McKinsey Global Payments Map 2017

Global Payments 2017: Amid Rapid Change, An Upward Trajectory Global Banking Practice Global Payments 2017: Amid Rapid Change. An Upward Trajectory Introduction 3 Introduction An Upward Trajectory For An Upward Trajectory for 5 Global Payments Global Payments Six Key Insights 8 Six Key Insights High-Growth Opportunities 13 High-Growth Opportunities . I . reinforce our previously stated view that the industry has reached a turning point. Global Payments 2017: Amid Rapid Change. the dynamics underpinning performance in various countries vary. For the next five years. however. making payments a $2 trillion dollar industry by 2020. revenue drivers in China are starkly different than those in the United States. the global payments industry accounted for 34 percent of overall banking revenues—up from 27 percent just five years earlier. according to McKinsey’s latest Global Payments Map data. for instance. annual growth will average 7 percent. As is always the case. An Upward Trajectory 3 Introduction Introduction In 2016. with strong fundamentals providing a buffer against macroeconomic uncertainties. The overall data. . The insights in this paper are based on Beyond the top-line revenue numbers. to fuel significant disruption in the coming credit cards remain the primary rev- years. Payments Map. reactive role in this transformation. a meaningful portion of n Fee-based payments revenue now performance in payments is related to nearly equals liquidity-driven income. The payments industry outperformed most n Payments between consumers and financial services sectors in 2016—indeed. others offering data. These solid results come at a petition and a frequent focus on B2B time of increased change.4 Global Payments 2017: Amid Rapid Change. stepped up the pace of innovation. which has been the ments Map led to six key insights—some industry’s premier source of information counterintuitive. on worldwide payments transactions driven validation and subtle twists on and revenues for two decades. even as volume increases. n Although trends indicate that consum- ment of e-commerce ecosystems stand ers are less likely to carry balances. Financial institutions must rise to the enue driver in the Americas. and are occasion and play a formative rather than projected to extend their lead. the 2016 version of McKinsey’s Global the results of this year’s Global Pay. ness are on a clear positive trajectory as n Cross-border transactions still gener- well—particularly electronic transaction ate substantially higher margins than volumes and account balance growth. despite heightened com- industries. an im- business revenues. businesses represent the largest payments was a stand-out among all opportunity. meaningful impact in several countries. macroeconomic factors—increasing n Consumer revenues have overtaken global GDP growth expectations. domestic. . n The war on cash continues to have But the fundamental aspects of the busi. proved interest rate environment—largely beyond payments executives’ control. and the advent of open banking and develop. Non-banks have and C2C. The map conventional wisdom—that can inform an gathers and analyzes data from more effective payments strategy: than 40 countries. An Upward Trajectory As always. as always. 1 just five years earlier—payments will represent a $2 trillion Indonesia. Chile. An Upward Trajectory 5 An Upward T for Global Pa An Upward Trajectory for Global Payments Despite unexpected interest rate declines in many regions as well as ongoing digitization across the globe. Peru by region.” September 2016) meaningful growth opportunities over the next five years. Japan. Hong Kong. growth in revenues from 2015 to 2016 other currencies in 2016. Taiwan. Global Payments 2017: Amid Rapid Change. US). gains. China. India. Comprising 34 percent of overall banking revenues—up from 27 percent Australia. based on two factors: (a) revenues in US dollar appear lower because of the appreciation of the US dollar against At a macro level. and (b) we enue grew by 5 percent to $1. Korea. Malaysia. Performance. Latin America’s3 19 percent America (Canada. which maintained . continuing a recent trend of solid tive double-digit performance. every region offers our 2016 report (“Global Payments 2016: Strong Fundamentals Despite Uncertain Times. Thailand dollar business by 2020.6 trillion in marked the region’s second consecu- have revised downward our estimates of cross-border revenues based on 2016. The new insights. varied 2 second-fastest growing region was North 3 Argentina. Mexico. Brazil. Singapore. global payments rev. Colombia. payments remain a large and growing industry. While Asia-Pacific1 will contribute 2 US dollar-denominated revenue figures have been restated from the majority of net new revenue. with card volumes maintaining $725 billion) of the global revenue pool. Switzerland. Slovenia.1 0.7 0. and value-chain expansions outweigh bility—erasing all of the region’s revenue Russia. 4 Denmark.7 0.3 03 0.2 0. particularly on gains since 2013 (Exhibit 2).4 0. Ireland. and its 5 percent growth led to 2016’s Margins. Nigeria. A widely anticipated 6 percent in 2016 (Exhibit 1).6 0. or robust. Italy. consolidations. Czech Republic. Finland. growth in fee-based revenues (as opposed to revenues Asia-Pacific continues to comprise driven by interest margins) is even more the largest share (45 percent.1 Latin America 0. Spain.1 0. EMEA4 revenues slipped by Greece.5 0.1 8 0. Belgium. Netherlands. 3 percent—after two years of relative sta- Morocco. already healthy. but by no means certain rebound in global interest rates would only brighten While total payments revenue is growing this outlook. Norway.3 0.3 0. Germany.1 0.2 annual growth +7% 1. Portugal.4 0.5 1.1 0.5 0.2 1. well ahead of GDP.4 0. South Africa. Slovakia. Romania. for the entire time series.3 4 APAC 0. Source: McKinsey Global Payments Map its 2015 year-on-year growth rate of the consumer side.5 6 0. improve as growth in volume and interest Meanwhile. Transaction .3 0. efficiency gains. Hungary. margins. France.7 1.3 1. a solid upward trajectory in all regions. Sweden. UK competitive pressures. Austria.4 North America 0.3 9 EMEA 0. 6 Global Payments 2017: Amid Rapid Change.6 1.3 0. An Upward Trajectory Exhibit 1 Global payments Payments revenue $ trillion1 CAGR (2016-21) revenues will +7% Percent average 7% +5% 2.3 2011 2012 2013 2014 2015 2016 2021 Share of total banking Percent 27 28 28 30 32 34 36 1 At fixed 2016 $ exchange rates.3 0. are poised to largest dollar increase in revenues.2 0. Poland.4 through 2021 1. as well as transactional revenues. 3 Fee revenue on domestic payments transactions and account maintenance (excluding credit cards). Source: McKinsey Global Payments Map volumes. 2 Net interest income on current accounts and overdrafts. all continue to grow in EMEA. These . 2016 North Latin Percent. account and credit card balan. however. Global Payments 2017: Amid Rapid Change. 4 Remittance services. 5 At fixed 2016 $ exchange rates. ($ billion) sources differ APAC America EMEA America 100% = $725 $405 $280 $170 across regions Commercial Cross-border transactions1 8% 8% 4% 15% 5% 13% 10% 13% 9% Account-related liquidity2 36% 9% 3% 5% 19% 0% 8% 21% 3% Domestic transactions3 18% 20% 3% 14% Commercial cards 2% 17% Consumer Cross-border 1% transactions4 18% 18% Account-related liquidity2 38% 35% Domestic transactions3 8% 7% 13% Credit cards “Credit card and liquidity “Commercial driven” “Credit card driven” “Balanced” driven” 2015-16 year-on-year growth. interest margins. percent5 +5 +6 -3 +19 1 Trade finance and cross-border payments services. for the entire time series. were offset by falling ces. gains. An Upward Trajectory 7 Exhibit 2 Revenue Payments revenue. Fee-based dropped substantially in EMEA. it in- revenue growth of 7 percent annually creased from 58 percent to 62 percent from 2006-16 significantly outpaced of overall revenue in Latin America. recent product of the cyclical interest rate history reinforces the need for pay- environment. and charting a slow recovery path come. Net interest income ments operators to seek robust new (NII) grew at a 6 percent CAGR from revenue foundations. Liquidity tilt the balance once again towards revenue is less stable. A closer look can inform a more effective payments strategy. with a CAGR ery—particularly in Europe—could of 9 percent since 2013. This pace of growth While it is possible that a rate recov- has accelerated recently. a natural by. falling dramatically in 2009 nearly equals liquidity-driven in. Fee-based payments revenue now 2006-16. be it from steady . liquidity-based revenues. fee compression. An Upward Trajectory Six Key Insights Six Key Insights Several unexpected and perhaps counterintuitive trends emerge when we look past the top-line numbers. The regional picture is now constitutes almost 50 percent of more nuanced—while interest income global payments revenue. 1. Revenue generated from fees since 2011. 8 Global Payments 2017: Amid Rapid Change. In the other three regions. where account balan. the challenge—and oppor- merce enablement. An Upward Trajectory 9 growth in transaction volumes and such growth opportunities. debit card use has overtaken cash est lift to consumer payments across as a payments vehicle at the point nearly all regions (with the exception of of sale. although the countries. risk and tunity—for payments providers is to fraud management. 2. rate environment. and in EMEA. higher baseline has clearly payments has been driven by credit been set. was primarily intended to continue to dominate. alternative sources potential to alter the competitive bal- of revenue in high-growth areas ance between banks and nonbanks. As with many of these high-growth or additional services such as com. The well-documented actions. India’s demonetization. respectively. with cash having fallen from Latin America. standing a painful transition caused consumer payments are driving the by the delayed availability of new majority of growth. with the consumer sector other means of electronic payments. in both North currency. other collateral effects were America and Latin America consumers welcomed by many in the industry—a account for nearly 70 percent of total sharp increase in the use of mobile revenue. commercial payments In the Netherlands and Sweden. Growth in consumer but a new. with the fee-based events. The war on cash continues to consumer segment is demonstrating have meaningful impact in several greater overall strength. cash growth slowed down—particularly in usage has dipped below 35 percent EMEA. The 3. Notwith- 64 percent. having edged ahead in 2016 largely These levels receded somewhat once as a result of the depressed interest the supply of paper money stabilized. wrap seamless value-added services around the core payments transaction. credit cards provided the great. Meanwhile. debit and credit cards. and actually force “grey money” out of the shadows increased their share in 2016 to and into taxable status. In absolute Consortium reports that in the UK terms. the same time. avenues.Global Payments 2017: Amid Rapid Change. Cash remains as PSD2 in the EU) will drive many a meaningful part of the payments . which involved reissuing 86 percent of In Asia–Pacific business revenues its currency. 52 percent to 42 percent of retail pur- ces contributed somewhat more). due to the decline in interbank and 20 percent of all payments trans- interest rates. Consumer revenues have over- taken business revenues. the British Retail cards across all regions. and South Korea momentum toward open banking is in the process of abolishing coins protocols (including regulations such altogether by 2020. pattern is not uniform across regions. The balance is quite even wallets. such as cross-border commerce. loyalty. At chases in the past three years alone. An Upward Trajectory Exhibit 3 Countries with Growth rate of electronic transactions. with a few the cost of remaining cash payments. Countries where electronic be the toughest to displace. Cross-border fears in some circles that electronic transactions. there is a notable correlation lucrative margins of up to 100 times between countries with high electronic their domestic counterparts for retail transaction growth and high revenue . and the residual volume will growth.g. India) (Exhibit 3). and for instance. deliver enues.. Malaysia. Cross-border transactions still gen- of ATM networks across all banks. both remittances and transactions generate lower unit rev- ecosystem-based payments. erate substantially higher margins Experiences like India’s recent cur- than domestic ones. Initiatives transaction growth rates increased by in low-cash usage countries are dem. Russia. high revenue size of bubble denotes payments revenue in 2016 growth are also 50 India Thailand Nigeria characterized 18 17 Brazil by high growth 16 15 Greece Indonesia in electronic 14 13 Malaysia South Africa Morocco transactions 12 Russia Korea Mexico 11 Chile Colombia 10 Slovakia Poland Romania Peru 9 China Hungary Australia Canada 8 Taiwan Argentina 7 Hong Kong USA Portugal Austria 6 Japan Italy Finland UK 5 Czech Republic Switzerland Singapore Ireland Netherlands 4 Spain France Sweden Denmark 3 Germany Norway Belgium 2 Slovenia 1 0 -25 -20 -5 0 5 10 15 20 65 Payments revenue growth rate. 2015-16 Percent Source: McKinsey Global Payments Map equation. Despite ness trade increases. 10 percent or more also enjoyed the onstrating new opportunities to reduce highest revenue growth. even as the rency overhaul provide other hints of volume of cross-border commerce potential pathways to fostering mobile and small and medium-size busi- wallets and other solutions. wide deployment and management 4. by optimizing nation.10 Global Payments 2017: Amid Rapid Change. exceptions (e. 2015-16 Percent Blue shading denotes countries where growth rate of electronic transactions is 10% or higher. despite heightened ference is not nearly as stark in the competition and a frequent focus business-to-business (B2B) space. rapidly into the SME space. will create new originating—that is. and streamlines payables processes However. Meanwhile. with the much-discussed consumer-to-consumer (C2C) category points remain about four times that of currently only 2 percent of the total. Among revenues but cross-border margins of 12 basis attributable to specific counterparty transactions. er’s—institution. real estate payments. 60 percent McKinsey expects that volume growth. a B2B solu- their positioning as global partners for tion that improves funds transparency the rising global affluent population. McKinsey expects greater complexity. Digital challen- These percentages may not be reflective gers are exploiting these opportunities of future opportunity or other strategic to build strong and growing portfolios considerations. 35 percent stem from B2B transactions. domestic counterparts. due to the margin pressure. Already today. driven by inter- foreign exchange revenues. tuition. Payments between consumers and alty payments to developers. And. relate to customer-to-business (C2B) driven by international marketplaces such transactions—nearly three-quarters of that amount accruing to the as Alibaba and Amazon. both e-commerce payments. which a consumer is the recipient generate relatively small revenue pools. However. An Upward Trajectory 11 remittances. and businesses represent the largest payments involving SMEs. the consum- revenue opportunities for focused players. transaction. The dif- opportunity. could create new revenue streams. Transactions for both banks and specialists. especially in the area of cross-border banks’ desire to maintain C2C volume e-commerce and peer-to-peer trade has as much to do with client engage- platforms. the more complex the with lucrative valuations. as the world is still globalizing. and the national marketplaces such as Alibaba premium positioning of the service. the greater the opportunity banks have an opportunity to reassert to provide added value and to price their role in this space by leveraging accordingly. this business will become ment as with direct revenues. on B2B and C2C. the additional that volume growth. more competitive with margin erosion . and Amazon. Global Payments 2017: Amid Rapid Change. cross-border banks and specialists. will create new revenue Examples of these transactions include opportunities for focused players. The average margin on a likely. Despite this pared to 6 domestically. com. For instance. roy- 5. remittance attack- cross-border consumer-to-consumer ers such as Transferwise are expanding transaction is 635 basis points. immediate access deposit and withdraw cash from ATMs to funds. credit cards re- on a steady growth curve. balances. payments similarly allay these security rather than from speed itself. includ. case of North America. credit cards alone payments grew by 42 percent in comprise 47 percent and 40 percent. It is also consumer. For . security concerns lead them to ing irrevocability. in the ments. real-time includes both network fees and net payments provide a more secure and interest on carried balances for both cheaper means to disburse social consumer and business card activity. and with business card a highly efficient means of distributing revenues driven more by fees than emergency aid relief. In North and and Zapp. monthly spend in full rather than as ACH transactions have continued carry balances. For SMEs. The concerns. In Singapore. Although card and standardized information content. incoming payments is an enormous benefit for managing cash flow. creating short-term examples. This the UK’s. business cards or customer refunds. This growth has 6. to extend their lead. percent since then. Real-time payments were cash flow issues. Over the next five years. 2016—a rate remarkably similar to respectively. the will play as meaningful a role as con- ability to receive immediate credit for sumer cards. SMEs and individuals man- payments is now generating new aging “hawker” stalls in Singapore payments revenue opportunities in require quick turnaround of funds to certain countries. welfare benefits—transferring funds with the solid majority contributed by directly into bank accounts. transaction transparency on a regular basis. Real-time is a bit allow for daily purchases of perishable of a misnomer.12 Global Payments 2017: Amid Rapid Change. In such a scenario. as most of the value raw food items. An Upward Trajectory H The rollout of real-time and instant example. quidity. funds are not available until UK and Singapore are two relevant a few days later. real-time Latin America. real-time payments are a superior cards will contribute more than half of means of making urgent supplier pay- each region’s growth as well. Faster main the primary revenue driver Payments enabled the introduction of in the Americas and are projected new UK solutions like Pingit. Paym. introduced in UK (branded as Faster real-time payments provide both Payments) in 2008 and have grown security as well as immediate access by an average annual rate of 43 to funds. While using cash as creation comes from other advantages a means of payment provides them li- O brought by these new systems. of payments revenue. For businesses. For government. Although consumers show a primarily come from the cannibaliz- greater propensity to pay their ation of cash and check payments. emergency payroll corrections. mature areas. Current account NII alone . Global Payments 2017: Amid Rapid Change. Credit cards account for a mere 36 percent of total payments revenue) 6 percent of total payments revenue. the US’s $183 annual revenue per through 2021. An Upward Trajectory 13 High-Growth Opportunities High-Growth Opportunities To achieve the growth mandates built into their business plans. Such opportunities exist in every region. is very different from come (credit card NII alone accounts for Brazil’s. most banks and fintechs will need to pursue high- growth opportunities to counterbalance the moderate growth in large. whether at a country or product level. Brazil relies more on interest in- growth economy. composition is expected to be stable Also. card is nearly double that of Brazil ($98). this 28 percent of total payments revenue). credit cards account for a significant implying further growth opportunities for share of payments revenue (in 2016: the latter. 48 percent in the The story in Indonesia. compared to the US’s more balanced Current accounts provide the largest profile (credit card NII accounts for share of revenue at 64 percent. 47 percent in Brazil. In both Brazil and the United States. another high- US). revenue by 2021. payments over the next five years. growth over the 5-year horizon. Looking ahead. This growth will be Steep drops in commodity prices and slow- driven by large transaction and balances downs in Chinese imports led to a pause growth. rate expectations. card revenues will be volume driven. current accounts provide the largest crease in use cases. increase attributable to improved interest particularly in credit cards (Exhibit 5. factors will take some time to rebound . for example. riding to 7 percent growth.” McKinsey & Company. How. In India to 3 percent. In 2016. from 2011-16. a revenues in India experienced a dip be- rate consistent with the trend established cause of the fall in interbank rates. despite some bumps in the road.5 While All regions will grow at solid overall rates 2016 revenue did indeed grow at over this period. or close to two-thirds cross-border revenues has been reduced of total current account revenue. China alone will deliver $250 billion “Global Payments 2016: Strong in 2016. unlike Indonesia. with balances Brazil. combined with solid transaction in the growth of cross-border revenues fees. current account revenue comes from NII. over 40 percent of the global total of September 2016. An Upward Trajectory accounts for nearly 40 percent of total fully. we have upgraded our outlook tinuing to lead the pack at 9 percent. they did not materialize as expected in China. cross-border ever. as net account balances continued their expected interest margins are expected to decline in double-digit growth in 2016. the potential for strong growth of net new payments revenue by 2021. nearly all of the payments should remain an area of focus. and where busi. of revenue and high margins. Roughly 38 percent of the re- (Exhibit 4). through 2021. more than half of the global increment.14 Global Payments 2017: Amid Rapid Change. with most of the on continued strong Brazilian performance. which comprises nearly 50 percent Asia–Pacific’s 8 percent growth. from credit cards in Brazil alone. 5 Fundamentals Despite Uncertain remains in place. given the in- too. com- of Asia–Pacific revenues. McKinsey forecasted 5 percent globally by 2021. The outlook for transaction gion’s absolute revenue growth will stem levels and fees remains largely unchanged. our five year-growth outlook for payments revenue. reaching $2. means it will ness payments strength shows no sign comprise $340 billion of new payments of abating. payments will be a $2 trillion The five-year horizon business by 2020. particularly in China page 16). All told. 66 percent of its growth. These After establishing an all-time high in 2015.2 trillion In 2016. McKinsey expects pay- making it more vulnerable to interest rate ments revenue growth averaging 7 percent changes. disproportionate share share of revenue at 53 percent. with account While our forecast for B2B payments rev- balances and interest margins contributing enue headwinds was borne out in EMEA. expected to lead the region. with Latin America con- 5 percent. bined with its large base. Nonetheless. Mexico’s 11 percent growth is also increasing by 11 percent to $30 trillion. Because macroeconomic Times. Eastern and drive growth. a conse- Germany. $ billion account-related 2016-21 2016-21 liquidity 100% = $620 billion 100% = $620 billion revenues will Account-related North America liquidity4 drive revenue 21 Domestic transactions3 growth over the 50 next five years 15 22 Latin America 54 APAC 9 2 Cross-border EMEA 26 transactions2 Credit cards 1 At fixed 2016 $ exchange rates. Global Payments 2017: Amid Rapid Change. for the entire time series. Despite this nominal growth outlook. 13 percent and 11 percent. respectively. the fastest-growing countries in Germany. An Upward Trajectory 15 Exhibit 4 APAC and Composition of net new payments revenues through 20211 Percent. terms. 4 Net interest income on current accounts and overdrafts. digital and agile trans- cash to electronic transactions are the key formations. Besides the recovery in interest rates. revenue from domestic transactions will be Revenue growth should continue to be an important growth driver in Finland and modest in EMEA. However. In South Africa. rate-driven recovery in current accounts will generate a greater lift in Western Eur. At the same time. global card ope. and South Africa are expected to Asia–Pacific will be India and Indonesia. From a product perspective. 3 Fee revenue on domestic payments transactions and account maintenance (excluding credit cards). in percentage opportunity to emerge in EMEA. through continuing Credit cards and a continued move from electronification. revenues are expected to grow at more we still expect $55 billion of new revenue than 7 percent annually over the next . at 4 percent. 2 Trade finance and cross-border payments services. Finland. while a infrastructure providers. we expect card quence of regulatory developments and payments—specifically debit cards—to competitive fee pressures. albeit with a different composition. operating Western European revenues will grow at margins may deliver more positive results similar rates (with the former nominally as EMEA realizes significant increases in higher). Source: McKinsey Global Payments Map $620 billion. at grow more robustly than the region overall. payments efficiency. including remittance services. and further consolidation of Eastern European growth drivers. a congestion of competition half of North America’s top-line growth. and will account for more than However. 2015-16 Percent Size of bubble denotes payments revenue in 2016. Consequently. on the consumer side will create margin Overall.20 0. In predominant driver. of total payments revenues are currently ery.10 0. interest revenue from pressures. and Nigeria.30 0. Consumer payments revenue growth Not surprisingly. More than 70 percent of with greater access to consumer credit. blue represents Latin American countries leads in terms of revenue margin 65 Argentina and revenue 20 Colombia growth rate Mexico Chile Brazil 10 Singapore Austria Indonesia Peru China Nigeria United Korea Canada 5 France Thailand Morocco States Poland Australia South Africa UK Belgium Switzerland 0 Finland India Russia Denmark Romania Netherlands Hong Kong -5 Slovenia Italy Germany Japan Hungary Ireland Czech Republic -20 Spain -25 0 0. 2016 Percent Source: McKinsey Global Payments Map five years. forecasts are sensitive to interest rate although an important country-level excep.05 0. more than 60 percent the later stages of global economic recov. The relative strength of countries like Argentina. or 50 percent—of main quite attractive despite nominally revenue growth. slower growth.25 0.16 Global Payments 2017: Amid Rapid Change. however. where the liquidity component different regions and specific countries of corporate payments will remain the are far more impacted by these swings. Ma- consumer payments revenues speaks to laysia.40 Revenue margin.15 0. higher-margin account balances will lead to the ma. opportunities in business payments re- jority—$315 billion. with stronger GDP growth intertwined derived from NII. An Upward Trajectory Exhibit 5 Latin America Revenue growth rate. Brazil. India. Perhaps less expected. revenue growth over the next five years .45 1. assumptions. payments revenue will exceed corporate across all regions. tion is China. global consideration in other countries—prom- transaction growth continues its strong. countries like Germany. macro-economic shifts. contribution will be less than 15 percent.Global Payments 2017: Amid Rapid Change. success in this soon-to-be arena. The UK’s Open Bank- payments equation. Overall electronic transaction-oriented revenue streams as transaction growth will average 7 percent well. An Upward Trajectory 17 in Brazil and India will be driven by NII. More than 70 percent of Germany’s slightly more rapidly than the transaction revenue growth through 2021 is expected counts themselves. ises to create dynamics conducive to steady upward trajectory. EMEA card transaction growth remains Korea. * * * The global payments industry continues an exciting one for both incumbents and to be locus of innovation and a center of new players. the than 30 percent of payments revenue from value conveyed by these payments will rise NII. Isolating the more revenue continues to evolve. expected rebound in interbank rates in As transaction-driven revenues comprise the eurozone. this will post the slowest growth (4 percent). ing initiative—and similar efforts under Consistent with past forecasts. Eastern Europe. and Slovenia derive less at a quite healthy 7 percent. the other extreme. characteristics make the current moment . This would merely return an increasing share of the overall pay- the interest composition of Germany’s ments equation. Although the Argentina. and Africa value chain. Slovakia. they provide a welcome payments revenue to near 2008 levels. and a clear fintechs. At combined with its high-growth sub-sectors. Globally. While the composition of payments over the next five years. three lishes a firmer foundation while opening geographies will post double-digit growth: new opportunities for players across the Latin America. $2 trillion industry will require a deep per- and buffeted by a number of external spective on exactly where the currents of forces—new regulation. further enhancing to derive from NII as an outcome of the revenue opportunities. however. In (the latter off a small base). the incursion of growth and opportunity flow. These strategy for tapping into them. it estab- lucrative card-based payments. The industry is also fast-moving. For both the former and opportunity in the larger financial services the latter. where interbank rates mature Western European card market are expected to fall from current levels. an buffer to the more volatile rate-related indication of the importance of rates to the income streams. .com The authors would like to acknowledge Tamas Nagy. and Liz Oates for their contributions to this report. An Upward Trajectory Contact For more information about this report.com Sukriti Bansal Expert. Luxembourg marc_niederkorn@mckinsey. please contact: Phil Bruno Partner. Pavan Kumar Masanam.com Olivier Denecker Partner. New York philip_bruno@mckinsey. Gurgaon [email protected] Global Payments 2017: Amid Rapid Change. Brussels [email protected] Marc Niederkorn Partner. An Upward Trajectory 19 .Global Payments 2017: Amid Rapid Change. transaction processors. mobilize for change. deeply committed to helping institutions in the private. public and social sectors achieve lasting success. e-mail paymentspractice@McKinsey. build capabilities and drive successful execution. credit card companies. With consultants in more than 100 offices in 60 countries. An Upward Trajectory About McKinsey & Company McKinsey & Company is a global management consulting firm. we bring unparalleled expertise to clients anywhere in the world. payments processing and transaction banking. or to contact the McKinsey Global Payments Practice. payments industry profitability. across industries and functions. For over eight decades. loyalty and marketing. technology firms and nonbanking firms) on strategic. . McKinsey’s Global Payments Practice McKinsey’s Global Payments Practice is a network of more than 100 partners worldwide serving a broad range of institutions (banks. The map gathers and analyzes data from more than 40 countries. The practice is recognized as a leader on topics such as digital payments. McKinsey Global Payments Map The McKinsey Global Payments Map has been the industry’s premier source of information on worldwide payments transactions and revenues for two decades.20 Global Payments 2017: Amid Rapid Change. We work closely with teams at all levels of an organization to shape winning strategies. credit card strategy for issuers and merchants. For information on the McKinsey Global Payments Map. our primary objective has been to serve as our clients’ most trusted external advisor. payments cooperatives.com. organizational and operational issues in retail and wholesale payments. . com/client_service/financial_services .Global Banking Practice October 2017 Copyright © McKinsey & Company www.McKinsey.