Payments Industry Revenue Models in 2021 and Beyond

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Pandemic has accelerated the move away from cash towards digital payment solutions. The shift challenges traditional payment revenue models in a number of ways, including through convenient alternatives to card payments via digital wallets, payment network innovations, and simple, transparent substitutes for credit cards via buy now pay later (BNPL) apps.

This report discusses the existing revenue models in the payments market and evaluates the challenges they face from emerging technologies and business models. New solutions have the potential to allow merchants and customers to cut out a key part of the traditional payment loop, bypassing interchange fees, system fees, and service charges – with major consequences for revenues.

What is the payments revenue outlook in 2020?

The global payments revenue saw consistent growth, doubling to $2 trillion over the decade. The shift to electronic payments worldwide has enabled revenues to keep growing. The payments value chain can be grouped as digital, traditional, and disruptive. Payment revenue covered in this report is generated via a range of payment mechanisms, ranging from established digital products (such as mobile wallets), traditional methods (such as payment cards and MSCs), and disruptive forces (such as BNPL and digital currencies).

The majority of revenue is accounted for by a combination of interchange fees and MSCs from card payments in 2021. GlobalData analysis shows that the revenue will increase in 2023. By volume, mobile wallets, payment cards, and cash account for the majority of payments. By payment value, credit transfer accounts for the majority of payment value.

Most used payment methods, by volume, 2021

Most used payment methods, by volume, 2021

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According to GlobalData’s analysis, mobile wallets are set to continue growing strongly over the next few years followed by payment cards. Cash use has contracted sharply during the pandemic, and usage will shrink by 5% between 2020 and 2023.

What factors are impacting the payment revenues?

The impact of the pandemic continues to be felt, masking other key changes to the payments industry.

Cash usage contracted: The use of cash was actively discouraged during the pandemic as it potentially enhanced the risk of viral transmission. Although not legally banned, many retailers that remained open either encouraged the use of plastic cards and contactless methods of payment or refused to accept cash. As a result, global cash transaction volume at the POS dropped 10% between 2019 and 2020.

Safer payments via digital payment model: Conversely, the pandemic accelerated the growth of the fintech sector. With lockdowns preventing bricks-and-mortar shopping for all but essential purchases, non-essential retailers adopted digital platforms to enable them to keep trading. Meanwhile, essential retailers promoted in-store contactless payments to reduce the risk of the virus as well as promoting their online channels.

Steep gains in financial app downloads: Mobile finance app downloads – which were growing steadily before the pandemic – reached more than 4.0 billion in 2020, up 15% compared to 2019. The strongest growth was seen in Latin America (over 75%), with North American downloads growing by 20% and strong double-digit growth in the Asia-Pacific and Europe.

Increase in contactless limits: Contactless limits – previously kept low in many countries due to concerns about security and fraud – increased at the onset of the pandemic and continue to do so today. In March 2020, Mastercard raised the limit in 29 countries. In April 2021, Visa reported that 1 billion additional contactless payments were made in 2020, boosted by these increased limits as well as the COVID-safe aspect.

Contactless payments limit changes (% increase) for single transaction in 2021 over 2019, by country

Contactless payments limit changes (% increase) for single transaction in 2021 over 2019, by country

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What is the regional payment landscape and how is it changing over the forecast period?

GlobalData research and analysis indicates that the changes in usage and preference for different types of payment tool brought on by the pandemic are simply accelerations of existing trends, which vary by region – often quite significantly. The payment mix varies around the world and spotlights digital growth hotspots. The analysis is based on annual payment volumes and values for all commercial and consumer transactions. The data shows payment volumes have more than doubled over the preceding 10 years while the value will grow over 150% over the same period.

By 2023 cash’s share of the payment, volume is forecast to decrease by almost 50 percentage points. Cash is expected to drop to a quarter in 2023, replaced by mobile wallets as the dominant payment mechanism. Payment cards and direct debits will remain relatively steady between 2020 and 2023, while cheques – already dwindling in usage in 2013 – will have all but disappeared by 2023.

Regional analysis reveals substantial variation in the payment mix, with mobile wallets dominating in the Asia-Pacific. Asia-Pacific is the prime driver in the global growth in mobile wallet use, accounting for over half of such payments in 2020 and set to account for nearly two-thirds by 2023. While plastic cards account for a growing share of payments in North America.


  • The report estimates the current global payment revenues.
  • Two key revenue streams – interchange fees and merchant service charges (MSCs), both specific to card-based transactions – account for around half of payment revenue.
  • The pandemic has slashed the use of cash across many regions, although in traditionally cash-dependent areas it will continue to dominate over the short term.
  • While payment cards remain the dominant payment mechanism in Europe and North America, the proportion of global transactions accounted for by mobile wallets has increased rapidly. This trend will continue out to 2023, driven by especially strong usage in Asia-Pacific and growing adoption in the developed world.

Market report scope

Revenue generated from Payments (2020) $2.0 trillion
Period 2021
Most used payments methods Credit transfer, direct debits, cheques, mobile wallets, and payment cards.
Regions covered Asia-Pacific, North America, Europe, Middle East & Africa, and Latin America.

Reasons to Buy

  • Identify payments value chain, revenue generated, and most used payment methods.
  • Understand the Social, Economic, and Political Changes are Impacting Payment Revenues
  • Assess changing payment landscape.
  • Evaluate industry challenges from COVID-19 and competition.

American Express

Table of Contents

Table of Contents

1. Executive Summary

1.1 Market overview

1.2 Key findings

1.3 Critical success factors

2. Payment Revenues in 2021: Market Overview

2.1 Revenue generated from payments totaled $2tn in 2020

2.2 The most commonly used payment methods and their costs

3. Social, Economic, and Political Changes are Impacting Payment Revenues

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. The Changing Payments Landscape: Regional Analysis

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

5. Interchange and Merchant Service Charges are Key Revenue Streams

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. Credit Card Profitability Faces Challenges from COVID-19 and Competition

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. Appendix

7.1 Abbreviations and acronyms

7.2 Definitions

7.3 Methodology

7.4 Secondary sources

7.5 Further reading

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List of Tables

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


List of Figures

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

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