The global payment ecosystem is evolving at breakneck speed, with no signs of slowing down. As digital transactions and innovative payment solutions continue to dominate, this dynamic sector is set to generate over $1 trillion in new growth opportunities for forward-thinking players in the coming years.
In this blog, we’ll guide you on how to tap into this explosive growth by exploring the surging global payment revenues, pinpointing high-impact areas within the payment landscape, and highlighting the top 6 trends that are expected to shape global payments over the next five years.
From digital wallets to real-time payments and cross-border transactions, we’ll dive into the strategies, opportunities, and insights that can help your business stay competitive in this booming industry.
Global Payments Revenues Will Continue to Grow: What You Need to Know
Handling $3.4 trillion in transactions that accounted for nearly $1.8 quadrillion in value, the 2023 global payments industry dealt with a revenue pool of $2.4 trillion.
However, with projections showing a slightly slower growth rate of 5% in the coming years,
The global payments industry expects to reach a revenue pool of $3.1 trillion by 2028.
This positions payments revenue at approximately 35% of the total banking revenue pool, underscoring the importance of payments for financial institutions.
The Role of Net Interest Income in Global Payments Revenue Pool
Net interest income remains a significant revenue contributor for the payments industry, making up approximately 47% of the global payments revenue pool in 2023.
With rising interest rates over recent years, net interest income has seen an uptick, representing a three-percentage-point increase from 2021.
This shift was largely due to historically low interest rates in prior years, giving way to higher yields as central banks worldwide responded to inflationary pressures by raising rates.
However, this revenue source is expected to slow between 2023 and 2028, with growth projected at 4% annually—a decrease from the previous 7% rate.
Geographic Contributions to Global Payments Growth
Geographically, the payments market has shown robust performance worldwide. In 2023, Europe, the Middle East, Africa (EMEA), and Asia-Pacific (APAC) regions were significant contributors, accounting for two-thirds of the global payments revenue pool.
This regional distribution reflects the increased adoption of digital payments and a strong focus on financial inclusion in these areas, driven by technological advancement and government support.
Looking ahead, these regions are expected to maintain their significant contributions to revenue growth, with North America and Latin America also playing key roles as digital payment solutions expand across markets.
Key Trends Affecting Transaction-Related Revenue Growth
The global payments revenue pool has been largely supported by transaction-related income, yet three primary trends are expected to influence future revenue growth:
Slower Economic and Personal Spending Growth: GDP and personal spending are critical drivers of payment volume and revenue. With a forecasted deceleration in these areas, the value growth of payments transactions is expected to see a corresponding slowdown.
Shift in Transaction Types: Consumers and businesses alike are moving away from high-yield credit card payments toward lower-yield account-to-account (A2A) payments. The shift to A2A payments, which include instant payments and electronic funds transfers (EFT), brings lower revenue margins for payment providers.
Regulatory Pressure on Card Fees: Card interchange fees contributed 49% of transaction-related revenues in 2023, a substantial share. However, increasing regulatory scrutiny on these fees could limit rate increases or even reduce fees in some regions. As regulators prioritize affordability, particularly in high-fee markets, payment providers will likely adapt to a more regulated fee structure.
What Are The Key Global Payment Areas Gaining Traction?
The global payments market is undoubtedly observing a storm as card transactions are observing tremendous growth
1. The Rise of Buy Now, Pay Later (BNPL):
Buy Now, Pay Later has taken the retail and e-commerce world by storm, providing consumers with flexible payment options and a low-commitment alternative to traditional credit.
With BNPL, consumers can split their purchases into interest-free installments, making it easier to manage budgets and avoid high credit card fees.
Why BNPL Is Popular:
Flexible Payments for Small Purchases: BNPL allows customers to split payments on purchases, both large and small, directly at checkout. Initially popular in online shopping, BNPL options are now making their way to in-store purchases, expanding access.
Appeal to Millennials and Gen Z: Younger, tech-savvy generations are particularly drawn to BNPL, which they view as a budget-friendly and transparent alternative to credit cards. BNPL’s instant approval process and lack of long-term commitment make it a favorite among these groups.
2. IoT Payments: The Future of Connected Payments
Internet of Things (IoT) payments are rapidly growing, allowing people to make payments using a range of smart devices, from wearables to connected vehicles.
According to McKinsey, IoT device usage is expected to expand from 10 billion in 2018 to 64 billion by 2025, a growth that signals exciting possibilities for the payments sector.
Key Drivers of IoT Payments:
Personalized, Secure Transactions: Wearables and other personal IoT devices, like smartphones, can be used to authenticate and complete transactions, enhancing security and personalization. For example, mobile phones now allow users to withdraw cash from ATMs without a physical card.
Smart Checkout Experiences: IoT devices enable innovations like Amazon’s self-checkout stores, where customers can make purchases without waiting in lines. This technology, already used in Amazon Go stores, is a model for the future of retail payments.
3. Real-Time Payments (RTP): Speeding Up Transactions Globally
The demand for real-time payments (RTP) is on the rise as businesses and consumers seek faster, more efficient ways to transfer funds.
With a surge in smartphone usage and cloud-based technologies, RTP systems are transforming payment settlements by providing immediate access to funds.
Why Real-Time Payments Are in Demand:
Instant Settlement: RTP allows funds to be transferred in seconds, meeting the expectations of a fast-paced world where customers value instant access to their money.
Financial Institution Investments: Banks and financial institutions are investing heavily in RTP infrastructure to meet customer demand. Mastercard’s PayPort+, for example, is designed to connect financial institutions with the UK’s RTP network, ensuring secure, flexible access to immediate payments.
4. Digital and Mobile Wallets: Revolutionizing How We Pay
Digital wallets and mobile wallets are fast becoming the go-to payment options for millions worldwide. With the number of digital wallet users expected to exceed 5.2 billion by 2026, these wallets are reshaping the payments industry.
Key Benefits Driving Digital Wallet Adoption:
QR Code Payments: The global market for QR code payments is booming, as QR technology offers a quick, secure, and cost-effective alternative to traditional POS setups. With lower setup costs and easy integration, QR code payments are popular in regions like Asia and are gaining traction globally.
Growth in Remittances: Digital wallets are proving particularly valuable for international money transfers, where convenience, speed, and low fees are essential. New apps and platforms dedicated to remittances are increasingly catering to global users.
Top 6 Trends That Will Shape Global Payments In The Next Five Years
The global payments industry has experienced unprecedented growth, with the combined market capitalization of specialist payments companies skyrocketing from $400 billion to $1.4 trillion over the past decade.
This transformation has been driven by an explosion of fintech unicorns and increasing consumer demand for faster, more convenient payment options.
As we look to the next five years, several key trends are set to shape the global payments landscape, paving the way for a new era of digital finance.
1. The Continued Decline of Cash Payments:
Global cash usage has been on a steady decline, now at just 80% of 2019 levels
, and is expected to decrease by an additional 4% per year.
While cash remains prevalent in certain markets, the $26 trillion in cash transactions globally represents a massive opportunity for digital payment adoption. However, the transition to digital payments is unfolding unevenly across regions.
In developing markets with low card penetration, such as India, Malaysia, and Indonesia, instant payments and digital wallets are rapidly replacing cash.
India’s cash share, for instance, is expected to decline from 23% of consumer spending to less than 10% by 2028. Meanwhile, credit card usage is growing in these markets as consumers are drawn to credit availability and attractive rewards programs.
2. Instant payments/ Real-Time Payments (RTP) Will likely Redefine Payments
Instant payments are reshaping how individuals and businesses manage transactions. With real-time payment infrastructures established in nearly every major market (except Canada), instant payments have become an increasingly popular option for their speed, security, and convenience.
At present, we can observe quick growth of instant payments in the established and emerging markets:
Established Markets Lead with Gradual Shift: In mature markets like the UK and U.S., cards remain popular, but instant payments are steadily replacing traditional methods in areas like bill payments, with options like Zelle seeing over 50% annual growth.
Emerging Markets Drive Innovation: In regions like Brazil and India, government-backed initiatives boost instant payment adoption, with Brazil’s Pix system reshaping point-of-sale and bill transactions.
3. Digital Public Infrastructure (DPI) Will Fuel Digital Payments Adoption
Digital public infrastructure (DPI) initiatives are helping to create robust and inclusive payment ecosystems, especially in emerging markets. DPIs consist of digital ID systems, interoperability standards, and inclusive financial services.
Markets like Brazil, Estonia, and India have pioneered DPI to foster competitive and efficient payments ecosystems. DPI systems are rapidly transforming the payment landscape in the following manner:
Foundation for Digital Innovation: DPI systems support innovations like instant payments and mobile wallets by providing essential digital infrastructure.
Successful Models: India’s Unified Payments Interface (UPI) showcases DPI’s potential, inspiring similar initiatives in Indonesia and Nigeria.
Increased Financial Access and Convenience: DPI frameworks simplify access to financial services, enable secure and low-cost transactions.
4. Intermediaries Will Take Market Share from Traditional Payment Providers
Platforms and marketplaces like Shopify, Square, Amazon, and eBay are reshaping global commerce, handling an estimated 30% of consumer purchases worldwide.
These digital platforms integrate payment processing through independent software vendors (ISVs) and acquirers, allowing small and medium-sized enterprises (SMEs) to manage payments, point-of-sale (POS) systems, and customer relationship management seamlessly.
In fact these one-stop solutions are gaining quite some popularity due to the following reasons:
Tailored Solutions: Integrated Software Vendors (ISVs) provide tailored solutions for industries like healthcare and retail, enabling SMEs to access advanced payment tech without managing complex systems.
Shifting from Traditional Providers: As ISVs offer cost-effective, integrated solutions, they continue to pull market share from traditional payment providers, who are seeing declining margins in card processing despite stable transaction volumes.
5. Transaction Banking Will Embrace Consumer-Like Digital Experiences
Transaction banking has evolved into a differentiator for banks, becoming a valuable source of fee-based income. Major banks like Citi, HSBC, and JPMorgan Chase are capitalizing on transaction banking to enhance user experience and deepen corporate relationships.
The focus is on delivering consumer-like digital interfaces for business clients, similar to the intuitive apps individuals use for personal banking:
Technology Boosts Transaction Banking: Banks are using advanced tech to simplify corporate finance, addressing reconciliation challenges and enhancing supply chain finance.
Easy Integration for Real-Time Insights: New platforms connect corporate and bank systems, enabling real-time cash flow monitoring and smooth transaction processing.
Rising Competition from FinTech Disruptors: Competitors like Banking Circle and Flywire offer cutting-edge B2B payment solutions, pushing traditional banks to keep up in the digital race.
6. Central Bank Digital Currencies Will Define Baseline Standards for Digital Currencies
More than 90% of central banks are exploring or testing CBDCs
, with over 30 pilot programs already underway in countries like Australia, Brazil, and France.
While CBDCs were initially viewed as disruptive, adoption has been limited, as consumers often treat them as another digital wallet option rather than a replacement for existing solutions.
Where Can We Invest To Capitalize On The Growth Of Instant Global Payments?
Now moving to the big question: How to Make the Most of the Next $1Trillion Growth in Global Payments?
As is clear the global payments industry is ever-evolving and will continue to do so in the coming years. A significant chunk of payments made by consumers, businesses, and corporations are now focusing on real time payments
The major areas where investors and disruptors are strategically investing are the ones where we find the answer to our question, where to invest:
1. Investing in Cross-Border Payments Solutions
Cross-border payments represent one of the most lucrative and complex areas in global finance. Historically, these transactions were slow and costly, but with instant payments, cross-border transfers are becoming faster and more transparent.
Why Invest in Cross-Border Payment Solutions?
Increasing Consumer and Business Demand: The need for faster cross-border payments is growing as global e-commerce and international trade expand. Many countries are now working to integrate instant payments systems across borders, such as Project Nexus, which connects real-time payment platforms in Asia.
2. Expanding in Treasury Management Solutions
As the CFO’s role becomes more digitized, treasury management solutions are critical to managing accounts receivable (AR) and accounts payable (AP) in real time.
Instant payments provide unprecedented transparency, efficiency, and accuracy for finance teams, especially in corporate environments where transaction volumes are high.
Why Invest in Treasury Management?
Unlocking Working Capital for SMEs: Treasury digitization also opens access to working capital financing for small and medium-sized enterprises (SMEs) by improving cash flow visibility and payment predictability.
3. Enhancing Payouts, Refunds, and Payroll with Instant Payments
For businesses across sectors, instant payments are transforming how they manage payouts, refunds, and payroll. Quick access to funds is particularly crucial in the gig economy, where instant payouts can improve job satisfaction and loyalty.
Benefits of Investing in Instant Payouts:
Employee Retention in the Gig Economy: Companies can differentiate themselves by offering instant access to earnings. This is especially appealing to gig economy workers in ridesharing and food delivery, where cashing out quickly is an essential feature.
Improved Customer Loyalty Through Fast Refunds: For e-commerce and retail, instant refunds enhance customer satisfaction by allowing consumers to see returned funds in their accounts almost immediately.
4. Strengthening Fraud Prevention and Anti-Money Laundering (AML) Systems
Fraud and AML systems are vital for the safe expansion of instant payments. With cyber threats evolving, investments in real-time fraud detection and AML compliance tools are crucial to protect consumers and institutions while fostering trust in digital payments.
Why Fraud Prevention and AML Are Critical:
Regulatory Push for Enhanced Customer Protection: In response to fraud risks, regulations in markets like the U.K. are pushing banks to bear the cost of reimbursements for authorized push payment fraud, while U.S. regulators are also considering legislative changes to increase consumer protection.
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