- Digital payments are expected to reach a record 726 billion by 2020, according to a study by Capgemini and BNP Paribas
- Non-cash transactions between 2014 and 2015 rose 11.2 percent, the highest growth of the past decade
- Cash still remains the mainstream means of payment
- Checks look to be on the way out, down 13.4 percent in 2015
People around the world are expected to make 726 billion transactions using digital payment technologies by 2020, according to a study released Monday.
The research, by consultancy giant Capgemini and bank BNP Paribas, found that emerging markets were leading the upward trend, and predicts tech innovations such as connected homes, contactless bank cards, wearable devices and augmented reality will drive cashless transactions in the future.
"Non-cash payments have increased in volume due to the rise in adoption of digital payment services across all market segments," Christophe Vergne, cards and payment practice leader at Capgemini, told CNBC via email Monday.
"Curiously, though the number of transactions continues to rise at a rapid rate, the average USD value per transaction has decreased slightly, as digital establishes itself as a growing rival to cash for low cost purchases."
Based on analysis of payment trends during the years 2014 and 2015, the study said that debit cards accounted for the highest share of non-cash payments at 46.7 percent, while credit cards trailed behind at 19.5 percent.
Non-cash transactions between 2014 and 2015 rose 11.2 percent, the highest growth of the past decade.
Contactless cards are seen as "the new normal," especially in Europe, the study said. In France, the circulation of Visa contactless cards doubled to 40 million in 2015 from 20.3 million the previous year. The U.K. was the biggest market for contactless payments in Europe, with cards in circulation reaching 106.9 million in 2015.
But cash still remains the mainstream means of payment, especially for low-value transactions.
"Though digital payments are on the rise, reports of the death of cash are likely exaggerated," Vergne said.
He added: "There are specific situations where one or more of the attributes of cash — speed of exchange, universal acceptance, anonymity, absence of record and free of charge — are not yet matched by digital payments."
Checks, on the other hand, look to be on the way out, and declined 13.4 percent in 2015. The study did not specify the number of check payments made.
The findings follow remarks by Bank of England Chief Cashier Victoria Cleland about the future of cash at a conference in Austria on Thursday. "Cash continues to play a key role for many, and a crucial role for some," she said in a speech, according to Business Insider.
And a study last week found that many Americans still look to cash as their preferred method of payment — although physical cash came in second place, behind debit cards.
Emerging markets are expected to grow at a rate three times that of developed economies in terms of digital transaction volumes.
Digital payments in developing markets grew 21.6 percent between 2014 and 2015, compared to a 6.8 percent rise in mature markets.
Non-cash payments in Asian emerging markets are projected to grow by almost a third (30.9 percent), led by powerhouses China and India.
"Expansion in emerging Asia was due to impressive growth across all geographies as increased adoption of mobile payments and wallets generated a proliferation of card use," the authors of the study wrote.
Digital invoicing, virtual payment cards and cloud-based accounting are also seeing popular use in emerging Asian economies.
The study highlighted that financial technology (fintech) firms and incoming regulation were transforming the payments landscape.
One law introduced by the European Union is set to allow third-party companies to gain access to banking customers' data with their consent. The aim of the EU directive is to open up the payments ecosystem to smaller lenders and non-banking firms and make competition fairer.
The new European rules, which come into force in January 2018, are part of an initiative in the fintech world known as "open banking."
"Within this new and dynamic ecosystem, payments industry participants must strategically reassess their roles," Anirban Bose, head of global banking and capital markets at Capgemini, said in a statement Monday.
In an open banking ecosystem, banks are expected to open up their application programming interfaces (APIs) to third-party payment providers.
APIs are codes that allow different financial programs to communicate with each other. Open APIs allow developers to gain access to the software applications of banks.
Capgemini's Bose said: "Banks must embrace this opportunity to enhance their offerings in collaboration with fintechs and third-party developers. Breakthrough technologies and significant industry advances, such as open APIs, instant payments, blockchain and regulatory standardization, will encourage collaboration."