The 2023 McKinsey Global Payments Report reveals the changes taking place in the payment industry with the rise of instant payments and digital wallets paving the way to a new era of monetary transactions
In India, instant payments are expected to contribute less than 10 percent to future revenue growth because there are currently no fees charged for the Unified Payments Interface (UPI). Image: Shutterstock
Payments revenue has seen a double digit growth globally, for the second year in a row, as per the latest McKinsey Global Payments Report, titled ‘On the cusp of the next payments era: Future opportunities for banks’. Payments revenue refers to the income or earnings generated by businesses and financial institutions from various transactions involving the transfer of funds, such as payments for goods and services, money transfers, processing fees, and related financial services. It also includes the fees, commissions, and charges collected for facilitating and processing these payment transactions. Payments revenue can come from sources like credit card transactions, online payments, mobile wallets, wire transfers, and other forms of financial transactions where a fee or a percentage of the transaction value is collected as revenue by the payment service providers or financial institutions involved in the process.
The report covers more than 25 types of payments used in 47 countries, making up 90 percent of the world's economy. It points out that because more people are using digital payments instead of cash, the use of cash dropped by almost four percent worldwide in 2022. In the last five years, electronic transactions have grown almost three times faster than all other payment methods combined. Despite challenges in different parts of the world, payments revenue stayed strong globally, growing by 11 percent in 2022, which is the second year in a row it grew by double digits, reaching a record high of over $2.2 trillion. The report predicts that payments revenue will continue to grow by 7 percent by 2027.
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The largest economies in terms of payments revenue, including Brazil, India, Japan, and the United States, achieved robust outcomes in both interest and fee-based revenues.