After the slump of 2020, payment industry revenues bounced back in 2021, showing strong growth across all regions
Global payment revenues grew at an 11% rate and hit $2.1 trillion globally, according to a report from McKinsey.
Amidst the pandemic, the payments industry saw its first revenue decline since the 2008-09 financial crisis. However, the study showed a quick rebound in 2021. Moreover, all regions registered double-digit gains.
It is notable that fee-based revenue continues to increase at a faster rate than net interest income. Besides, it comprises more than half of the total profit.
Electronic payment transactions grew at a 19% rate in 2021. Meanwhile, global e-commerce saw a 17% increase. It was primarily driven by China, which now accounts for around 50% of all retail e-commerce sales.
The most dramatic Covid-19 impact is observed in cash usage, which plummeted by 15% in 2020. Nevertheless, reopening physical stores in 2021 didn’t bring the cash rebound. In fact, cash use grew by only 1%.
At the same time, A2A mainly substituted cash. Account-to-account transaction revenues continued to increase. Their contribution accounted for roughly 29% of 2021’s total rise in global revenue. Debit and credit and transactions also saw strong growth of 20% and 18%, respectively.
McKinsey expects payments revenue to top $3 trillion by 2026, as the payments landscape reshapes due to many factors. Thus, geopolitical tensions, capital market resets, commerce expectations, technology advancements, and societal responsibilities are creating more pronounced sector and regional dynamics.
This rapidly changing landscape will create new opportunities for incumbents and disruptors. If they adapt timely, they can win customers, develop new solutions, and claim market share, reshaping the competitive chessboard, predict the authors.