More consumers worldwide are turning to digital payments, with the volume of non-cash transactions expected to hit 1.65 trillion this year.
Those in Asia-Pacific are leading the charge, accounting for 777.5 billion non-cash transactions, followed by 417.3 billion in Europe and 338.3 billion in North America, according to Capgemini Research Institute’s World Payments Report 2025. The Asia-Pacific region also is expected to clock the second-highest year-on-year growth at 20.4% this year, ahead of Europe’s 15.5% and North America’s 6.4%. Latin America leads the global growth rate at 23.2%.
The study found that Non-cash transactions tipped at 1.41 trillion in 2023 and will climb to 1.65 trillion this year and almost 2.84 trillion by 2028.
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The Capgemini research is based on insights from its global corporate survey and interviews with banking and payments executives conducted in 2024. The research spans 15 markets including Singapore, Australia, Germany, Italy, Sweden, and the UK. The global corporate survey polled 600 corporate treasurers from insurance, retail, and automotive, and the report also draws insights from interviews with more than 200 senior payment executives from financial organizations, including central banks, payment operators, and industry associations.
The study projects that instant payments will account for 22% of all non-cash transactions by 2028, up from 16% in 2023. It added that Asia-Pacific is driving the growth of instant payments, with the segment already accounting for 26% of the region’s payment volumes in 2023, just behind 28% in Latin America.
In particular, Account-to-account instant payment transfers are emerging as a faster and cost-effective way to pay, bypassing expensive card networks, Capgemini said.
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“The rise in their popularity may threaten to challenge the dominance of traditional payment cards, with estimates suggesting they could offset 15% to 25% of future card transaction volume growth,” the study noted. It added that with interchange fees and interest charges a key profit source, financial institutions could deem this a significant risk, with the potential to cost industry incumbents billions in lost revenue.
With instant payments surging, banks are struggling to keep pace with the necessary infrastructure. Capgemini pointed to a “concerning technological maturity gap” between markets in its readiness to support instant payments. About 67% of banks are categorized as “medium preparedness” for business and technology.
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This is particularly challenging for banks in Europe, as the January 2025 deadline looms with regard to the Instant Payment Regulation. The mandate requires all banks and payment services providers in the region to have the capabilities to offer instant payments, with full receive and send functionalities in place by October 2025.
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Citing Capgemini Financial Services’ assessment matrix, the consulting firm estimates that just 13% of European banks can claim to have a strong technology foundation to support instant payments. This figure is behind their peers in Asia – which leads the pack at 30%, followed by the Americas at 26%.
Just 5% of banks are deemed to have obtained high business and technology scores to secure their foothold as instant payment leaders.
However, almost all payment executives expressed concerns about fraud in instant payments. Such apprehension likely resulted in banks choosing to receive, but not send, instant payments, due to a lack of robust defenses, noted the Capgemini report. It highlighted that UK regulators had linked authorized push payment scams to losses totaling almost $505 million in 2022, with instant payments used in these cases.
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Financial institutions also find it challenging to fully embrace open finance due to issues with non-standardized APIs (application programming interfaces), limited control over data use, and a lack of incentives to share data with third parties.
The report noted that just 17% of banks are at an advanced stage – where they are piloting or launching open finance products, while 39% are in the planning phase, conducting impact assessments. Another 23% expressed hesitance as they await regulatory clarity.
“Open finance is evolving from open banking using technology and data sharing to create a more transparent and interconnected financial ecosystem,” Capgemini said. “While its potential [is] immense, widespread adoption is uneven across the globe.”
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Source: Robotics - zdnet.com
