Global payments revenue projected to reach $3.3 trillion by 2031

Continued cash-to-non-cash conversion to spur growth despite macroeconomic headwinds; industry players must act on multiple fronts to remain resilient and competitive, says new BCG report

Boston, October March 3, 2022 /PRNewswire/ – Despite the combined effects of expansionary monetary policy, geopolitical instability, pandemic-driven supply chain shocks, and a macroeconomic environment characterized by high inflation and rising energy costs, global payments revenue is likely to grow year-over-year according to According to a new report from the Boston Consulting Group (BCG), it will approach 9.5% by 2022 and remain on a positive trajectory over the next decade.This report, titled Global Payments 2022: The New Growth Game, It’s being released today.

BCG’s 20th annual analysis of the payments industry forecasts annual revenue growth of 8.3% from 2021 to 2026 and 7.6% from 2026 to 2031 (see chart). One particularly strong area will be revenue from revolving credit card balances, deposit interest and account fees.The report estimates that total global payments revenue will reach $3.3 trillion by 2031.

“The global payments industry has shown extraordinary resilience throughout the pandemic and current macroeconomic challenges,” said Markus Ampenberger, partner at BCG and co-author of the report. “Going forward, winners and losers in this space will depend on the players. The ability to adapt to the new normal, diversify, create new business models around data, form partnerships and unlock new revenue streams.”

Four trends driving the global payments industry

The report outlines four major trends that will shape the global payments industry outlook over the next five years:

  • The era of market outperformance is over. Total shareholder returns for acquirers, networks and other industry players have all contracted since the second half of 2021. Instead of focusing on pure revenue growth, payments companies must demonstrate solid profitability to attract customers and investors.
  • The growing demand for electronic payments. Continued cash-to-cash conversion, continued growth in e-commerce, and increasing integration of payments with the retail and enterprise customer journey are expected to drive global payments revenue. For example, in card payments, cardless online spending is expected to climb at a CAGR (compound annual growth rate) or 11.0% from 2021 to 2026.
  • Central Bank Digital Currencies (CBDCs) will gain momentum. The central bank is researching, developing and piloting feasible CBDC Replenish cash with digital central bank currency.In addition, central banks can use CBDC As a tool for faster and more granular implementation of monetary policy by regulating the money supply in near real time.
  • Payments businesses face significant financial and non-financial risks and are under increasing scrutiny from the authorities. Payments players should aim to strengthen their risk and compliance activities in order to continue their growth path and install the required safeguards for their business. Market participants must address multiple risk dimensions: financial, compliance, cyber, and encryption.

Steady growth in all regions

After a strong post-pandemic rebound in 2021 and 2022, all regions are expected to show stable revenue CAGRs over the next five years. Latin America (10.8%) and Europe (10.6%) should take the lead, followed by middle East and Africa (9.8%), Asia-Pacific (7.6%), and North America (7.3%).

The COVID-19 pandemic may permanently alter the playing field, fundamentally shifting the market from offline to online and requiring significant changes to merchants’ business models.The report estimates that the acquisition industry’s revenue will grow at a CAGR of 8.7% from 2021 to 2026, increasing its total revenue pool to $160 billion. The revenue pool for small business acquirers will grow faster than larger merchants, contributing about 75% of incremental revenue growth.

Issuer revenue will continue to grow at an annual rate of 6.2% over the next five years, surpassing $1 trillion Worldwide by 2031. Through 2026, primary (transaction-related) revenue, mainly from interchange fees, will drive this growth (8.4% CAGR), followed by secondary (non-transaction-related) revenue (3.9% CAGR), Including foreign exchange and annual card fees. Two major shifts could reshape the distribution space. First, new payment methods such as “buy now, pay later” open the door for payment participants to move beyond transactional roles. Second, customers increasingly expect richer rewards and a more personalized loyalty experience.

Global network must diversify to sustain growth

BCG’s analysis shows that network revenue (from both international and domestic programs combined) will grow at a CAGR of 8.9%, from $63.8 billion 2021 to $97.9 billion 2026. While this is a healthy growth rate, it is lower than the 10.2% CAGR in the previous five years. To revive its stagnant growth, the network must develop untapped vertical-specific product propositions, accelerate adoption of open banking and A2A payment processes, gain first-mover advantage in new growth areas such as digital currencies, and lead sustainable payments in payments Development agenda to achieve diversity.

Report finds that wholesale transaction banking $494 billion By 2021, it is likely to grow at a CAGR of 9.2% to $768 billion From 2021 to 2026, followed by more than $1 trillion by 2031. But four major challenges complicate wholesale transaction banking’s path to success: rising expectations from corporate clients (CFOs and treasurers), increased competition from non-banks, growing demand for investment in digital payments infrastructure, and the need to achieve scale.

The high-flying era of fintech has returned to reality

From 2016 to 2021, nearly one-fifth of new fintechs globally will focus on payments. Together, these businesses accounted for approximately 20% of the cumulative fintech equity financing during the period. But the valuations of many fintech companies have fallen significantly over the past six to nine months. To ensure profitable growth, payments-related fintechs must prioritize profitability over pure growth, specialize in risk and compliance management, and closely monitor cost structures and business expenditures.

“Digital payments continue to be embedded in the customer journey and become part of nearly everyone’s daily life,” said Sohrab Tripathi, senior partner at BCG and co-author of the report. “This dynamic will only intensify as the unbanked shrinks and overall financial inclusion expands. If the past is truly a prologue, the industry will remain strong and resilient.”

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