Growth in non-cash payments marches on

Within Europe, Western and Southern Europe in particular still have material upside and future growth left in terms of adoption of non-cash payments. Below we show that in several large European economies such as Germany, France, Italy and Spain, the vast majority of money transactions still happen on a cash basis.Non-cash payments have been on a steady growth march and consistently been gaining share from cashbased transactions. The main drivers of this are long-term thematic and secular in nature and are set to continue well into the next decade:

• Higher convenience for consumers of card- & mobile-based payments over cash transactions
• Strong growth in Ecommerce and mobile payments driven by higher convenience and lower prices of online shopping
• The rollout and gradual adoption of electronic consumer ‘wallets’ such as Apple or Google Pay
• Active government initiatives to limit (untraceable) cash transactions; India was a prominent example last year; the attempts to regulate crypto-currencies by many governments seem to have a similar motive
• On a more cautious note, we see potential disintermediation risk of the card payment ecosystem from the emergence of direct Peer to Peer payments and ‘Open Banking’ initiatives such as PSD2, some of which might circumvent the established electronic payments ecosystem.

These favorable trends drive expected continued growth in global non-cash transactions of ~11% p.a., with Asia expected to see even faster growth rates.

The marked outperformance of growth in non-cash transactions compared to economic growth has been consistent and is evidence of a secular trend – below we show how non-cash transactions have materially outperformed GDP growth in the largest markets. 

Within Europe, Western and Southern Europe in particular still have material upside and future growth left in terms of adoption of non-cash payments. Below we show that in several large European economies such as Germany, France, Italy and Spain, the vast majority of money transactions still happen on a cash basis.