The McKinsey Report on Global Payments 2023 offers useful information about the growth of the global payments industry in recent years. Worldwide payments saw a significant rise in revenue for the second year running, thanks to the instant payment system such as digital wallets, and structural shifts.
Odilon Almeida is the lead author of the study. He states that “revenue growth was asymmetric across the globe with a strong performance being recorded across various regions like North America, Latin America and the EMEA economy bloc. However, the Asia-Pacific region posted relatively slower but significant growth compared with the global average.”
McKinsey & Co’s data analytics division, a renowned management consultancy that specializes in research and consulting they stated that interest rates would be the most important factor in driving worldwide payments revenue maturation by 2022. This is the first time that fees are no longer the main source of growth for the industry. Their number crunchers deduced that although in the past fees comprised more than 60% of income, the year last saw a moment of reckoning when interest was responsible for more than 55% of the global income from payments, and is rapidly evolving into the predominant source.
Odilon Almeida, the author of the report said that “Much can be attributed for this change to the ongoing rapid growth of instant payment and electronic wallets, which are slowly replacing and diminishing cash usage across both developed and developing economies.” Future modalities that extend worldwide reach will increase the possibilities of earning interest income from temporarily stored liquid.
The report also found that the customer payments brought in more money than wholesale transactions. The global consumer cross-border payment yields have increased nearly threefold over the rate of growth recorded by the payments vertical overall in 2022, a sign of a booming global travel industry as well as record diaspora wages transfer to their home countries.
Odilon almeida remarked, “An element that caught my attention was the obvious reallocation, which shifted payments revenue from the wallet of the consumer to the commerce-backed earnings. When the global economy was struggling in the face of a recession, business volumes across different sectors like online shopping, logistics, healthcare and software services continued to be profitable, which boosted the value of corporate payments.
McKinsey predicts this rebalancing process to stretch over their evaluated five-year horizon for international transactions, anticipating that business streams will account for more than 60% of the total turnover against end-user payments forming the balance. Odilon Almeida said, “The industry is favorably situated for the next few years, as the consultancy’s econometric models forecast compound annual revenue advancement between 6to 8 percent as they look to 2027. outpacing projected global GDP growth.”
The McKinsey global payments map for 2023 offers optimism of the global payments ecosystem, powered by the positive structural shifts that will shape its growth in the near-term. The way it is summarized by payments expert odilon almeida CEO Almeida “Be it the increase in technology absorption, the proliferation of digital networks, or the increasing appetite for financial services in developing regions, every major trend suggests long-term, sustainable growth for platforms enabling global money moves.”
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