Start of menu
Search United Kingdom website
Close Menu
Consumers and businesses pursue a global shift towards cashless payment services and away from cash and checks.

The Global Shift Towards Cashless Payment ServicesARTICLE

By Mike Faden

The worldwide proliferation of technologies such as smartphones and internet access is changing the behaviour of consumers and businesses alike, helping to accelerate the global shift away from cash and cheques toward cashless payments. Understanding the nature and pace of this global shift is important for most businesses.

What Drives Growth for Cashless Payment Services Internationally?

Cashless global payments continue to rise, propelled largely by growth in Asia (principally by China) and Latin America (largely due to Brazil), according to a McKinsey report on global payment trends.1 A confluence of factors is helping to drive cashless payment services growth. First is expanding internet access, which continues to grow rapidly due to adoption of mobile devices, especially in developing markets. The spread of internet access propels the growth of e-commerce, which in turn drives cashless payment services because consumers need paperless payment methods to participate in online transactions with retailers and remote transactions with other individuals.2 Further, the instant-payment technologies that have emerged to support online transactions, including non-bank peer-to-peer mobile payment apps, digital wallets and virtual currencies, spur further increases in cashless payments by providing payment methods that are widely available even in countries where many consumers lack bank accounts.3

These trends are transforming consumer expectations and driving changes to payments infrastructure and B2B commerce. People increasingly expect to make and receive payments online, quickly and conveniently, at work as well as in their personal lives.

Businesses Plan to Expand Cashless Payment Services

Most businesses planned to increase their electronic B2B payments in 2016, according to a 2016 Capgemini report on the global payments landscape.4. That’s partly because the number of suppliers that accept e-payments continues to increase. But there is also potential to reduce cost. In a research survey and analysis by Ardent Partners, best-in-class accounts payables groups (defined as the 20 percent of respondents with the lowest cost per transaction) enlisted more suppliers to accept electronic payments and processed 63 percent more payments in a touchless fashion, thus achieving cost-per-payment more than 90 percent lower than all other responding organisations.5

E-payment methods on the increase include Faster Payment Service and CHAPS in the U.K.; the Single Euro Payments Area (SEPA) in the Eurozone; and Direct Entry in Australia.6,7,8 Notably, also increasing rapidly are payments integrated into collaborative B2B trading networks, which are experiencing growing use by companies in many countries around the world.9

Faster Settlement Propels Cashless Payment Service Growth Internationally

Facilitating these changes are the growing availability of services that enable faster, easier B2B payments. Within the U.K., for example, same-day Faster Payments have been approved with 24/7 processing.10 Responding to consumer adoption of immediate-payment technologies from non-traditional suppliers such as PayPal, financial institutions in several countries are developing or have already implemented faster payment systems; and the Australian Payments Clearing Association is on track to reveal their New Payments Platform in the second half of 2017.11,12

Changes in International Payment Services

International payment services are changing too, for two main reasons. One is that cross-border commerce is expected to continue expanding rapidly, driven largely by emerging Asian and East European economies.13 The other is that, traditionally, international B2B payments have been cumbersome, time-consuming and expensive, with exposure to risks such as exchange rate fluctuations and a reliance on securing trade finance such as letters of credit. Cashless payments services can simplify and speed international transactions, and are offered by a variety of online services.

The Takeaway

Step by step, B2B payment services technologies are starting to provide the greater speed, ease of use and 24/7 availability that consumers have already come to expect.

The Author

Frances Coppola

With 17 years’ experience in the financial industry, Frances is a highly regarded writer and speaker on banking, finance and economics. She writes regularly for the Financial Times, Forbes and a range of financial industry publications. Her writing has featured in The Economist, the New York Times and the Wall Street Journal. She is a frequent commentator on TV, radio and online news media including the BBC and RT TV.

Sources

1. "SWIFT introduces mandatory customer security requirements and an associated assurance framework", SWIFT; https://www.swift.com/insights/press-releases/swift-introduces-mandatory-customer-security-requirements-and-an-associated-assurance-framework
2. "How cyber criminals targeted almost $1bn in Bangladesh Bank heist", Financial Times; http://www.ft.com/cms/s/0/39ec1e84-ec45-11e5-bb79-2303682345c8.html#axzz4AAkl9pYO
3. "Bangladesh Bank hackers compromised SWIFT software, warning issued", Reuters; http://www.reuters.com/article/us-usa-nyfed-bangladesh-malware-exclusiv-idUSKCN0XM0DR
4. "SWIFT rejects Bangladeshi claims in cyber heist, police stand firm", Reuters; http://www.reuters.com/article/us-usa-fed-bangladesh-swift-exclusive-idUSKCN0Y001H
5. "Statement on Recent Allegations", SWIFT; https://www.swift.com/insights/press-releases/swift-statement
6. "Joint statement: Federal Reserve Bank of New York, Bangladesh Bank and SWIFT", SWIFT; https://www.swift.com/insights/press-releases/joint-statement_federal-reserve-bank-of-new-york_bangladesh-bank-and-swift
7. "SWIFT customer communication: Customer security issues", SWIFT; https://www.swift.com/insights/press-releases/swift-customer-communication_customer-security-issues
8. "Vietnam bank says interrupted cyber heist using SWIFT messaging", Reuters; http://www.reuters.com/article/us-vietnam-cybercrime-idUSKCN0Y60EN
9. "Special Report: Cyber thieves exploit banks' faith in SWIFT transfer network", Reuters; http://www.reuters.com/article/us-cyber-heist-swift-specialreport-idUSKCN0YB0DD
10. "Swift Hack Probe Expands to Up to a Dozen Banks Beyond Bangladesh", Bloomberg; http://www.bloomberg.com/news/articles/2016-05-26/swift-hack-probe-expands-to-up-to-dozen-banks-beyond-bangladesh
11. "SWIFT attackers’ malware linked to more financial attacks", Symantec Connect Community; http://www.symantec.com/connect/blogs/swift-attackers-malware-linked-more-financial-attacks
12. "The Interview: A guide to the cyber attack on Hollywood", BBC News; http://www.bbc.co.uk/news/entertainment-arts-30512032
13. "Swift network bank thefts 'linked' to Sony Pictures hack", The Guardian; https://www.theguardian.com/technology/2016/may/27/swift-network-bank-theft-sony-pictures-hack-lazarus-symantec
14. "Customer Security Programme (CSP)", SWIFT; https://www.swift.com/customer-security-programme
15. "Gottfried Leibbrandt on cyber security and innovation", SWIFT; https://www.swift.com/insights/press-releases/gottfried-leibbrandt-on-cyber-security-and-innovation
16. "Heist finance", The Economist; http://www.economist.com/news/finance-and-economics/21699458-recent-hacks-highlight-vulnerability-cross-border-payments-system-heist

Make International Payments

Back to top