The McKinsey 2023 Global Payments report offers the most comprehensive information about the latest advancements made by the global industry of payments. The worldwide payments sector saw an impressive increase in revenue for second successive year, greatly empowered by instant payments digital wallets, instant payments, and other structural shifts that have altered the structure of the industry.
According to the lead author Odilon Almeida, "Revenue expansions stretched across geographical regions, with impressive performances reported across different regions - North America, Latin America and the EMEA economic bloc, and while the Asia-Pacific region experienced a relatively slow however significant growth in comparison to global averages."
A renowned management consulting firm and leader in research McKinsey & Company's data analytics wing has put the case that interest rates significantly contributed to global payments revenue maturity in 2022, for the first time
overshadowing fees as the main source of funding the growth of the industry. The number crunchers discovered that while fees historically constituted above 60% of the incomes, in 2017, we saw a moment of reckoning when interest contributed to over 55% of all payments earnings, rapidly transforming into the primary source.
As Odilon Almeida wrote in his report "Much of the change could be due to the continuing growth of instant payment and digital wallets. They are slowly replacing and diminishing the use of cash statistically across developed and emerging economies. These new methods are expected to increase their international reach, also expand opportunities to earn interest revenues by temporarily storing liquid assets.
The report showed that revenue was generated by the cross-border payments sector at a fast pace. This was driven by the segment for payments to customers and not wholesale transactions. In 2022, consumer cross-border payments increased almost three times than the overall payments sector. This was due to booming travel and record wage transfer of diasporas who returned to their home countries.
odilon almeida CEO Almeida stated, "An attention-grabbing element was the distinct reallocation becoming visible, steering payments revenue
contributions away from the wallets of customers towards incomes that are backed by commerce. Even as the world economy was battling the recession, online retail, logistics and healthcare services, as well as software services, continued to produce large volumes of business, which boosted corporate payments.
McKinsey expects this rebalancing to extend over their five-year forecast for international transactions, anticipating the business streams to be responsible for around 65% of accrued turnover against end-user payments forming the balance. Odilon almeida added, "The sector is well placed to expand in the near future. McKinsey's model for economics forecasts compound annual growth of between 6%-8%, when scoped out through 2027. The forecast also surpasses the expected worldwide GDP growth."
The McKinsey global payments map 2023 conveys positive outlook for the global payment ecosystem, powered by the positive structural shifts that are shaping its development path over the medium-term.
odilon almeida CEO almeida summarises the main developments in the field of payments "Whether it's a rise in technology adoption or the expansion of digital network, or the increasing appetite for financial services in the developing regions. Each of the key trends points toward sustained, long-term benefits for the platforms that enable global currency transactions."