The Payments landscape is changing fast and it is clear that within a few years it will look very different from today – but how different will it look by the end of this year? This is a first in the series of 3 blogs I will be publishing on our payment predictions developed with colleagues at the start of this year.
We predict that there will be a strong rise in emerging new ways of paying – from digital currencies such as Bitcoin and Ripple, to contactless and mobile payments such as Apple Pay, to alternative, non-card based payments such as Zapp (UK).
- Digital currencies will continue to be subject to regulatory and industry scrutiny, but will be increasingly accepted during 2015
- Digital currency applications will continue to gain acceptance among payments networks, retailers and on a B2B basis overall
- Traditional banks and larger institutions will begin to take on more pilot programs, focusing on the blockchain technology, and governments will look for partners in blockchain solutions
- There will an increase in awareness and usage of different types of digital currencies
- Bitcoin will develop strongly, but without significant support from the banking sector
- Daily bitcoin transactions will rise from around 85 thousand transactions per day at the end of 2014 to an average of 130 – 170 thousand transactions per day by the end of 2015
- The banking sector will experiment with, and form consensus networks such as Ripple, for real-time payments using digital currency technology, favouring these over proof-of-work networks (such as Bitcoin)
- Ripple will make waves (how many times will this headline appear?)
- Effective regulation will focus on the KYC, AML and sanctions controls on digital currency wallets, rather than on digital currencies specifically
- There will be a steady stream of executives from the traditional FS sector migrating to the nascent digital currency industry.
Contactless and mobile payments
- Contactless card transactions in the UK will rise above 1.25bn txns for the year, and above 3bn txns across Europe, continuing to grow at 200% – 300% per annum
- Cash displacement will become a noticeable trend in Europe, especially in the UK, due to contactless card txn growth
- Contactless card transactions in Europe and the UK will start migrating to mobile NFC payments
- Apple Pay will catalyse strong growth in mobile NFC transactions, accelerating merchant adoption of NFC/contactless POS both in the US and in other countries where it is rolled out
- Apple Pay will also catalyse the growth of in-app payments
- Open operating system mobile/NFC/in-app payments will grow strongly in response to Apple Pay
- No clear winner will emerge in contactless and mobile payments – the industry will start shifting to polymorphic payments (multiple payment methods and brands, omni -channel acceptance).
Alternative, non-card payments
- New account-to-account payments and alternative payments to card payments will start seeing successful adoption e.g. Zapp (UK)
- Merchants will drive adoption of non-card alternative payments, and actively promote them with consumers as alternatives to card payments (plastic and mobile).
My next blog in the series will cover the predictions on cards, so stay tuned for more information.