celebrating its 20th anniversary, the report predicts that by 2028, instant payments will account for a remarkable 22% of all non-cash transaction volumes.
Advancements in Payment Technologies
Since the first World Payments Report was published in 2004, the payments industry has undergone significant changes. The rise of digital technologies, including mobile wallets and peer-to-peer payment systems, has greatly enhanced consumer experiences. These innovations have been bolstered by regulatory efforts aimed at fostering innovation and safeguarding consumers. Consequently, payment ecosystems have become more interconnected, reliable, and efficient.
Surge in Non-Cash Transactions
This year, non-cash transaction volumes reached an impressive 1,411 billion and are anticipated to climb to approximately 1,650 billion in the coming months. As consumers increasingly favor seamless payment methods, this trend is expected to persist, with non-cash transactions projected to hit 2,838 billion by 2028.
Asia-Pacific Takes the Lead
The Asia-Pacific region is emerging as a leader in adopting non-cash transactions, showing an impressive 20% year-over-year growth in 2024. In contrast, Europe is experiencing a 16% increase, while North America is lagging behind with only a 6% growth. A significant 77% of industry leaders attribute this shift to the rapid expansion of e-commerce.
Challenges Facing Traditional Card Systems
A2A instant payment methods present a quicker and more cost-effective alternative to traditional card networks, which could threaten their longstanding dominance. The report indicates that A2A solutions might replace 15-25% of the anticipated growth in card transactions. This shift has considerable implications for financial institutions that heavily depend on interchange fees and interest as key revenue sources.
Innovative Solutions Driving Adoption
New initiatives, such as the European Payments Initiative's Wero wallet, are expected to further accelerate the adoption of A2A payments, with predictions of a 37% reduction in card transactions across Europe by 2027.
Expert Perspectives on Payment Trends
Jeroen Hölscher, Global Head of Payment Services at Capgemini, notes that the rise in non-cash transactions marks a critical moment for banks and payment providers. He stresses the importance of collaboration between the private and public sectors to navigate this transition effectively. The success of innovations like Pix in Brazil and UPI in India highlights the need to meet consumer demands for immediate payment services.
Preparedness of Financial Institutions
While it is clear that banks must adapt to the trend of instant payments, many payment executives point to concerns about fraud as a significant obstacle. Currently, only a quarter of banks are equipped to accept instant payments, and just over half can both send and receive them. The report reveals a notable gap in readiness, with only 5% of institutions demonstrating a strong capability to embrace instant payments.
Challenges in Corporate Treasury
Executives in industries such as insurance, retail, and automotive often encounter inefficiencies due to outdated accounts payable and receivable systems. Alarmingly, 80% still rely on manual processes, which can tie up about 7% of corporate revenue. By adopting instant payments and enhanced financial solutions, these organizations can achieve real-time cash visibility and streamline their financial operations.
The Future of Open Finance
Europe's 2018 Payment Services Directive has played a crucial role in advancing the open finance movement. This shift not only empowers consumers but also promotes the adoption of instant payments. However, the growth of open finance is hindered by competing regulatory frameworks and market strategies. Countries like Australia and India have made significant strides in facilitating easier data sharing for both businesses and individuals.
Barriers to Adoption
Despite the potential benefits of open finance, many banks face challenges due to non-standardized APIs and a lack of incentives to share data. Statistics show that only 17% of banks have reached an advanced stage in launching open finance products, while 39% are still in the planning phase.
Report Methodology
The insights presented in the World Payments Report 2025 are based on a combination of corporate surveys and interviews with banking and payment executives across 15 global markets. The corporate survey involved 600 treasurers from various industries, examining their expectations and satisfaction levels with payment services.
About Capgemini
Capgemini is a global leader in business and technology transformation, assisting organizations in their journey towards sustainability and digital innovation. With a workforce of 340,000 across more than 50 countries, the company leverages over 55 years of experience to provide comprehensive solutions that encompass strategy, design, engineering, and technology. In 2023, Capgemini reported impressive global revenues of €22.5 billion.
About the Capgemini Research Institute
Capgemini's Research Institute functions as an internal think tank dedicated to exploring digital transformation across industries, publishing critical insights that influence financial services through innovation and emerging trends.
Frequently Asked Questions
What is the main focus of the World Payments Report 2025?
The report analyzes the impact of account-to-account and instant payment solutions on the financial industry, predicting significant changes in transaction volumes.
How are instant payments expected to change transaction behavior?
Instant payments are projected to increase in popularity, potentially becoming a preferred method of payment due to their efficiency and convenience.
Why are financial institutions hesitant about instant payments?
Concerns over fraud and inadequate defenses are major barriers preventing banks from fully adopting instant payment solutions.
What role is Asia-Pacific playing in the payment revolution?
Asia-Pacific is leading in the growth of non-cash transactions, with significant increases surpassing other regions.
What is open finance, and why is it important?
Open finance expands on open banking principles to provide consumers and businesses with greater access to financial information, facilitating better services and data sharing.
