State of global payments: Six trends shaping the industry

Payments growth and transformation

The global payments industry has been remarkably resilient despite intensifying macroeconomic challenges and global instability.

Global payments revenue grew 5% annually between 2017 and 2019 before contracting 10% in 2020 due to the global pandemic, according to Statista. However, the industry has recovered quickly, growing 16% between 2021 and 2022. Total revenues now exceed US$2.2 trillion, a US$500 billion increase since 2017.

Payments growth persisted despite the industry undergoing significant transformation:

These drivers will continue to reshape payments, bringing growth, new opportunities and challenges across key payments categories.

Six key payment areas

Card and alternative payment rails

Despite increasing competition from alternative payment rails, card usage has continued to grow strongly. Consumer credit card transaction value across all channels increased almost US$800 billion between 2021 and 2022, and now exceeds US$13 trillion, according to FIS Worldpay.

While card payments are driven by digitization and mobile centricity, technology and regulation are enabling emergence of innovative alternatives.

The key payment technologies that will continue to shape the global payments landscape, both assisting and challenging credit cards are digital wallets , QR codes and real-time payments. Indeed digital and mobile wallets accounted for 49% of e-commerce spending in 2022, and are set to continue to increase their market share.

Financial institutions (FIs) that can harness the opportunities of payments modernization, and enable a broader range of payment flows, can improve their operational efficiency, generate new revenue streams, boost customer satisfaction and loyalty, and increase their customer base.

Open banking and data

The open banking industry is growing, driven by both regulatory requirements, such as PSD2 and PSD3 in Europe, and innovation enablement.

Indeed, the total number of global open banking transactions not only more than doubled between 2022 and 2023 alone, reaching almost $850 million, but are forecast to exceed $6.5 billion by 2027, an exponential increase, according to Juniper Research.

The progression of open banking to open finance and potentially to open data will enable greater monetization potential and greater added value to the public, thereby driving adoption.

While financial institutions face a range of API distribution and integration challenges, open banking has the potential to enable additional or enhanced services, such as Super Apps, embedded finance, programmable payments, and e-KYC , as well as improve business performance and drive income growth.

Merchant acquiring

The growth of the payments sector is driving expansion of the acquiring market, enabling new entrants and innovation. Total revenues in the acquiring industry are expected to grow at a CAGR of 8.7% in the next few years, exceeding $160 billion by 2026, according to BCG.

However, traditional acquirers face intensifying pressures from growing competition, constantly evolving payment solutions and lower expected margins. Indeed, non-bank players are capturing a growing share of acquiring revenues. In the US, payment facilitators more than doubled their acquiring volume from 2019 to 2021, according to Glenbrook.

To meet these evolving challenges, Mastercard Data and Services can help traditional acquirers across the acquiring value chain, including improving their operational efficiency, optimizing current portfolios and segment mix, developing compelling value propositions, and assessing partnering opportunities with fintech and technology companies.

Crypto and innovative payments

In recent years, there has been an unprecedented acceleration in the adoption of digital assets globally.

While the total number of cryptocurrency wallets grew by 75% from 2020 to 2022, reaching 81 billion wallets, the number of cryptocurrencies worldwide have exploded from 66 in 2013 to over 9,000 in 2023, according to Statista.

Despite the recent turmoil in the sector, retail and institutional interest in digital assets remains high. Although the adoption of crypto solutions by traditional financial institutions is at an early stage, FIs can harness this burgeoning technology to enable additional services and revenue streams.

Fraud and payments security

As organizations and individuals embrace the convenience and efficiency offered by interconnected systems, consumer concern about the security of payments is also growing.

Indeed, the global transaction value of e-commerce fraud alone grew an estimated 16% between 2022 and 2023, and is set to continue to increase strongly, according to Juniper Research.

As fraud becomes more complex, industry players need to evolve to ensure security and stakeholders’ trust. Businesses will need to adapt their data security infrastructure and processes, as well as continually improve authentication, authorization and fraud performance to both comply with regulations and meet the evolving threat landscape.

ESG integration

Sustainability is becoming a key social and regulatory priority in the financial and payments industry. Indeed, more than three quarters of the world’s largest 250 companies now have targets in place to reduce their carbon emissions.

However, sustainability is not just about complying with evolving regulations and stakeholder expectations. It is fast becoming an important growth area and is increasingly seen as a competitive advantage for financial institutions.

Organizations can leverage D&S’s end-to-end offering to identify key ESG opportunities, design and implement organization-wide sustainability strategies, and develop winning ‘green’ product value propositions.

Access the full ‘State of Global Payment Market’ report today to explore the main drivers and trends transforming the global payment industry, and find out how Mastercard Data & Services can help you navigate the challenges and opportunities of this evolving market.