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Cross-Border Payments Help Drive Global Payments System Growth

By Bill Camarda

Recent research has shown strong revenue growth in the global payments system driven primarily by expanding e-commerce and rising cross-border payments, especially in the Asia-Pacific (APAC) region—suggesting that small and midsize enterprises (SMEs) face a rapidly “electronifying” payments landscape. North American SMEs already experiencing growth in credit card payments, partly due to rising digital and mobile transactions, may soon see trends involving new digital and mobile payment methods already in use in other parts of the world.

According to a McKinsey report, revenue throughout the global payments system rose by 11 percent to $1.9 trillion in 2017, the highest annual growth in five years.1 Reflecting this growth, McKinsey upped its revenue projections, anticipating nearly $3 trillion in global payments system revenue by 2022. After several years in which payments accounted for the same roughly 30 percent of the banking industry’s revenue, the trend has turned up.


That growth projection comes despite downward pressure on per-transaction payment fees from growing competition and more aggressive regulation. Boston Consulting Group recently projected that innovation and competition will compress U.S. payment providers’ margins by 3 percent, and that regulatory changes will drive down cross-border payment costs throughout Europe.2


‘Electronification’ and Digital Commerce Propel Global Payments System


McKinsey found that “electronification”—the move away from cash—is a core driver of revenue growth in the global payments system. Five years ago, 89 percent of the world’s transactions were performed in cash; now it’s only 77 percent, and debit and credit card transactions have nearly doubled. In 2017, North America crossed a major milestone: it became the first region to perform over half of its transactions electronically, translating into a whopping 450 e-transactions per individual.


Credit cards represented over half of North American payments revenues, “far more than any other geography.” McKinsey anticipates that growth in credit card usage throughout North America will continue to outstrip other payment forms, suggesting that wider use of these instruments may make sense as part of SME growth strategy.


Throughout the global payments system, digital commerce is a key driver of electronification. Digital commerce volume blew past $3 trillion in 2017, and McKinsey expects it to pass $6 trillion by 2022, with 70 percent occurring on mobile devices. APAC accounts for more than half of digital commerce volume and, led by China, McKinsey expects that figure also to be nearly 70 percent by 2022.

Of note, rapid growth in mobile digital commerce is expected worldwide, not just in APAC, suggesting that many North American SMEs which haven’t embraced mobile commerce in their growth strategies may wish to revisit the issue. Within North America, McKinsey projects especially high growth in tap-and-pay usage, consumer use of store apps to order ahead and pick up merchandise, and in-person usage of digital wallets, including widely-used wallets like Apple Pay and private-label wallets such as those offered by Starbucks and Walmart. As these examples suggest, the growth in non-cash payments reflects a growing focus on customer experience, both in e-commerce and in-store.


APAC accounts for four-fifths of the world’s recent growth in payments and now represents nearly half of all global payments system revenue, up from barely a quarter five years ago. With only 21 percent of APAC payments made without cash, McKinsey sees plenty of upside as the region follows China, where the share of electronic payments has soared from 4 to 34 percent from 2012 to 2017.


SMEs Promote Growth in Cross-Border Payments


Worldwide, cross-border payments revenue is increasing at a healthy rate, even though cross-border transactions remain a relatively small percentage of overall transactions. McKinsey points to “higher-ticket account-based remittances (for affluent consumers and small and medium size enterprises) and cross-border disbursements to micro-enterprises (driven by the growing prominence of online marketplaces)” as key areas of growth in cross-border payments.3


McKinsey’s data appears to align with a separate study of APAC SMEs that has identified major recent shifts in their trading behavior, encouraging their wider use of cross-border payments. Research from FedEx found that the number of APAC SMEs exporting outside their region has soared 254 percent in the past four years.4


According to the report, 71 percent of APAC SMEs now export beyond their region—roughly the same percentage as export to other countries within APAC. In addition, more APAC SMEs are sourcing from beyond their region, and their mix of imports and exports is widening to include more professional services and design work.


The FedEx report also finds that APAC SMEs are diversifying their export destinations, in part to protect against excess risk associated from focusing on a single export region. For example, 37 percent export to central and south Asia, 33 percent to Europe, 24 percent to North America, and 15 percent to the Middle East. Going forward, such a diversification strategy may also make sense for North American SMEs, especially in an era of uncertain trade and tariff relationships.


Mixed Payments Results in Other Economies


Outside APAC, McKinsey’s report found wide variances in growth throughout the global payments system. For example, in North America, payments grew by 7 percent in 2017. While a more modest growth rate than APAC’s, this represented acceleration from preceding years. Latin American payments revenue growth was flat after several years of strong growth, largely due to Brazilian regulators’ action to reduce credit card interest rates that account for most revenue there. African and Eastern European developing economies experienced high single-digital growth, while Western Europe saw slight declines.



Global payments system revenue is growing rapidly, as “electronification” of payments accelerates, cross-border payments rise, and buyers worldwide demand more flexible—and more mobile—ways to pay.

Bill Camarda - The Author

The Author

Bill Camarda

Bill Camarda is a professional writer with more than 30 years’ experience focusing on business and technology. He is author or co-author of 19 books on information technology and has written for clients including American Express Private Bank, Ernst & Young, Financial Times Knowledge and IBM.


1. “Global payments: Expansive growth, targeted opportunities,” McKinsey;
2. “Global Payments 2018: Reimagining the Customer Experience,” Boston Consulting Group,
3. “Global payments 2018: A dynamic industry continues to break new ground,” McKinsey & Co.;
4. “Global Is the New Local,” FedEx Business Insights;

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