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Network Effects - the Forces Driving Ongoing Payment Trends

My concluding blog on trends focuses on the ongoing payment trends, those that are already strongly established and which will continue in 2018.

  1. The momentum towards a “less-cash” society increases in developed economies, including the US, Australia and Europe, primarily driven by adoption of contactless bank cards, causing reduced cash usage and consolidation and reengineering of bank ATM networks
  2. Contactless payments march onwards relentlessly. UK statistics for 2017 are unpublished as I write, but when they are available I expect over 7bn transactions last year, more than 100% growth, in line with my prediction a year ago. For 2018, expect 100% growth again to over 15 bn contactless transactions in the UK, with similar large increases in countries throughout Europe
  3. Despite negative press on the adoption of “The Pays” such as Android/Google Pay, Apple Pay and Samsung Pay, Worldpay reported a 328% annual rise in UK mobile payment transactions in 2017. Expect similar strong growth to be repeated in 2018 across countries where “The Pays” are available, and specifically for the UK, further growth of 200% - 300% leading to at least 400m mobile transactions totalling more than £3bn
  4. Cross-border ecommerce will continue to grow rapidly at 20% - 30% p.a., probably exceeding $700bn globally by value, driving innovation in low value cross-border payments (non-cards) including in recurring payments for borderless subscription services (e.g. music)
  5. Fully operational real time payment systems in countries such as Denmark (Nets 24/7) Sweden (Bankgirot) and the UK (Faster Payments) will go into overdrive as new business models and demand from corporates and consumers expand. Expect >20% growth in the UK and >40% growth in Sweden.

Many of these trends are indicative of positive network effects – the more transactions in a network, the more investment is made in new capabilities and new ways to pay in the network, drawing more users in to make and to accept payments, leading to more transactions and so on.

Consequently, it is again the consumer, and corporates, who benefit – from the immediate fulfillment enabled by real-time payments, from the convenience of using mobiles and from the greater choice and trade opportunities with cross-border ecommerce.

However, the flip-side of these benefits is the reduction in cash usage, a negative network effect where those who rely on cash increasingly find it difficult to do so. That is a subject of a future blog.


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Jeremy Light



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24 Jun 2009



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