Cashless payments plateau is stats mirage: Deutsche Bank
European Central Bank (ECB) figures appear to show that cashless payments transaction volumes in 2014 remained flat at 68 billion payments. However, Deutsche Bank analyst Heike Mai, who specialises in payments and shadow banking, has published a report that corrects this conclusion. Entitled ‘Payments in the euro area: Are they stagnating? – No!’ the report identifies that this apparent plateau is the result of an overhaul of the statistical methodology used by the ECB which caused breaks in many of the series.
“Corrected for this, there was actually a strong development of the market: cashless payments grew by about 7% year-on-year (yoy) or almost 5 billion transactions,” she writes. “This growth rate is even at the upper end of growth in recent years.”
The shift in modelling also led to what appeared to be more pronounced differences in the development of the various payment instruments. Card payments increased by 6% yoy, in line with previous years, accounting for 40% of the cashless payments market by number of transactions. E-money payments grew by over 15% yoy, to make up 3% of the market, while credit transfers and direct debits appeared to shrink by 2% and 9% yoy respectively against the trend of growth seen in previous years, shrinking their respective market shares slightly with each having 26%.
“A reclassification of several billions of credit transfers and direct debits as simple book entries explains the drop in these payment categories,” writes Mai. “ Simple book entries are transactions initiated by a payment service provider (mostly banks) in order to credit or debit a (non-bank) customer’s account, for example to pay the interest accrued to a deposit account. It is important to note that simple book entries are not included in the ECB’s payments statistics.”
She goes on to explain that while some countries, like Spain and Portugal, have adjusted their reporting for some time others, like Germany and Austria, only made this shift in 2014.
“As a result, Germany reclassified a total of 3.7 billion credit transfers and direct debits as simple book entries, Austria 0.9 billion transactions,” she writes. “This makes comparisons with previous data difficult, but it does considerably improve the comparability of data between different countries as well as the quality of aggregate data for the euro area.”
Figures for 2015 will not be released before August 2016, further growth is expected, with Mai noting that the transaction numbers published by leading payment service providers for 2015 suggest a continuation of the growth story.
Reported by Dan Barnes
