SINGAPORE - Global payment revenue fell for the first time in more than a decade last year as a result of the Covid-19 pandemic and the accompanying economic slowdown, a McKinsey & Company report said on Monday (Oct 11).
It totalled US$1.9 trillion (S$2.57 trillion) last year, a 5 per cent decline from 2019.
But the drop was not as bad as feared and payments should rebound this year, the report added.
From there, McKinsey projects a return to historical single-digit growth rates, generating global payment revenue of roughly US$2.5 trillion in 2025.
By specific regions, the Asia-Pacific saw a 6 per cent decline in payment revenue last year.
This was less steep than Latin America's 8 per cent drop, but steeper than the 3 per cent fall in Europe, the Middle East and Africa, and the 5 per cent decline in North America.
The Asia-Pacific region has consistently outpaced other regions in payment revenue growth over the past decade, the report said.
Meanwhile, the muted figures from last year mask some important trends, such as how the pandemic accelerated ongoing declines in use of cash and increased adoption of electronic and e-commerce transaction methods, the report said.
"Real-time payments are playing an increasingly important role in the global payments ecosystem, with the number of such transactions soaring by 41 per cent in 2020 alone, often in support of contactless (payment methods) or wallets and e-commerce," it added.
Over the past year, Singapore saw 58 per cent growth in instant payments, compared with Britain's 17 per cent.
Small and medium-sized enterprises are getting in on the trend, as they are encouraged to use payment modes that best serve their consumers and themselves.
"Payments providers are competing to offer customised solutions like QR code, 'tap to pay', and link-based payments - processes initiated by merchants sharing a URL - that make the payment experience seamless, pleasant, and increasingly contactless," the report said.
It added that applications that capitalise on the infrastructure for instant payments have been an added impetus for such growth, citing Singapore's PayNow as an example.
Banks are also providing solutions tailored to specific customer segments.
The report mentioned DBS Bank, which implemented a fully automated real-time payment system for drivers at ride-hailing firm Gojek.
"This created a differentiating feature recognised by the client as a recruiting advantage. Rather than waiting until the end of the week for payment, Gojek's drivers can now transfer funds to their bank account after each trip," it said.
All these payment trends are expected to outlast the pandemic, the report noted.
"An opportunity of this magnitude draws attention - tech firms and ecosystem competitors are already focusing on these attractive, and often less regulated, elements of the payments value chain, rather than traditional interchange, acquiring, and transaction fees linked to payment flows."