Cashless Payments Could Bring Extra $10 Trillion in Spending

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The growth of cashless payments, and in particular their increasing adoption via smartphones, could generate an additional $10 trillion (£7.57 trillion) in consumer spending over the next decade.

That figure comes from The Demand Institute, a non-profit think-tank operated by Nielsen and The Conference Board, which projects that 1.2bn more people will gain internet access by 2020, largely via smartphones.

This growth in potential digital consumers, together with the increase in smartphone penetration and new digital payment systems, will enable 2bn unbanked consumers to access the connected economy and basic financial services for the first time.

“What happens when a consumer accesses the internet is similar to what happens when a baby starts to walk a whole world of exploration opens up including new shopping patterns,” said Louise Keely, president of The Demand Institute.

“However, alongside the long-underserved developing economies, the proliferation of cashless payment services will also benefit those in advanced markets as new competitors and business models dive in to meet the needs of every imaginable consumer use-case.”

The report identifies big retail bank and credit card companies, retailers with their own payment systems, and disruptors such as mobile-first banking services as the three key drivers in this growth.

“Across the planet, traditional banks and credit card networks will compete directly with retailers, telecom providers, tech giants, social-media upstarts, and scores of regional, often government-backed initiatives,” said Keely, “However, whichever segment prevails, and it’s too early to say, the payments industry will change in three fundamental ways.”

Also among the findings in the report was the fact that the growth of cashless payments will boost financial security as we reach a tipping point in emerging and middle-income economies, and the growth of payment systems in social networks will push towards a total convergence of the consumer experience into a single, seamless platform.