Global Payments 2020: Fast Forward Into The Future

For Payments Players, COVID-19 Will Accelerate the Pace of Change

Annual Global Payments Revenues Could Reach $1.8 trillion by 2024 Under a Quick-Recovery Scenario, as Industry Participants Adjust to Slower Growth but Faster Evolution, Says Report by Boston Consulting Group

BOSTON—Although the COVID-19 crisis has partly reshaped how consumers and businesses transact, foreboding slower revenue growth in the short term, favorable trends such as the shift to contactless payments, the rising adoption of digital wallets, and the more widespread use of business-to-business payments automation will lift the industry’s prospects in the medium term, according to a new report by Boston Consulting Group (BCG). The report, titled Global Payments 2020: Fast Forward into the Future, is being released today.

BCG’s 18th annual analysis of the payments industry outlines recent developments in the payments market both globally and regionally, explores how retail and wholesale payment providers can best respond to the disruptions caused by the pandemic, and notes the key challenges impacting payments stakeholders. The report, which draws from BCG’s proprietary global payments model—using data from SWIFT, the global provider of secure financial messaging services—also offers five overall imperatives for achieving competitive advantage in the payments space of the future.

“By accelerating changes that traditionally take a decade to materialize in the payments industry, the pandemic and its aftermath have created a window for the most talented companies to leapfrog the competition, gain scale, and deliver customer impact,” said Yann Sénant, a Paris-based BCG managing director and partner, coauthor of the report, and global leader of the firm’s payments and transaction banking segment. “That ticking clock means that payments players that act decisively now will have a clear advantage over the rest of the field.”

Market Outlook. Given the uncertainty surrounding the still-unfolding pandemic, BCG’s payments forecast includes three revenue growth scenarios based on global GDP development. Under a quick-rebound scenario, BCG’s outlook suggests that the global payments revenue pool will expand from $1.5 trillion in 2019 to $1.8 trillion in 2024, a compound annual growth rate (CAGR) of 4.4%. Although solid, this CAGR is much lower than the 7.3% annual growth the industry enjoyed from 2014 to 2019. In a slow-recovery scenario, the global revenue pool would reach $1.7 trillion by 2024, a CAGR of 2.7%. Under a deeper-impact scenario, the revenue pool would grow by only a moderate CAGR of 1.1%.

The second half of the decade, however, looks considerably brighter, driven by economic expansion, advancements in payments infrastructure, e-commerce growth, and greater financial inclusion. From 2024 to 2029, global payments revenues should rise by 4.4% to 5.6% annually (depending on the scenario)—roughly 1.5 times faster than the growth of banking revenues overall. By 2029, the revenue pool could swell to between $1.9 trillion and $2.4 trillion, depending on the extent of the economic recovery.

Securing Future Growth in Retail Payments. The report says that, in the near term, issuers and merchant acquirers in most markets face a greater likelihood of delinquencies and chargebacks as customers and businesses struggle with the financial fallout from the pandemic. In addition, merchants face their own challenges. Wooing customers back into physical stores, finding the best ways to reach them online, and discerning which promotions are likely to appeal most will require experimentation.

Solving Customer Pain Points in Wholesale Payments. According to the report, the COVID-19 crisis is likely to accelerate the digitization of wholesale transaction banking—a set of services that includes domestic and cross-border payments, cash management, trade finance, and working-capital solutions. The mission-critical nature of these activities for corporations and the expertise required to support them will drive revenue growth in most major markets. By focusing on a few near-term actions, banks and wholesale payments providers have an opportunity to become part of the overall crisis solution, strengthening relationships that can pay long-term dividends. These actions include becoming a proactive go-to partner in crisis management, collaborating for speed and scale, providing wholesale transaction banking solutions rather than products, and improving risk management capabilities.

Winning the Future. BCG’s report says that the payments landscape is a vibrant space populated by diverse institutions. From big tech to fintechs, issuers to processors, full-service providers to niche players, all competitors in this fast-evolving ecosystem face their own challenges. Yet five overarching imperatives unite them.

BCG says that the winners in the postcrisis world will be the companies that lead the field in addressing the following priorities now:

  • Rebalance the product and customer portfolio
  • Pursue strategic M&A, partnerships, and ecosystem opportunities
  • Become a data-driven organization
  • Reinforce risk management
  • Accelerate digital transformation

“Crises often force companies to revisit how they do business,” said Markus Ampenberger, a Munich-based BCG partner and associate director, and coauthor of the report. “And COVID-19 is no different. Payments leaders have greater permission—and urgency—to make bold moves that can secure their business’s long-term prosperity.”

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About SWIFT

SWIFT is a global member owned cooperative and the world’s leading provider of secure financial messaging services. We provide our community with a platform for messaging and standards for communicating, and we offer products and services to facilitate access and integration, identification, analysis and regulatory compliance. Our messaging platform, products and services connect more than 11,000 banking and securities organizations, market infrastructures and corporate customers in more than 200 countries and territories. While SWIFT does not hold funds or manage accounts on behalf of customers, we enable our global community of users to communicate securely, exchanging standardized financial messages in a reliable way, thereby supporting global and local financial flows, as well as trade and commerce all around the world. Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure. SWIFT’s global office network ensures an active presence in all the major financial centers.

About Boston Consulting Group

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we help clients with total transformation—inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact.

To succeed, organizations must blend digital and human capabilities. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives to spark change. BCG delivers solutions through leading-edge management consulting along with technology and design, corporate and digital ventures—and business purpose. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, generating results that allow our clients to thrive.

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