Six macrotrends shaping the future of payments (2024)

The financial services industry is in the midst of a significant transformation, accelerated by the COVID-19 pandemic. Electronic payments are at the epicentre of this change, as consumers become increasingly cashless, and the industry’s role in fostering inclusion becomes a significant priority.

A new report in PwC’s 2025 & Beyond series, Navigating the payments matrix: Charting a course amid evolution and revolution examines the payments industry and the key factors influencing it. How the industry responds to macrotrends will define how successful it is in the coming years and its impact on society overall.

The move to digital

Even before COVID-19, the increasing use of texting, QR codes or tapping mobile phones were evidence of a steady shift to digital payments— a shift that might ultimately lead to a cashless global society. Global cashless payment volumes are set to increase by more than 80 percent from 2020 to 2025, from about 1tn transactions to almost 1.9tn, and to almost triple by 2030.1

Asia-Pacific will grow fastest, with cashless transaction volume growing by 109 percent until 2025 and then by 76 percent from 2025 to 2030, followed by Africa and Europe.

This means that by 2030 the number of cashless transactions will be about double to triple the current level, across regions.

Underneath the shift lies a larger, more profound change. Not only are traditional ways of paying for goods and services — including the humble paper check and analogue invoices — set for radical transformation, but the entire infrastructure of payments is being reshaped, with new business models emerging.

That reshaping involves two parallel trends: an evolution of the front- and back-end parts of the payment system (instant payments; bill payments and request to pay; and plastic cards and digital wallets); and a revolution involving huge structural changes to the payment mix and ecosystem (emergence of so-called “buy now, pay later” offerings; cryptocurrencies; and work underway on central bank digital currencies).

The next five years

Six macro trends — driven by a combination of consumer preference, technology, regulation and M&A – will define how the next five years play out.

1. Inclusion and trust

In 2014, the World Bank set a goal under its Universal Financial Access program that by 2020, adults who were not part of the formal financial system would be able to have access to a transaction account to store money and send and receive payments.2 That goal is still some way off from being achieved, but a growing number of initiatives are addressing it.

In developing countries, financial inclusion will continue to be driven by mobile devices and providing access to affordable, convenient payment mechanisms. By 2025, smartphone penetration is estimated to reach 80% globally, driven by uptake in emerging markets.3 Trust in these systems, particularly as central banks consider the feasibility of CBDCs, puts new emphasis on the role of supervisors to ensure data privacy and traceability for consumers and businesses.

2. Digital currencies

CBDCs — digital tokens or electronic records that represent the virtual form of a nation’s currency — along with private sector cryptocurrencies are predicted to have the biggest disruptive impact over the next 20 years. The report found that financial services organisations surveyed in Europe, the Middle East and Africa with more than US$5bn in revenues cited “market uncertainty and potential disruption,” such as the introduction of CBDCs, within their top three concerns.

Scepticism within central banks about the potential of private sector cryptocurrencies to undermine the conduct of monetary policy may begin to shift, as some players have said they’re prepared to facilitate use of such digital assets.4

3. Digital wallets

Digital wallets allow consumers to load and store payment methods and access funding sources, such as cards or accounts, on their mobile devices. These wallets will be increasingly pivotal as a payment ‘front end,’ as exemplified by Apple Pay, the relaunched Google Pay and the rise of WeChat Pay and Alipay in China.

The use of digital-wallet-based transactions grew globally by 7 percent in 2020, according to a report by FIS, which predicts that digital wallets will account for more than half of all e-commerce payments worldwide by 2024, as consumers shift from card-based to account- and QR code-based transactions.5

Looking ahead, as many as 86 percent of the 2025 & Beyond survey respondents agreed with the prediction that traditional payments providers will collaborate with fintechs and technology providers for innovation. 45 percent of respondents ‘strongly agreed’ that there will be increased investment in mobile technology beyond retail payments to support business-to-business (B2B) payments and the digitalisation of supply chains.

4. Battle of the rails

Behind-the-scenes payments processing — the ‘plumbing’ of payments — is also changing, as payment initiation changes from cards and traditional accounts to digital wallets and as regulators force the industry to strengthen, or build up, domestic infrastructure for payments.

As a result, international card networks and card processors, often US-domiciled, are facing pressure on their core business, and have started to reposition themselves to retain relevance. Outsourcing of cloud and platform infrastructure will become increasingly important, too. Eight out of ten financial services organisations surveyed for the report expected to have outsourced such infrastructure by 2025.

Processors and networks will also need to ensure relevance in the merchant services space, where payments are initiated.

5. Cross-border payments

Frustration with the traditional correspondent banking model, both cumbersome and costly in a world of instant, low-cost payments, has led to the intensification of non-bank providers. New players and solutions are competing with bank and card-based solutions at scale.

In the report, 42 percent of respondents surveyed felt strongly that there would be an acceleration of cross-border, cross-currency instant and B2B payments in the next five years. This is reinforced by the adoption of ISO 20022, a globally developed methodology for transmitting data which provides a consistent messaging standard for payments.

6. Financial crime

The pandemic’s effect in driving increased e-commerce provided an opening for fraudsters, with the average value of attempted fraudulent purchases rising by almost 70 percent in 2020, compared with the previous year.6

Open banking, combined with a set of new players and the shift towards payment initiation and digital wallets, is also opening new doors for all types of financial crime, such as the increased risk to consumers from authorised push payments (APP) scams across payment networks, globally. Payment providers that help merchants and their customers move money across borders might also enable sanctions evasion and money laundering.

Defining a new future

Accelerated by the pandemic, the shift to a cashless society and the rising role of payments as more than simply an exchange of value for goods and services create a once-in-a-lifetime opportunity for the payments industry to lead in financial services. At the same time, by becoming a cornerstone of the global economy, payments can serve as a catalyst for economic growth, innovation and inclusion.

Organisations need to define what their role will be in this evolution. It is critical to understand what they need to do to stay relevant and how to improve the customer experience and contribute to a bigger societal purpose.

Download the full report for further insights from the first in our Payments 2025 & Beyond series.

Six macrotrends shaping the future of payments (2024)

FAQs

Six macrotrends shaping the future of payments? ›

That reshaping involves two parallel trends: an evolution of the front- and back-end parts of the payment system (instant payments; bill payments and request to pay; and plastic cards and digital wallets); and a revolution involving huge structural changes to the payment mix and ecosystem (emergence of so-called “buy ...

What are the megatrends of payments? ›

To grasp the scale of the change it helps to consider these changes in three broad megatrends: payments digitization, payments modernization and rapid evolution in the fraud, risk and compliance decisioning landscape.

What is shaping the future of payments? ›

Speed, convenience and competition are shaping the future of payments. Cash is still king but increasingly seen as a way to store value rather than make payments.

What are the seven forces reshaping the payments industry? ›

Our report, The rise of PayTech – Seven forces shaping the future of payments, aims to help PSPs assess the level of innovation enabled by PayTechs across the most influential areas impacting payments today: open banking, real-time payments, cross-border payments, buy now, pay later, digital wallets and super apps, ...

What is the future of the payments industry? ›

The future of the Payments industry is decidedly digital. With the surge in fintech developments, consumers and businesses are quickly adapting to cashless transactions. The use of mobile wallets, digital currencies, and open banking systems are expected to dominate the industry.

What are the six categories of megatrends? ›

Leadership 2030: The Six Megatrends You Need to Understand to Lead Your Company into the Future
  • Globalization 2.0. Globalization 2.0 is fundamentally different from its predecessor. ...
  • Environmental crisis. ...
  • Individualism and value pluralism. ...
  • The digital era. ...
  • Demographic change. ...
  • Technological convergence.

What are the 5 megatrends? ›

Search the United Nations

The new report examines five megatrends: climate change; demographic shifts, particularly population ageing; urbanization; the emergence of digital technologies; and inequalities –that are affecting economic, social and environmental outcomes.

What will the payment system like by 2050? ›

Traditional bank accounts will be replaced by tokenized versions, tied to identity forms and applicable to both machines and humans. As AI cannot use physical wallets, the computing systems of financial services will rely on cloud-based infrastructure.

What is the meaning of future payments? ›

Future Payments means collectively, (a) any Upward Adjustment, plus (b) any portion of the Escrow Fund or the Stockholders' Agent Reserve that may become distributable to Securityholders pursuant to this Agreement and, if applicable, the Escrow Agreement.

Will there be cash in 2025? ›

Analysis from Barclays Investment Bank, meanwhile, predicts that the global transition from cash to digital payments would reach a tipping point moment in 2025, when absolute cash usage would decline from 41 per cent in 2019 to 20 per cent by 2030.

What is the next generation payment system? ›

Key Takeaways. Next-generation payments refer to advanced methods using AI, blockchain, and real-time processing for efficiency and security. Benefits of next-generation payment solutions include enhanced security, efficiency, real-time processing, and improved customer experience.

What are the six 6 various forces that make it necessary for organizations to change? ›

What are the various forces that make it necessary for organizations to change? The six specific forces for change are the nature of the workforce, technology, economic shocks, competition, social trends, and world politics.

What is the future of banking in 2030? ›

In the banking landscape of 2030, heightened social consciousness and a focus on environmental, social and governance (ESG) principles will prompt customers to prioritise banks with ethical and sustainable practices.

What will payments look like in the future? ›

As consumers continue to embrace the legacy of the pandemic and a surge in finance technologies, cash payments are expected to continue to decline in the coming years. The shift towards a cashless society has been gaining ground for some time now.

What are the trends in the payment industry? ›

Changing trends in payments

This includes frictionless payment methods, real time payments, digital wallets, open banking, mobile banking and cryptocurrencies.

What is the worlds biggest payment platform? ›

UnionPay. UnionPay (also known as China UnionPay, CUP or UPI) is the world's biggest card network with more than 7 billion cards issued. It's a popular payment method in China, South is the world's biggest card network with more than 7 billion cards issued.

What is the strongest current trend in payment processing? ›

Going Cashless Leads the Way for Digital Payment Trends

Common cashless transaction types include credit and debit, mobile wallets, ACH transfers, and any eCommerce transaction. Cashless transactions are expected to increase tremendously in the coming years, and businesses need to be prepared.

What is the trend in faster payments? ›

Regardless of region, real-time transaction volume is growing rapidly. Real-time payments, alone in the United States, are growing in the double digits quarter over quarter. Businesses that are not taking advantage of real-time capabilities will find themselves at a competitive disadvantage.

What is the outlook for the payments industry? ›

The growth of the payments sector is driving expansion of the acquiring market, enabling new entrants and innovation. Total revenues in the acquiring industry are expected to grow at a CAGR of 8.7% in the next few years, exceeding $160 billion by 2026, according to BCG.

What are the key megatrends? ›

The Megatrends and their implications
  • Climate change.
  • Technological disruption.
  • Demographic shifts.
  • Fracturing world.
  • Social instability.

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