In the course of the next five years, we will see some more card-accepting outlets around, twice as many as today in fact.
By the end of 2014 there were 46.6 million merchant outlets worldwide and by 2020 there will be 90.3 million, according to strategic research and consulting firm, RBR.
Emerging market growth
The majority of the growth will happen in Asia-Pacific markets such as China and India where the fastest growth was recorded in 2014. Interestingly, the growth mainly increased not because the larger cities expanded and evolved, but rather because card-accepting terminals expanded to geographic areas and merchant sectors where consumers could not previously use cards, rather than remaining in just the largest merchants and cities.
Despite being the fastest and the largest growing region, it is still relatively underdeveloped and the overall density of outlets is much lower than that of North America.
Europe growth is consistently strong
Central and Eastern European markets came second behind the Asia-Pacific region in terms of growth, roughly for the same reason of expansion into areas that previously did not use cards.
This strategy has also been adopted in Latin American markets, which too will see rapid growth, especially in the rural areas.
However, in other regions, the rate of growth will be slower because of the maturity of the markets.
Why will growth accelerate?
Aside from the previously mentioned strategy of targeting rural areas that traditionally did not use cards, there are other factors at play – it appears it is as much to do with PR as it is with putting actual outlets in place.
Banks and other financial institutions are laying it on thick by extolling the virtues of using cards and encouraging customers, new and old, to use them instead of cash.
The other significant reason is of course contactless. The rise of contactless technology has been stratospheric, which has been helped immeasurably by the likes of Transport for London and supermarket chains that make up the locations where consumers spend their money most frequently.
Retailers have deployed contactless-enabled terminals to replace more traditional units, and acquirers see contactless as a key tool in their attempts to increase card acceptance among low-value sectors. As a result, contactless card acceptance is becoming more common in outlets such as pharmacies, cinemas, restaurants and coffee shops.
This increase in contactless capability has been particularly noticeable in the UK, where we managed to spend £2.5 billion in the first six months of the year. In the period running from January of this year to June, just under 40,000 new contactless payment terminals were installed.
MPos plugs the remaining gaps
In locations where traditional payment terminals isn’t cost effective, smaller, cheaper devices offering mPOS capabilities come into their own. The US is a good example of them in action. Last month finally saw the liability shift happen meaning that many merchants upgraded their technologies in order to accept EMV cards. However, many smaller businesses were concerned about the costs of these upgrades as terminals did not come cheap, and would not necessarily prove to be cost effective.
MPOS platforms such as SumUp and giants like PayPal saw this gap in the market and decided to quickly plug it. SumUp introduced an EMV-compliant mPOS device that works with swipe cards; electronic and e-wallet payments via NFC, including Apple Pay and Android Pay; and with EMV chip cards. This cover-all-bases approach was one that PayPal pursued earlier when it released its PayPal Here reader.
When it was released in the US, Christopher Uriarte, chief Strategy & Payments officer at Vesta Corporation told PaymentEye that many small merchants have not had made the transition to EMV a priority, but the increase of such EMV-compatible technologies can quickly reach a larger scale across America without requiring a huge investment by small and medium merchants.
What about Visa and MasterCard?
With this rapid growth of card-accepting outlets the big question to consider is which company will come out on top? Will the likes of Visa and MasterCard be able to keep up with the growth rate?
“While Visa and MasterCard are currently accepted at 78 per cent of outlets worldwide, it is unclear whether they will be able to maintain this level, as most of the growth will be in China, where they are only accepted at 29 per cent of outlets,” said RBR.
Visa and MasterCard are still the most widely accepted schemes worldwide, with 37 million outlets each according to RBR figures, but their acceptance is low in the Middle East region – mainly because of their inability to access the large Iranian market due to international sanctions.
Unsurprisingly, Visa and MasterCard acceptance is low in China where UnionPay has a chokehold on the industry.
Whilst on the subject of UnionPay, it is the fastest-growing scheme in terms of the number of outlets, having increased by 25 per cent with 5.7 million new outlets in 2014, according to RBR figures. However, outside of China, it is wholly dependent on network-to-network agreements, which hinders its dominance.
The Emerging Payments Association discuss the impact of Brexit on the fintech industry at the latest payments industry event.
Jonathan Quin, co-founder and CEO of World First, explores how established financial institutions and newer fintech disruptors stand to benefit from collaborating with one another in the fast-moving financial services sector.
With advancements in technology and the subsequent availability of data, it seems surprising that banks seem to know less about their customers than ever before.
In an era where cheques are largely a thing of the past for organisations that operate within these shores, many people will be surprised to learn that many overseas B2B payments are still made by cheque.