PwC: Electronic payments at the epicentre of industry transformation

The financial-services industry is in the midst of a significant transformation, accelerated by the COVID-19 pandemic. Given the key role digitisation plays in the financial lives of more and more of the world’s population, electronic payments are at the epicentre of this transformation.

Payments are increasingly becoming cashless, and the industry’s role in fostering inclusion has become a significant priority. As digital money draws a stronger interest, the financial services industry must acknowledge that the entire infrastructure of payments is being reshaped, with new business models emerging.

PwC’s survey reveals how even before the COVID-19 pandemic, cashless payments like sending a text to pay for a bus ticket, or using a QR code to buy groceries are evidence of a steady shift to a digital economy - a shift that might ultimately lead to a global cashless society.  Global cashless payment volumes are predicted to increase by more than 80% from 2020 to 2025, from about 1 trillion transactions to almost 1.9 trillion, and to almost triple by 2030.

PwC findings reveal the key themes that are influencing the payments industry and highlight the importance of how the industry responds to these trends. As a result, leadership teams of financial services businesses need to understand each of these trends in order to properly plan for their future:

1. Inclusion and trust

In developing countries, financial inclusion will continue to be driven by mobile devices and access to affordable, convenient payment mechanisms. By 2025, smartphone penetration will likely reach 80% globally.

2. Digital currencies

CBDCs (Central Bank Digital Currencies) are predicted to have the biggest disruptive impact over the next 20 years.

3. Digital wallets

Looking ahead, 86% of our survey respondents agreed or strongly agreed with the prediction that traditional payment providers will collaborate with fintechs and technology providers as a main source of innovation.

4. Battle of the rails

Senior payment professionals expect important regional developments towards a payment infrastructure in which card and other transactions run on joint account-based payment rails.

5. Cross-border payment

In our survey, 42% of respondents said they felt strongly that there would be an acceleration of cross-border, cross-currency instant payments and B2B payments in the next five years.

6. Financial crime

Security, compliance, and data-privacy risks and related issues were the top concern for banks, fintechs and asset managers in implementing a fully integrated technology strategy.

According to PwC, aside from this shift to a cashless society, we need to also pay attention to a more profound change as not only are consumers saying goodbye to traditional ways of paying for goods and services, but the entire infrastructure of payments is being reshaped.