Innovation is opening significant opportunities, but emboldened competitors are tightening the time frame for pursuing them.
Payments snapped back from the rigors of the pandemic faster than most observers would have expected. Analysts use the term elastic to describe a market participant’s success in absorbing change. But the payments industry wasn’t just elastic—it was a slingshot. The nimbleness with which it adapted to the crisis enabled economies the world over to rebound faster as well.
As purchasing habits shifted almost overnight from offline to online and from cash to noncash, payments players responded in kind, accelerating e-commerce enablement, expanding fulfillment options, and streamlining point-of-sale and online checkout. They helped people who were dealing with financial uncertainty by providing debt relief, flexible installment purchases, supplier financing, and cash-flow management.
Although many industry experts, including BCG, expected payments growth to slow significantly as a result of the crisis, revenues declined only marginally from 2019 to 2020. We now anticipate that the total revenue pool could nearly double to $2.9 trillion by 2030, up from about $1.5 trillion today.
But growth has a price. The industry’s success is attracting new players and leading to faster innovation. Over the next several years, we’re likely to see continued platformization as payments acceptance and services become embedded in more digital ecosystems and as software solutions become more specialized. Regulators, governments, and central banks are engaging more actively, too. Many are developing new payments frameworks and holding players to higher standards in a number of areas. As a result of these changes, most industry participants will have to adapt their strategies, operating models, and routes to market—in some cases, retooling down to the core.
These are among the findings of BCG’s 19th annual analysis of payments businesses worldwide. Our coverage opens with a comprehensive market outlook, examining global trends and regional performance. Then we examine the likely implications of these trends for the industry’s major participants—focusing on challenges they’re likely to face over the next five years and on actions they can take to secure long-term growth.
The pandemic revealed the payments industry’s ability to respond to change. Now is the time to build on this capability. The race for advantage starts now.