The 2021 McKinsey Global Payments Report
By Alessio Botta, Philip Bruno and Jeff Galvin – Last October, when we published McKinsey’s 2020 Global Payments Report, it was already clear that the pandemic’s economic impact would lead to the first decline in global payments revenues in 11 years.
One year later, the picture is unexpectedly positive—on the payments front—despite challenges. Payments revenue did indeed decline—to $1.9 trillion globally—but by less than we anticipated last fall. Indicators point to a nominal but geographically uneven rebound in 2021, bringing revenue back into the range of 2019’s record high. From there, McKinsey projects a return to historical mid-single-digit growth rates, generating 2025 global payments revenue of roughly $2.5 trillion.
The relatively muted 2020 topline numbers mask some important countervailing effects, however, which are poised to reset the scale of opportunity for payments players for years to come. The pandemic accelerated ongoing declines in cash usage and adoption of electronic and e-commerce transaction methods. Revenue gains in these areas were offset by tightening of net interest margins earned on deposit balances. All these trends are expected to outlast the pandemic. The contraction of net interest income—combined with technology breakthroughs and the impact of open banking and fintech innovation—has spurred the creation of revenue models that within five years will offer adjacent opportunities as large as the core payments revenue pool. more>