Consulting firm PwC has released the Payments 2025 & Beyond report. The analysts predict that banks and payment companies will be able to grow their revenues from the expected increase of the number of cashless payments.

The financial-services industry is in the midst of a significant transformation, accelerated by the COVID-19 pandemic. Even before COVID-19, these ways of paying for goods and services were evidence of a steady shift to digital payments - a shift that might ultimately lead to a cashless global society. Global cashless payment volumes are set to increase by more than 80% from 2020 to 2025, from about 1tn transactions to almost 1.9tn, and to almost triple by 2030, growing by 61% percent more up to 3tn transaction.

Frank Media reports that Asia-Pacific will grow fastest, with cashless transaction volume increasing by 109% from 2020 to 2025 and then by 76% from 2025 to 2030, followed by Africa (78%, 64%) and Europe (64%, 39%). Latin America comes next (52%, 48%), and the US and Canada will have the least rapid growth (43%, 35%).

That reshaping involves two parallel trends, the report concludes: an evolution of the front- and back-end parts of the payment system (instant payments; bill payments and request to pay; and plastic cards and digital wallets) and a revolution involving huge structural changes to the payment mix and ecosystem (emergence of so-called ‘buy now, pay later’ offerings; cryptocurrencies; digital currencies of central banks).



The market transformation will lead to increased revenue for banks and payment companies, PwC notes. The bank’s revenue from payments made USD 325bn in 2020, and the PwC experts predict the revenue can grow up to USD 447bn by 2025 and up to USD 561bn by 2030.

Payments generate roughly 90% of banks’ useful customer data—information about who is buying what, how much and when. This is creating new revenue streams for payments businesses that can monetise that data, yet it also exposes them to risks related to data privacy. The PwC survey backs this: data privacy and cybersecurity were, as one category, the top concern (48%) in terms of the impact of regulatory changes over the next five years.

Macro trends up to 2025. The analytics have described macro trends affecting the future of payments up to 2025:

Inclusion. In 2014, the World Bank set a goal under its Universal Financial Access programme that by 2020, adults who were not part of the formal financial system would be able to have access to a transaction account to store money and send and receive payments. That goal is still some way from being achieved, but the number of initiatives is growing. 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, largely via uptake in emerging markets such as Indonesia, Pakistan and Mexico, PwC writes in the report.

Digital currencies. CBDCs - digital tokens or electronic records that represent the virtual form of a nation’s currency - along with private-sector cryptocurrencies are predicted to have the biggest disruptive impact. Financial services organizations in Europe, the Middle East and Africa with more than US$5bn in revenues cited “market uncertainty and potential disruption,” such as the introduction of CBDCs, within their top three concerns. According to the recent Bank for International Settlements survey, around 60% of central banks are considering use of digital currencies and 14% are already conducting pilot tests.

Digital wallets. Digital wallets allow consumers to load and store payment methods and access funding sources, such as cards or accounts, on their mobile devices. These wallets will be increasingly important as a payment ‘front end,’ as exemplified by Apple Pay and the relaunched Google Pay, and the rise of super-apps WeChat Pay and Alipay in China. FIS, a financial services technology group, predicts that digital wallets will account for more than half of all e-commerce payments worldwide by 2024. In response, banks and card companies have been partnering with or investing in digital wallet businesses to create payments platforms with scale. In the future, traditional payment systems will cooperate even more actively with fintech companies that develop digital wallets.

Changes in infrastructure. In addition to external changes, structural changes are taking place in the payments market. As technology advances and regulatory requirements for security become more stringent, processing companies have begun to experience pressure on their businesses. Some financial companies are switching to outsourcing. Cloud and platform technologies will become increasingly important: 8 out of 10 surveyed financial services companies plan to outsource this infrastructure by 2025.

Cross-border payments. Frustration with the traditional correspondent banking model, considered both cumbersome and costly in a world of instant, low-cost payments, has led to the intensification of non-bank providers. Singapore and Thailand recently linked their respective national systems PayNow and PromptPay, allowing registered users on either system to instantly send money between the two countries using only a mobile phone number. In the PwC 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.



Cyber fraud. The average value of attempted fraudulent purchases rose by almost 70% in 2020 from the previous year, according to a report by digital fraud prevention company Sift. In the PwC survey, 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. All this points to the need for, and likelihood of, greater collaboration among banks, payment providers and the public sector in preventing fraud and money laundering.

The partner of Fintech section is