Most promising current and future payment technologies | SG Analytics

Future of Payments:
Next-Gen Payment Processing Technologies
The decades-long debate over the evolution of payment technology
continues in the age of mobile wallets, EMV, blockchain, etc.
The evolutionary disruptive technologies in the payment landscape are
poised to redefine businesses with increased automation and
connectivity.

www.sganalytics.com | info@sganalytics.com | Page | 2
SG Analytics highlights the evolution of the 9 most
important payment technologies that will transform
the world’s financial ecosystem.
The Revolution has just begun!

 As of Q2 2016, globally 42.4% of transactions were EMV
 As of Q2 2016, the percentage of card present EMV transactions were the highest in Europe at 97.6%, followed by MEA at 89.94% and North America at 88.81%
 The EMV standard was first implemented in the UK in 2002 and the country completed its EMV migration by 2006. EMV adoption in the U.S. had been relatively
slow; however, the growing popularity of mobile NFC payments in the U.S. is expected to drive EMV adoption among U.S. merchants, since both contactless EMV
cards and mobile NFC systems use the same contactless ISO payment specifications
 Chargebacks are predicted to escalate across the U.S., UK, and Europe due to the growth in EMV adoption across the globe
EMV (Europay, Mastercard and Visa cards)
Key Players
Sources: EMVCo, LLC, NCR, CreditCards.com, Global Risk Technologies
89.9%
Region
MENA Asia
Europe
(Except CIS & Baltic nations)
57.9% 88.8% 97.6%
U.S.
7.2%
North America
(Except U.S.)
Percentage of EMV Card Present Transactions (as of Q2 2016)

0.4 0.6
2.2
10.9
20
44
62
87
2009 2010 2011 2012 2013 2014 2015 2016
 The growing acceptance of mRDC among consumers is expected to save
financial institutions over USD 1 billion in 2017 through reduced processing
costs
 According to the 2016 Mobile Deposit Benchmark Report, 6 out of 10 online
consumers in the U.S. have never used the mRDC facility due to higher fees,
deposit limits, and paper check retention policy of banks
 The mRDC customer adoption rates among financial institutions in the U.S. is
the highest in giant banks, followed by regional banks and credit unions.
However, regional banks have outpaced giant banks and credit unions, in
terms of mRDC adoption growth during the 2013-2016 period at a CAGR of
165%
Remote Deposit Capture
mRDC Adoption in the U.S.
Sources: GlobeNewswire, Inc., Celent, Banking Exchange, Mitek Systems, Inc.
Key Players
EndUsers(million)
Year

1,450
2,113
3,006
3,842
5,581
6,531
7,562
8,334
9,259
2006 2008 2010 2012 2014 2016
 Globally the biometrics technology market is spread over a minimum of 13
biometric modalities, 11 major industry sectors, 142 individual use cases and
over 100 technology vendors and system integrators
 Biometric authentication is perceived as an absolute must-have for banks in
the near future, especially due to the growing popularity of mobile banking
 Biometrics in banking is expected to reach USD 11 billion and authenticate
65% of the global mcommerce transactions by 2020
 The biometric authentication market would largely be driven by growing
identity theft and fraud globally
 Annual biometrics revenue is the highest in Asia Pacific, followed by Europe
and North America
Authentication/Biometrics
Sources: WEX, Find Biometrics, Lets Talk Payments LLC ., NetAmerica Alliance, Trendforce
Key Players
Revenue(millionUSD)
Year
Global Biometric Industry

 European countries were leading the contactless adoption wave globally in
2015, with an increase of 150% contactless transactions over 2014. A
mandate directing compulsory contactless enablement of newly-deployed
and upgraded POS terminals, applicable from January 2016, is expected to
further drive its adoption
 Based on in-store transactions processed by MasterCard in 2015, Czech
Republic led with 77% contactless transactions, followed by Poland with 55%,
Hungary with 40% and Slovakia with 38%
 In November 2016, with 69.70 million debit cards and 32.10 million credit
cards, the U.K. had a total of 101.80 million contactless cards in issuance that
could be used at 439,623 bank-owned contactless enabled terminals
NFC/Contactless Payments
Sources: Ovum, Smartpaymentassociation.com, Pymnts.com, Globalretailbanker.com, Smartpaymentassociation.com, Theukcardsassociation.org.uk
Key Players
0
200
400
600
800
1000
1200
2014 2015 2016 2017 2018 2019
ActiveUsers(million)
Global Mobile Proximity Payment Users

 The ACH Network handles more than USD 40 trillion and nearly 23
billion electronic financial transactions annually, and in 2015 it
supported more than 90% of the total value of all electronic payments
in the U.S.
 ACH Network transaction volumes in the U.S. increased to 5.11 billion
in 3Q 2016, witnessing a growth of 8.14% from 4.72 billion in 3Q 2014
 The regulatory reform is a key factor impacting the market adoption of
real-time payments. In addition, the growing customer expectations
and competition from fintech have driven the adoption of real-time
retail payment settlement systems by banks
Faster/Real-Time Payments
Sources: Nacha.org, Chapsco.co.uk, Swift.com
Key Players
18 countries ‘live’ 12 countries ‘exploring’
planning/building
17 additional Eurozone
countries ‘exploring’
The Real-Time Retail Payment Settlement System Landscape

 The number of bitcoins in circulation has grown to 15,742,950 as of July
2016, from 50 bitcoins in January 2009
 Of this, the highest number of bitcoin transactions till July 7, 2016 stood
at 281,849 (recorded on June 16, 2016) and its peak market price was
recorded at USD 1,151 (December 4, 2013)
 The growth in digital payments, and the perception of bitcoin being an
anonymous payment network, play a key role in bitcoin adoption;
leading to a 34% increase in the number of venture capital-backed
bitcoin and blockchain companies from 103 in 1Q 2015 to 138 in 1Q
2016
Blockchain/Bitcoin
Sources: Datamarket.com, Coindesk.com, Coinatmradar.com, Bit-media.org
Key Players
4.4
9.5
9.7
5.6
2.6
11.4
0
2
4
6
8
10
12
0
50
100
150
200
250
4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016
Quarterly Total VC Investment (USD million)
Quarterly Average VC Investment Deal Size (USD million)
Global Investment in Bitcoin/Blockchain Industry
More about Bitcoin Mining!More about Bitcoin!

7.4% 8.7% 10.0% 11.5% 13.0% 14.6%
0%
25%
50%
75%
100%
1
2
3
4
5
2015 2016 2017 2018 2019 2020
Retail E-commerce Sales in USD millions
 Retail ecommerce sales worldwide is expected to reach USD 4.06 trillion in
2020, due to changing consumer behavior and buying patterns
 In APAC, retail ecommerce sales is expected to reach USD 1 trillion in 2016,
where the bulk of ecommerce will come from China, representing almost half
of retail sales worldwide
 The UK witnessed an online sales growth rate of 16.2% in 2015 and is
expected to grow further by 14.9% in 2016
 Mobile commerce has also witnessed progress with growing ecommerce.
According to BI Intelligence, m-commerce will reach $284 billion, i.e. 45% of
the total U.S. e-commerce industry by 2020
E-commerce and M-commerce
Sources: Business Insider Inc., Twenga, eMarketer Inc., Smart Insights
Key Players
Retail E-commerce Sales Worldwide, 2015-2020
% of Total Retail Sales

 The adoption of mPOS terminals over standard POS terminals will be 46% by
2017, as opposed to the 17% that was observed in 2012. The shift is seen due
to easy maintenance, zero performance charges, free downloadable
statements, automatic settlements, etc.
 Globally, mobile payments are expected to reach USD 3 trillion by 2021, as
consumers are turning toward online platforms
 The U.S. is expected to be the largest market, with an estimated USD 33.90
billion in mobile payments in 2016
 40% of respondents carry less than USD 20 in their wallet due to a rise in
mPOS transactions, according to a survey conducted by Visa and GfK research
mPOS (Mobile point of Sale)
Sources: Altimetrik.inc, PR Newswire Association LLC, Inniti Research Limited, Business Insider Inc., Global Industry Analysts, Inc., Scroll.in
Key Players
0.5
0.7 0.9
1.6
2.4
3.6
5.4
0
1
2
3
4
5
6
2012 2013 2014 2015 2016 2017 2018
USD billions
mPOS Proximity Payment Value

 The global mobile wallet market is forecasted to reach USD 2.70 trillion by
2020, as it offers multiple mobile financial services under one umbrella.
 The North America mobile wallet market is expected to grow from USD 34.00
billion in 2015 to USD 158.80 billion in 2020 at a CAGR of 36.1%, while the
EMEA mobile wallet market is projected to increase from USD 45.40 billion in
2015 to USD 260.30 billion in 2020 at a CAGR of 41.8%
 Mobile wallet transactions in India have increased from USD 180 million in
2012-13 to more than USD 7,214 million in 2015-16 and is projected to grow
at a CAGR of around 30% from 2015-2019
Mobile wallet
Sources: BankingTech.com, Mobile Payments Today, Networld Media Group LLC, PaymentsCM LLP, Miura Systems Ltd, Siegel Communications, Inc.
Key Players
38%
30%
12%
20%
0%
10%
20%
30%
40%
50%
Money Transfer Recharge Utility & Bill
Payments
Others
Market Share of Mobile Wallet by Payment Type

Arnab is a Business Consulting Senior Analyst with
over 6 years of experience in conducting business
research studies across diverse industries, including
Financial Services, Civil Aviation, Hospitality, and
FMCG. His areas of expertise include market sizing,
forecasting, and trend analysis.
ARNAB
GHOSH
Prerna is a business analyst at SG Analytics, having
two years of experience in research. Prerna holds
an MBA degree in Marketing from MITSOM, Pune.
PRERNA
RAWAL
Surabhi Singh is an Associate Analyst at SGA’s
Business Consulting team. She holds a master’s
degree in Electric Drives from NIT Bhopal.
SURABHI
SINGH
About the Authors
About SG Analytics
At SG Analytics, we help our clients understand the strengths of diverse markets and exploit these opportunities. As businesses need to access accurate and
actionable inputs for strategic decision-making in a dynamic environment, we at SG Analytics, provide global clients strategic insights, which help them achieve
their business objectives keeping their costs under control. We provide market entry strategies, feasibility studies, competitive intelligence, and country analysis,
as well as create investment memorandums and support mergers & acquisitions. Our actionable insights add value to a business throughout its lifecycle.

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