2015 may have been a landmark year for the global payments industry, but a new report suggests that what goes up must come down — even advanced payments strategies.
According to McKinsey & Company’s annual Global Payments 2015 report, the growth acceleration experienced by many payments firms over the past year is expected to slow. The previous year predicted that banks, money-transfer groups and other entities would grow by 9 percent, but McKinsey’s most recent findings point to a more modest 6-percent growth rate through 2020.
Phil Bruno, an analyst at McKinsey and an author of the study, told Bloomberg Business that the slowdown most likely will not be felt uniformly across the nation’s financial services.
“We had by all accounts a banner year that we’ve rarely seen in the payments industry,” Bruno told Bloomberg. “As we start to see the slowdown, a lot of this is certainly going to be regional, and we’re seeing it primarily in the regions which were growing fastest.”
Bruno identified Asian markets as having shown rapid gains with global payments revenue, and countries like China in particular could see more dramatic regression than other regions. However, any negative effect on the Chinese economy could have a ripple effect on the global stage. McKinsey identified that about 20 percent of all transactions comprise cross-border payments, but these interactions drive 40 percent of revenues. Any fractional loss would be felt by innumerable nodes in the system.
Various startups have offered their proprietary solutions for a slowing global payments industry, with cloud-based architectures included that reduce the integrative burden on firms. However, with the global payments space projected to hit $2 trillion by 2020, some financial companies might be content to simply wait out the rough patches and re-engage when the market is up.
To check out what else is HOT in the world of payments, click here.