Strong balance growth in China is cementing the region's dominance.
McKinsey's Global Payments Map, an annual global payments research which is a composition of all of the intermediary revenues for global payment providers, revealed the greatest single year of growth in payments at 11% with revenues soaring to $1.9t in 2017. But one of the highlights of the report is the strength from the Asia Pacific region boosting this growth.
Nearly half (44%) of global payments revenue now come from APAC at $900b compared to less than a quarter of the total global revenue just six years earlier.
"Assuming the current economic state, APAC is going to drive about two-thirds of the revenue going forward just as we start to see all the growth in balances on the commercial side," said Phil Bruno, partner and head of McKinsey's Global Payments Practice, at Swift International Banking Operations Seminar (Sibos) 2018 held in Sydney, Australia. "And from a product breakdown, what we're seeing is a little bit more drive towards domestic transactions. The liquidity side is going to be much more modest than what we've seen in the past."
Bruno also added that APAC's strength in payments is dominated by growth of balances in China. The trend in electronification and growth is also mainly because of the rising popularity of alternative payments solutions and e-commerce.
"You would say that APAC (3.7%) and Latin America (4.4%) look a bit like the laggards in cost of payments for the economy," Bruno said. "But these are the regions that are having the most interesting events going on to actually try to move this area: in APAC with great electronification going on in China and demonetisation in India. I would say APAC is the interesting one to watch that I would put on the consumer electronification that's primarily at the consumer side but there are certainly some things going on in the commercial side as well."
APAC has been dominating the overall growth in revenue in global payments for several years, and Bruno reckoned the outlook is still up. "Over the next four to five years, we can say that this growth is going to continue. And we're assuming that economic projections going forward are believable and consistent."
Sibos is an annual banking and finance conference organised by the Society for Worldwide Interbank Financial Telecommunication (SWIFT). Elisha Yamzon of Asian Banking & Finance will be present at the four-day event from October 22-25. For editorial opportunities, kindly send an email to email@example.com. For advertising opportunities, kindly send an email to firstname.lastname@example.org.
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