The volume of non-cash transactions is set to hit 1.3 trillion this year and then rise by 15% a year to reach 2.3 trillion by 2027 as consumers and businesses adopt new digital payment schemes, according to Capgemini.
The consultancy said new digital payment methods will make up approximately 30% of total volume, with traditional payments dropping to around 70% of overall non-cash transactions.
The findings were revealed in Capgemini Research Institute’s 2023 World Payments Report, which also said payments will grow by 19.8% across the Asia Pacific, 10.7% in Europe, and 6.5% in North America by 2027.
The report identified that a growing digital payment infrastructure, changes in regulations and the expansion of open banking are driving an increase in new payment methods – such as instant payments, e-money, digital wallets, account-to-account and QR code payments.
It surveyed 355 treasury professionals of companies with a turnover of at least $1bn on factors driving payments disruption and bank relations, along with expectations from banks, satisfaction levels, non-banking services currently used, emerging payment services such as real-time payments, and distributed ledger technology.
Participants drawn from across Europe, the America, Asia-Pacific and Middle East regions, were also asked about the current challenges they face in cash management services (CMS) and their expectations from partner banks on value-added services in cash management.
The current model of tackling cash management services needs an overhaul
Many of the treasury professionals surveyed express dissatisfaction with current cash management services. More than 70% said they face issues in dispute negligence, poor credit risk assessment, and delayed or duplicate payment processing. Two in three (63%) cited legacy infrastructure barriers as the biggest hinderance to providing efficient CMS.
The report reveals more than half of corporate treasurers believe the rising globalisation of trade and ongoing supply chain disruptions have driven demand for effective and efficient cash management services (CMS). Another third said evolving risks (geopolitics and cybersecurity) made CMS critical, while nearly 30% call out rising inflation causing their growing need for better cash management.
"The current model of tackling cash management services needs an overhaul. Treasury professionals are feeling the pressure from mounting inefficiencies across lengthy cash conversion cycles,” said Jeroen Hölscher, global head of payments services at Capgemini.
“What’s clear from our report is that a robust digital foundation is the path forward to optimise the value chain. By simplifying the inherent complexity of their own operating and IT models, banks and payment firms can boost productivity and performance to manage client treasury needs,” he added.
The report also includes insights from focused interviews and surveys of 130 senior executives of banks, financial service organisations, payment service providers, industry associations, and central banks across the Americas, Europe, and Asia-Pacific and Middle East.
It said 67% of bank executives acknowledged that strategically partnering with corporate clients reduces the threat of disintermediation by fintechs and paytechs.
To nurture strategic cash management relationships with corporate clients, the report recommends banks and payment firms “simplify the back office to enable innovation and agility, perform with platforms to boost cash management efficiency and engage with corporate clients as strategic partners, not service providers”.
Lawrie Holmes is a freelance business and finance journalist