Digital Ecosystems: the Answer to the Accelerating Payments Challenge
New technologies, emerging competitors, cybersecurity threats and changing member expectations are transforming the payments marketplace dramatically. As the payments ecosystem evolves, credit unions will need to find new value propositions. Around the world, consumers are expected to make 726 billion transactions using digital payments technologies by 2020 according to the 2017 World Payments Report released by Capgemini and BNP Paribas. Emerging markets will lead this growth with advanced technologies such as the Internet of Things (IoT), contactless bank cards, augmented reality and wearable devices — all fueling the growth of cashless transactions. Fact is, near and far, change isn’t just coming: It’s here. And it isn’t going away anytime soon. Based on analysis of payment trends, the Capgemini/BNP Paribas 2018 World Payments Report says debit cards account for the highest share of noncash payments at 46.7 percent, while credit cards trail behind at 19.5 percent. Noncash transactions between 2014 and 2015 rose 11.2 percent, their highest growth of the past decade. Contactless cards are seen as the “new normal,” especially in Europe. In France, the circulation of Visa contactless cards doubled to 40 million in 2015 from 20.3 million the previous year. The U.K. was the biggest market for contactless payments in Europe, with cards in circulation reaching 106.9 million in 2015. Checks, on the other hand, look to be on the way out, and declined 13.4 percent in 2015. The study did not specify the number of check payments made. The Emergence of New Payments What are the environmental elements driving this change? The World Payments Report highlights the emergence of new payments driven by a number of converging factors:
- The dynamic regulatory landscape including the requirements of PSD2 compliance.
- The proliferation of fintech.
- Changing corporate and member expectations for value-added services.
- An increase in payments-enabling technologies.