Global payment revenues in the first half of 2020 (1H20) contracted by an estimated 22% (roughly US$220 billion or RM915.31 billion) relative to the first six months of 2019, said US-based management consulting firm McKinsey & Company.
In its Global Payments Report 2020 titled “Accelerating winds of change” released today, McKinsey said it expects full-year 2020 global payments revenue to be roughly US$140 billion lower than in 2019, a decline of about 7% from 2019, which leaves revenues 11% to 13% below the pre-pandemic projection for 2020.
It explained that consumers in certain geographies seem to be paying off credit-card balances in preparation for challenging times ahead.
By the end of 2020, McKinsey expects a shift of four to five percentage points in the share of global payment transactions executed via paper (cash and checks) – down from 69% in 2019.
It said interest-dependent revenue components are likely to remain suppressed for an extended period, mostly affecting banks that provide payment services.
McKinsey said the payments industry of Asia Pacific ex-China could suffer larger declines beyond 1H2020 as its revenue model is more affected by net interest margin contraction.
It said Europe may be poised for a swifter rebound, given that margin compressions had already been absorbed.
McKinsey said volume growth has been driven by the acceleration of digital migration in southern and eastern European countries, flanked by strong government measures protecting customer spending.
In North America, the revenue benefit from an accelerated shift to digital channels has been more than offset by credit-card economics, where outstanding balances are down nearly a third from 2019 levels and delinquencies threaten to increase.
Meanwhile in Latin America, which is characterised by a significant unbanked population, cash usage will likely remain resilient, whereas among the banked, Visa-supported mobile wallets such as PLIN and Yape have gained more than a million users since December 2019, with the pandemic accelerating this trend.
Source: The Edge