Even with the growing popularity of electronic payments, mobile banking and digital wallets cash remains resilient. That is the conclusion of the recent publication of G4S, a cash management company, on cash use across 28 European countries. ‘The volume of cash in circulation has increased 11 percent up to 2015 with cash now making 60 percent of all payment transactions’, according to the report. Is cash here to stay? The answer of that question depends on who is answering it. “In five years the vast majority of the cash will be out of the system”, says the opposing side MasterCard.
Let’s zoom in on the various opinions and beliefs on the future of cash payments. To say something about the future, it is eminent to research the present state; how many transactions are made with cash and is there a trend in cash payments? Read more
The rapidly growing popularity of mobile peer-to-peer (P2P) cash transfers in recent years holds pride of place as one of the most exciting developments in m-payments & commerce. An Economist Intelligence Unit (EIU) survey of major European banks reveals that financial technology is radically alter the relationship between the users and providers of banking services, with 65% of the over 200 banking executives interviewed expecting further growth especially in retail P2P payments.
P2P payment services enable individual users to transfer small amounts of cash in real time – to split the bill for an evening out, for instance, or to pitch in for a collective gift – using “instant payment” mechanisms that make the transferred funds immediately available to the beneficiary, essentially doing away with the tedious and time-consuming procedures associated with bank drafts (which are still preferred for transactions entailing larger sums). Read more
To compete or to cooperate? That is the main question of these challenging times for banks and fintechs, where innovation is constantly and radically reshaping the payments industry. It seems that the market is roughly divided by the two forces, but I think that a change of scope is needed to answer the first question. The real question is: how can banks and fintechs deliver better value for customers?
The needs and requirements of the European, but overall global payments market are rapidly evolving. In the payments industry, the market can be roughly divided in two streams. Read more
Although Apple Pay was already introduced in September 2014, the mass adoption of this mobile payment technology has been lagging. However, Apple continued investing in R&D to expand the technology, expanding its partners network and introducing new services such as payments for parking. Apple is entering this market very gradually, which is a different strategy than their earlier innovative products. Still there are several reasons to assume that this has actually been a successful strategy.
Paying with placing your phone at the terminal and your finger at the button on your iPhone. That is how simple Apple Pay works for consumers. The credit card industry was happy to embrace the new solution as well, because Apple partnered with the banks that issued credit cards. Read more
The move to instant payments is quite an undertaking with high initial investments and big, high-risk projects. It comes with both opportunities and challenges for the industry. “It is therefore important that we make the move, but also maintain the high security, low risk and low fraud,” explains Alessandro Baroni, CMO at Equens. “We must keep earning the trust that we have from the customer.” Baroni explains what the challenges are for the financial industry now that instant payments will become a reality in the near future.
The European banks and the national communities have made significant investments in their payments infrastructure through the creation of SEPA in the last decade. But at the same time, there has been a spur of innovation coming from non-traditional players. The challenge for the banks now lies in keeping the bank account in the centre of payments and building on the harmonized payments landscape created by SEPA. Read more
Instant payments have become a reality now that the European Payments Council has released a proposal for the development of an instant credit transfer scheme. This proposal (set for November 2016) aims to bring real time money transfers in the SEPA zone by November 2017. Instant payments are the next big change in the payments industry, expected to have even more impact than the transition to SEPA. Mark Munne, Banking Consultant at Equens, explains in this blog why banks should embrace this evolution in payments.
Munne: “The use cases of instant payments are very interesting. Splitting a restaurant bill. Paying for the loaded cargo on a ship waiting in the harbour on Sunday. Buying a used car without carrying an envelope full of cash. Or paying your plumber for an emergency repair in the house late at night.” Read more
Cashless payments are rapidly gaining foothold, but cash still remains resilient. According to RBR’s study ‘Global Payment Cards Data and Forecasts to 2020’ cashless payments are increasing at only a slightly faster rate than the number of ATM cash withdrawals. This suggests that cash is still favoured as a means of payment for a significant proportion of the global population. How can this development be seen in the ongoing ‘War on Cash’?
Cashless payments are growing strongly globally as a result of increased bank account holding, continued growth of e-commerce and general migration of cash-based transactions to electronic payment instruments, supported by constantly improving technology. Several industry experts already predicted the end of the era of cash payments, but even in today’s expanding market of digital payment options, cash remains a leading payment form, says Chainstorage. According to a survey of over 1,000 consumers by Cardtronics, cash is still widely used and frequently selected for making all sorts of payments, in spite of people having access to and using a greater variety of payment methods. Read more
They were supposed to disrupt modern banking, but in reality, financial technology companies are more eager to cooperate with banks, rather than to overrun them. The relationship between banks and fintech firms is much closer than just being each other competitors, according to the Wall Street Journal. It proves that the banking sector is open for innovative initiatives, but all of the innovators need the banking infrastructure to succeed, it seems. Or, as the Wall Street Journal put it: ‘the relationship status between bank and fintech firms is complicated’.
Financial technology firms have been seen as agile and innovative competitors to banks. Although banks have a proven track record in overall financial services and that they’re trusted by consumers with managing their money, fintech firms concentrate on a specific task with a specific technology and excel in that. This makes them quite a difficult competitor because traditional banks find it challenging to adapt to changes, especially in this digital age; they just aren’t as fast and flexible as a start-up. Read more
In a short space of time, prepaid cards have changed payment habits and increased the associated services and methods of use for millions of users. In particular, the Prepaid Summit Europe 2015, held in Milan in early November, revealed that Italy is one of the countries with the highest rate of use of and reliance upon this type of payment instrument.
Currently in our country, the real competitor of prepaid services is cash, which still represents 70% of commercial transactions, but which is increasingly coming up against a number of other phenomena, such as e-commerce, mobile commerce and the spread of retail marketing services linked to “derivatives” of the prepaid, which are paving the way for the wider dissemination of digital services.
Now this is a paradox. Digital wallets are generally considered the next big thing in mobile payments. And its adoption does seem to be increasing slowly across many global regions.
Recent research performed by Market Force Information shows that fewer people are actually using digital wallets to make payments or receive money in the US. Currently 12% of internet users who are also banking customers are making use of digital wallets, compared to 7% in 2014. Half of those people (50%) said that they are using digital wallets to pay or receive money, which is down 5 percentage points from 2014.