World Payments Report: highlights & key points
In mid-November, Capgemini released its annual World Payments Report, focusing on both the most recent happenings and some key upcoming trends affecting the payments industry. Today, we look at some of the main points addressed in the report, including the notion of Payments 4.X which builds on data and robust infrastructure, and eventually provides consumers with new experiences.
As explained in the introduction of the report – during the pandemic and multiple lockdowns,“the already-dynamic payments ecosystem offered a perfect storm for multidimensional disruption”.
The authors highlight: “well before 2020, consumers and commercial clients were already clamoring for digital experiences similar to what they had come to expect from other service providers. COVID-19 infused urgency into demands for convenient omnichannel payment services”.
Moreover, several PayTechs and industry newcomers responded rapidly with innovative business approaches and client-focused services, which immediately boosted customer experience, notably by favoring disintermediation. This also impacted traditional payment service players and eventually their profits.
The name Capgemini came up with to describe this experience-driven environment, in which payments firms are profitably shaking things up, is “Payments 4.X”.
With a focus on CX, this era is being enabled by data, shared infrastructure, robust platforms and embedded finance.
Anirban Bose (Financial Services Strategic Business Unit CEO & Group Executive Board Member, Capgemini) adds: “High-performing Payments 4.X early adopters will become tomorrow’s embedded finance leaders. Increasingly, as-a-Service models will create a modular value chain, opening up opportunities for disruptors with innovative business models.
“Within a era of continuous modification and mutation, short development cycles and intense competition, success will depend on the strength of each firm’s complementary partnership ecosystem”.
Entering Payments 4.X – the new, experience-driven era
- A pandemic-accelerated transformation: increasing consumer desire for convenient, lifestyle-embedded payments, on the one hand, and the retailers’ demand for instant confirmation, smooth reconciliation and seamless cross-border transactions, on the other.
- Focusing on data, shared infrastructure, robust platform capacities and embedded finance to deliver superior customer experience – future-focused providers are scaling capabilities in an agile way to enable experience through payments.
- The leaders of tomorrow will build on earned customer trust, domain competence and expertise, while prioritizing the tech needed for an embedded future.
New customer habits
- An unprecedented push for contactless payment options, faster transaction settlements, foolproof security and better CX.
- The pandemic was a tipping point for the B2B segment, now on track to record nearly 200 billion transactions by 2025.
- Instant payments and e-money are emerging as preferred methods and will account for more than 25% of global non-cash transactions by 2025 – up from 14.5% in 2020.
- Next-gen methods – BNPL, invisible, biometric and crypto – will drive digital payments growth
Regulation helps a collaborative ecosystem thrive as firms industrialize innovation efforts
- A balanced approach to the categories of key regulatory and industry initiatives (KRIIs) to promote and facilitate a payments-friendly environment.
- Financial firms are collaborating with Fintechs to share compliance burdens, launch pan-regional initiatives, etc.
- By ensuring a level playing field through anti-monopoly measures and transparent data sharing, policymakers signal a future that’s friendly to Open Finance.