Non-Cash Payments Are Growing
Driven by both economic and behavioral changes, non-cash payments continue to grow quickly both globally and regionally. Underlying an ongoing global shift toward non-cash payments, First Data believes that the relative popularity and growth of different types of payments reflect the nuances of individual markets. Many economies in Asia Pacific still rely mostly on cash payments, with some countries moving away from cash faster than others. For instance, in Indonesia, 99.5 percent of transactions are conducted using cash – and the number of cashless transactions is growing at an annual rate of 23 percent. Conversely, in Malaysia 92.5 percent of transactions are in cash, but electronic transactions are growing at a comparatively modest 9 percent annually.
Like other macro trends in the global economy, the most significant changes in payment behavior are occurring in the developing world, driven by rapid urbanization and a growing middle class. According to the World Payments Report, 40 percent of the major credit card schemes’ payment volumes now originate from emerging markets. Asia Pacific remains the world’s fastest growing non-cash transactions market, enjoying approximately 9.5 percent compound annual growth – with emerging Asian markets growing 20 percent annually. China recently recorded a 32.7 percent annual increase in the number of non-cash transactions. Vietnam’s payment card market has become one of the most rapidly growing markets, increasing at an annual rate of 37 percent between 2008 and 2012. And according to Euromonitor, India’s debit cards are growing at 13 percent annually, with credit cards growing at 7 percent.
Over the next couple of months, we’ll examine the opportunities and challenges of electronic payments in emerging markets.