Non-banks now account for a quarter of the institutions offering payment services, up from 14 per cent in only six years, according to the Bank for International Settlements (BIS).

The Basel-based association for central banks stated that driven by innovation and shifts in consumer preferences, new systems, methods and players are shaping the future of payments.

The BIS’ annual Red Book statistics report showed that consumer preferences continue to shift the payments industry towards more convenient electronic payment methods.

“Innovation and policy changes have come with new players,” the report read. “The traditional bank-based ecosystem is being disrupted from below by FinTech and from above by well-established BigTechs.

“When asked which financial products and services are most affected by technological developments and competition, banks often rank payments the highest – both today and over the next five years.”

Central banks are adapting to the emergence of new players by expanding access to their wholesale payment systems. Non-bank providers now account for 10 per cent of direct participants in Real-Time Gross Settlement (RTGS) systems in jurisdictions covered by the BIS-convened Committee on Payments and Market Infrastructures, compared to just four per cent in 2012.

The report also looked at the development of cashless societies, suggesting that these have yet to materialise in most countries. “Sweden is the exception: there, cash in circulation is decreasing and mobile payments booming at the expense of card payments.”

However, consumers crave convenience in paying, something reflected in the number of contactless cards per inhabitant rising rapidly in both advanced and emerging market economies. Consumers are also increasingly using debit or credit cards when abroad.

“Cross-border card payments have grown twice as fast as domestic payments since 2012,” the report noted. “In advanced economies, on average, consumers use their card for overseas transactions 14 times a year, while in emerging market economies the average is twice a year.”

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