12 insights for the global payments industry in 2023
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This document provides 12 insights into the global payments industry in 2023. It finds that digital wallets will represent over 50% of global e-commerce by 2026, and that real-time payment systems are gaining e-commerce market share faster than other payment methods in some markets. It also notes that cross-border real-time payment systems could eliminate the need for companies that process cross-border purchases. Finally, it argues that an omnichannel approach is needed to merge cash and digital payments to attract consumers in developing markets.
12 insights for the global payments industry in 2023
- 1. Plus 5 Big Picture ideas 12 insights for the global payments industry in 2023 Part of PCMIs Q3 MegaTrends update View Full Report
- 2. 2 2023 All rights reserved | Private and Con鍖dential | www.paymentscmi.com E-commerce By 2026, digital wallets will represent >50% of global e-commerce1 With the dematerialization of money, payment credentials need a place to live (wallets). Open-loop passthrough wallets are driving the bulk of spend. Google and Apple have consolidated their role as competitors. Within wallets, cards drive the bulk of volume. 1 Cards and RTPs will compete for 2nd place, with success of RTPs depending on the market RTPs will represent >40% in Brazil and India by 2026. Closed-loop RTPs have not significantly evolved past P2P (with the exception of China). 2 Cash is still highly strategic in some markets and is successful at attracting SEL C and D In markets with 30%+ unbanked, cash is successful at driving incremental demand for e-commerce. 3 Cross-border e-commerce is growing faster than domestic e-commerce around the world Especially in emerging markets, growing at 20%+ globally2 . This will continue as technology improves, with xborder RTP schemes possibly cutting out middlemen. 4
- 3. 3 2023 All rights reserved | Private and Con鍖dential | www.paymentscmi.com RTPs and multi-rail Brazils Pix P2M volume has exceeded debit card volume3 Purchases at merchants via Pix, Brazils RTP scheme, exceeded debit card volume in Q1 2023. Both credit and debit card volume fell, while Pix P2B grew, suggesting cannibalization of card payments by Pix and the imperative of a reinvented debit card value proposition 5 RTPs are gaining e-commerce market share faster than any other payment method4 in markets where government-led RPT schemes have scaled, being the #2 consumer use case (after P2P). Merchant decisions to promote RTPs with discounts have paid off . 6 Cross-border RTPs is the next evolution, manifesting first in Asia This trend will accelerate cross-border e-commerce and could eliminate the need for middlemen like dLocal, EBANX, etc. who provide local processing for cross-border purchases. 7 RTPs are unlikely to dethrone cards in the Europe and the US in the short-term despite the rollout of FedNow (US) and SEPA (Europe). This is due to the deeply entrenched card culture (US) and value-added services of cards and wallets (loyalty, credit, security). RTPs are most successful in less developed markets with a financial inclusion deficit and latent digital demand. 8
- 4. 4 2023 All rights reserved | Private and Con鍖dential | www.paymentscmi.com Cards, retail and ecosystems To capitalize on future growth trends, companies should focus on SEL C and D, who require a tailored approach There is still large opportunity to capture low-income consumers around the world, who need cash-friendly options, alternative credit scoring and innovative, contextual financial education. 9 Most of Africa, Mexico and Central America and pockets of Asia and the Middle East are still predominantly cash. Credit is the key. They have resisted payment digitization so far, despite widespread smartphone penetration. Point of sale lending and fractional payments is a huge enabler capable of shifting consumer behavior. 1 0 An omnichannel, ecosystem approach is required to merge cash behavior with digital In-person cash payments, click-and-collect, and other value added services are working to digitize low-income consumers and their shopping. 1 1 Open Finance is opening doors to enable expanded lending, especially when government-led and based on an open API infrastructure An opportunity for companies to provide data, service loans, and expand revenue. 1 2
- 5. 5 2023 All rights reserved | Private and Con鍖dential | www.paymentscmi.com Wrap up: 5 ideas to understand global payments in 2023 Wallets are the new cash. Consumers choose them for their convenience and security and increasingly for their value-add. The era of instant money transfers is here, disrupting the card business, pushing card networks into money movement like remittances and disbursements payouts. Xborder is the new innovation arena. 1 2 Credit is the new barometer for financial inclusion, with huge gaps still to be solved and big opportunity in alternative credit scoring. 3 Cash and omnichannel experiences should be deployed strategically by market capture the last mile, cash-only consumers (over two billion people worldwide). 4 Culture matters. More than investment, regulation, new fintechs, etc., what matters most to payment technology innovation is how people think and what they believe. 5
- 6. About PCMI PCMI provides market intelligence and strategy advisory services to companies in the global payments industry, helping them make smart decisions and grow amidst rapid market change. PCMIs founders have over four decades of market intelligence experience and have produced over 400 studies in the payments industry. We perform custom engagements adapted to our clients' investing and projects needs including market sizing, opportunity benchmarking, market entry, customer insights mand more. Sources 1. FIS, 2023. Global Payments Report 2023, PCMI analysis 2. 2023 PCMI E-commerce Data Library 3. Central Bank of Brazil, 2023 4. 2023 PCMI E-commerce Data Library VISIT PCMI Lindsay Lehr Managing Director lindsay@paymentscmi.com For inquiries about this infographic, please contact: