Non-cash transaction volumes will reach 1.3 trillion by 2023 globally
The Capgemini Research Institute’s 2023 World Payments Report, published earlier, reveals that non-cash transaction volumes will reach 1.3 trillion by 2023 globally, whilst according to Statista, the Egyptian market is expected to reach US$16.34bn in 2023. As consumers and businesses adopt new digital payment schemes, the report suggests this growth will accelerate to 2.3 trillion by 2027 globally, growing at a rate of 15% annually. In Egypt, digital payments’ total transaction value is expected to show an annual growth rate (CAGR 2023-2027) of 14.03% resulting in a projected total amount of US$27.63bn by 2027.
The expanding digital payment infrastructure, regulations, and open banking are swiftly changing how customers and businesses pay for goods and services. According to the report, by 2027, new payment methods (instant payments, e-money, digital wallets, account-to-account, and QR code payments) will gain more popularity comparing to traditional non-cash payments (checks, direct debits, cards, and credit transfers). In Egypt, the volume of non-cash transactions increased by 46% in 2023, reaching a value of EGP10 trillion, according to a report by the Central Bank of Egypt (CBE). Since 2019, New payment methods in non-cash transactions have also have experienced significant growth, marked by the increasing, the increasing number of credit cards, POS, and digital wallets.
The most popular non-cash payment method in Egypt in 2023 was card payments, accounting for 46% of all transactions. However, the report also noted that new payment methods such as instant payments, e-money, digital wallets, account-to-account, and QR code payments are gaining popularity among consumers and merchants. According to a survey by PwC Egypt, 62% of consumers and 58% of businesses used digital wallets in 2023, compared to 42% and 36% respectively in 2020. The survey also found that 54% of consumers and 48% of businesses used QR code payments in 2023, compared to 32% and 28% respectively in 2020.
“In an era marked by remarkable digital transformation, Egypt’s payments landscape is evolving at an unprecedented pace,” Eng. Hossam Seifeldin, CEO of Capgemini Egypt, says. “The surge in non-cash transactions and the increasing adoption of new digital payment methods reflect the market’s dynamic evolution. This reflects a substantial shift in how businesses and consumers engage within Egypt’s economy. At Capgemini Egypt, we are committed to driving innovation, fostering financial inclusion, and partnering with our clients to navigate this transformative journey effectively. We believe that by harnessing the power of technology and collaboration, we can contribute to shaping a more connected and digitally empowered future for Egypt.”
Capgemini’s report reveals over half of corporate treasurers believe the rising globalization 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.
As corporations navigate economic headwinds, current CMS offerings largely underwhelm multinational corporates, despite having more than 27 banking relationships on average to meet treasury needs. Over 70% of enterprise executives said they face issues in dispute negligence, poor credit risk assessment, and delayed or duplicate payment processing. However, the solution is clear with around two in three (63%) payment executives citing legacy infrastructure barriers as the biggest hinderance to providing efficient CMS.
“The current model of tackling cash management services needs an overhaul. Corporate executives 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 optimize 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.”
New payment solutions and key industry initiatives are fueling the growth of digital payments among enterprises. Expectations are also changing, with 63% of corporate clients are demanding a retail-like payment experience from their banks in 2023.
The payments sector has been at the forefront of digitization, however, it’s coming at a cost with compliance to local, regional and international regulations (including ISO20022 and SWIFT global payments initiatives) leaving limited room for investments in future innovation. Payment executives cite nearly 80% of traditional payment revenue sources are stressed and service providers must rebalance their focus between retail and commercial payments. Globally, more than 50% of payment executives believe commercial payments offer a better profit potential than retail payments.
End-to-end digital transformation in transaction banking requires top-down commitment, cohesive planning, and a unified purpose for structural reforms. Sixty-seven percent of bank executives acknowledged that strategically partnering with corporate clients reduces the threat of disintermediation by FinTechs and PayTechs; and 57% of payments executives said strategic banking partners enjoy increased cross- and up-selling opportunities because of these relationships. To nurture strategic cash management relationships with corporate clients, the report offers banks and payment firms a three-layered strategy: 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.