Numbers Don’t Lie: 7 Reasons Why Electronic Payments Is King
Every which way you look at it; open-loop electronic payment use is on the rise.
More people are loading money onto cards, more consumers are buying open-loop cards, and more people are turning away from traditional payment methods like cash or credit. But don’t just listen to us, check out the numbers and stats below, which have been recorded by 5 separate research companies in 5 separate studies.
1. Open-Loop Cards Continue to Grow
According to a study by Mercator Advisory Group, in the U.S., nearly $300 billion is expected to be loaded onto open-loop cards in 2016, a 4.1 percent increase compared with $287.1 billion loaded in 2015. Funds loaded onto the cards are expected to consistently increase with a compound annual growth rate of 4 percent through 2019, when the total is projected to reach $341.3 billion.
2. More Consumers Are Buying Open-Loop Cards For Self-Use
Another recent report from Mercator shows that more consumers are buying open-loop cards for themselves. Nine in 10 consumers reported purchasing open- or closed-loop gift cards in the previous year, according to a 2016 survey. Of those consumers, 66% reported some of those gift cards were purchased for self-use, an increase from less than half who reported doing so in 2013.
3. Number of Cards in Global Circulation Increases
The total number of credit, debit, and payment cards increased 58% globally in 2015, totaling over 18 billion, according to research conducted by The Nilson Report. “By 2020, payment cards are expected to increase 21.3 percent to 21.93 billion,” said David Robertson, publisher of The Nilson Report.
4. More People Pay With Cards Than Cash
According to new data from Euromonitor International, for the first time ever more consumers will pay with cards than cash. Card transaction will reach $23.1 trillion worldwide in 2016, while cash transactions are expected to be only $22.6 trillion.
“This stagnant growth of cash payments signals a shift from an increase of cash supply to a decrease and is a major victory for card and electronic payments,” said Kendrick Sands, senior consumer finance analyst at Euromonitor. “Overall, continued strong momentum is expected in the conversion of consumer payments away from paper to card and electronic alternatives.”
5.Mobile Spending Is Exploding
Euromonitor also predicts mobile spending to increase by 53 percent in 2016 compared to 2015. Over the next five years, overall spending on mobile devices will increase by 23 percent annually from 2016 to 2021.
6. Non-Cash Transactions Continue To Grow in Both Developing and Mature Markets
According to the 2016 “World Payments Report” from Capgemini and BNP Paribas, non-cash transactions grew 8.9 percent year-over-year in 2014 to reach 387.3 billion transactions. Developing markets recorded a 16.7 percent increase in 2014 while mature markets grew by 6.0 percent.
In North America, non-cash transactions increased to 128.3 billion transactions in 2014, up 4.2 percent from 123.1 billion in 2013, according to the report. The growth rate might be higher, though, because “of [the] increasing use of alternative payment methods such as closed loop mobile wallets.”
7. China Is Fast Becoming A Major User of Non-Cash Transactions
“For the first time, China surpassed the U.K. and South Korea to take fourth position among the top ten markets by global non-cash transaction volumes… China’s high growth rate was driven by strong e-commerce and mobile phone penetration. If the current growth trends continue, non-cash transaction volumes in China are expected to surpass those in the Eurozone by 2021, placing the country second to the U.S.”