As the global payments ecosystem continues to evolve, 2024 presents a landscape marked by simpler user interfaces, but with growing complexity behind the scenes.
According to McKinsey’s recent report, global payment revenues are expected to increase from $2.4 trillion in 2023 to $3.1 trillion by 2028.
Six major trends will shape this growth, including the continued decline of cash, the rise of instant payments, and the growing influence of digital public infrastructures.
Key Trends Shaping the Future of Payments
One of the primary drivers behind the transformation of payments is the decline in cash usage, particularly in regions like India and Brazil, where instant payments are rapidly gaining traction.
In contrast, cash usage in developed markets like the US and Germany continues to decline more slowly.
Instant payments, now firmly established in most major markets, are expected to further displace cash and checks, especially in historically cash-heavy economies.
Another significant trend is the growing adoption of digital public infrastructures (DPIs), which are supporting inclusive digital ecosystems in countries like Brazil and India.
The rollout of DPIs in emerging markets, such as Indonesia and Nigeria, will further enhance payment accessibility and security, ensuring a more efficient flow of transactions.
Evolving Payment Platforms and Disruption
The payments ecosystem is also witnessing increased competition from intermediary platforms like Shopify and Square, which are capturing a growing share of global commerce.
With more than 30% of global consumer purchases being processed by platforms and marketplaces, traditional incumbents face growing pressure to innovate.
Real-time payments are becoming a differentiator, especially for transaction banking, where commercial clients are demanding the same seamless experience they encounter in their personal lives.
The rise of central bank digital currencies (CBDCs) also promises to set new standards for digital payments, offering a baseline for cost and service expectations while serving as an alternative to private stablecoins.
Challenges and Opportunities
While global payment networks have made great strides, challenges such as increasing complexity, fraud prevention, and regulatory pressures continue to grow.
To capture the next wave of growth, payments players must invest in anti-fraud systems, scalable infrastructure, and innovative payment solutions that cater to the evolving needs of both consumers and businesses.
As the payments industry becomes increasingly interconnected, players will need to remain agile and responsive to capitalise on the $700 billion in additional revenue expected by 2028.
The future of payments promises to be both exciting and challenging, with simplicity and complexity coexisting as payment providers navigate this evolving landscape.
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