Payments Industry Revenue Models in 2021 and Beyond

1.1 Market overview
1.2 Key findings
1.3 Critical success factors

2.1 Revenue generated from payments totaled $2tn in 2020
2.2 The most commonly used payment methods and their costs

3.1 The impact of the pandemic continues to be felt, masking other key changes to the payments industry
3.2 COVID-19 has had long-term implications for the global payments landscape
3.3 Contactless limits were increased, encouraging more digital transactions
3.4 Mobile wallets are convenient, rewarding, and popular with younger customers
3.5 Businesses face fivefold fee increases when trading between the UK and Europe post-Brexit
3.6 Mastercard case could pave the way for further action against multilateral interchange fees

4.1 The payment mix varies around the world, and spotlights digital growth hotspots

5.1 Global interchange income will reach $506bn in 2023f
5.2 Global MSC will reach $741bn in 2023f
5.3 New concepts and payment systems are emerging as an alternative to Visa and Mastercard
5.4 Open banking payment systems will account for at least 2 million transactions in 2021

6.1 Interest income was waning before the onset of the pandemic
6.2 Despite small changes, regional net credit loss remains relatively steady
6.3 Rollover rates in the UK have been affected by the pandemic
6.4 Substitution is another threat to traditional credit card providers
6.5 BNPL as a concept is growing globally

7.1 Abbreviations and acronyms
7.2 Definitions
7.3 Methodology
7.4 Secondary sources
7.5 Further reading
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Table 1: Revenue potential is highest for mobile wallets, but disintermediation is a risk for the sector
Table 2: Emerging payment solutions compete for purchases and decrease banks’ visibility
Table 3: The UK’s contactless payment limit has increased by over 200% in just over 12 months

Figure 1: The traditional payments value chain is increasingly being disrupted by new players
Figure 2: The most used payment methods account for less than 10% of payment value
Figure 3: Mobile wallet growth rates are over twice as high as for payment cards
Figure 4: PayPal has a robust share of online payments in many key countries
Figure 5: Asia Pacific as well as the Middle East and Africa lead the way in mobile wallet penetration
Figure 6: Global transactions have increased steadily since 2013, both in terms of volume and value
Figure 7: Mobile wallets will overtake cash as the dominant payment mechanism
Figure 8: Credit transfers consistently account for the majority of all transactions by value
Figure 9: Mobile wallets will account for two thirds of payments in Asia Pacific by 2023
Figure 10: Payment cards remain the most popular payment mechanism in North America
Figure 11: In Europe, payment cards are the most used payment mechanism but cash is still popular
Figure 12: Cash and cards remain the main payment methods in the Middle East and Africa
Figure 13: Regional banking infrastructure issues help cash retain its dominance in Latin America
Figure 14: Mobile wallets will see strong growth in North America, Europe, and Asia Pacific
Figure 15: Mobile wallet growth hotspots are mostly in the Asia Pacific region
Figure 16: Credit card interchange rates fell in the first half of the last decade, but have remained steady since
Figure 17: Average interchange rates for debit cards show considerable differences between regions
Figure 18: Singapore and the US have the highest credit card interchange rates
Figure 19: Canada’s domestic payment network helps it keep debit card interchange at a global low
Figure 20: Interchange income will grow strongly in the short term
Figure 21: Average MSCs vary significantly within regions for credit and charge cards
Figure 22: Canada has the lowest MSC for debit cards
Figure 23: MSC income will grow to $741bn in 2023
Figure 24: North America will see rollover rates decrease by 15% between 2013 and 2023
Figure 25: Countries with entrenched borrowing behavior will see some of the largest decreases in rollover rates
Figure 26: Credit losses will decline from a high of 9% in Latin America, but will increase in Europe and North America
Figure 27: In the UK, Klarna accounted for just under 1 million downloads from January to July 2020