The global payments industry finds itself at an inflection point. Once a perennial outperformer, the sector is now facing the reality of slower growth, investor impatience, and mounting operational complexity.
Boston Consulting Group’s 2024 Global Payments Report, titled “Fortune Favours the Bold,” offers a sobering assessment — and a call to arms for those aiming to lead in the next chapter of payments innovation.
In numerical terms, the slowdown is stark.
Global payment revenues, which hit $1.8 trillion in 2023, are projected to rise to $2.3 trillion by 2028 — a compound annual growth rate (CAGR) of just 5%.
That compares with 9% growth annually between 2018 and 2023.
Markets once responsible for the rapid ascent of digital payments — including the US, UK and much of Northern Europe — are now mature, with revenue expansion increasingly tied to efficiency and ecosystem strategy rather than raw adoption.
At the same time, investor sentiment has shifted.
Value-oriented investors now make up a third of the capital base in the payments sector, up from just over a quarter in 2021. The implication is clear: returns matter more than hype.
Many merchant acquirers, previously favoured for their exposure to e-commerce, have seen annual total shareholder returns fall by double digits since 2021.
By contrast, networks like Visa and Mastercard have performed more robustly, thanks in part to their diversification into areas such as open banking and data monetisation.
The Technology Imperative
One of the report’s strongest conclusions is that technology modernisation is no longer optional. Legacy architecture and technical debt are impeding scalability and innovation.
The firms that succeed over the next five years will be those that invest now in modular, cloud-native platforms — systems that reduce cost-to-serve, enable real-time functionality, and accelerate time to market.
Adyen and JPMorgan are cited as exemplars, each deploying unified platforms and agile delivery models to support innovation at scale.
AI and the New Differentiators
The emergence of generative AI (GenAI) is another clear disruptor.
While 85% of surveyed financial institutions believe GenAI will have a transformative impact, only 18% have articulated a defined strategy.
Early movers — including Stripe and Klarna — are already deploying GenAI to drive efficiency, improve customer experiences, and enhance developer platforms.
For others, delay risks widening an already significant readiness gap.
Strategic Pressure on Incumbents
Banks are also under pressure.
Traditional strongholds in cross-border payments, merchant services and commercial flows are under siege from more nimble digital challengers.
To remain relevant, institutions must lean into strategic partnerships, acquisitions, and embedded finance models.
Capital One’s partnership with Stripe, HSBC’s launch of the Zing app, and Fifth Third’s acquisition of Rize Money all illustrate the increasing urgency to reposition.
The rise of instant payments — with live schemes now active in over 60 countries — adds another layer of complexity.
Leaders must not only integrate these faster rails, but also build layers of value around them: fraud prevention, consumer protection, dispute resolution and seamless user experiences.
BCG’s central thesis is unambiguous: incrementalism is no longer enough.
Payments players must choose between optimising for short-term margin or embracing transformation that delivers long-term leadership.
Those that succeed will not merely ride the next wave of disruption — they will define it.
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