Pandemic-Driven Economic Slowdown Impacts Revenue Recovery
Global payment revenue experienced its first decline in over ten years in 2020, driven by the economic challenges posed by the Covid-19 pandemic, according to a report released by McKinsey & Company on Monday (Oct 11). Revenue dropped by 5 per cent to US$1.9 trillion (S$2.57 trillion) compared to 2019, though the downturn was not as severe as anticipated.
Recovery is on the horizon, with projections suggesting payment revenues could rebound to US$2.5 trillion by 2025, resuming pre-pandemic growth patterns.
Regional Revenue Impacts
The Asia-Pacific region experienced a 6 per cent decrease in revenue, outperforming Latin America’s sharper 8 per cent drop but faring worse than North America’s 5 per cent decline and Europe, the Middle East, and Africa’s 3 per cent contraction. Notably, the Asia-Pacific region had previously led global payment revenue growth over the past decade.
Emerging Trends Amid Declines
The pandemic accelerated shifts in payment behaviours, including a marked reduction in cash usage and a surge in digital and e-commerce transactions. Real-time payment systems saw significant adoption globally, with transaction volumes increasing by 41 per cent in 2020.
Singapore exemplified this trend, experiencing a 58 per cent rise in instant payments compared to Britain’s 17 per cent growth. Additionally, small and medium-sized enterprises (SMEs) increasingly adopted tools like QR codes, “tap to pay” solutions, and URL-based payment links, enhancing convenience and facilitating contactless transactions.
Innovations in Instant Payments
Applications such as Singapore’s PayNow highlighted how infrastructure development supports instant payments. Meanwhile, banks tailored solutions to address specific market needs. For instance, DBS Bank implemented a real-time automated payment system for Gojek drivers, allowing them to transfer earnings immediately after trips instead of waiting until week’s end—a feature Gojek acknowledged as a recruitment advantage.
Long-Term Implications
These trends are set to outlast the pandemic, with the payments landscape attracting attention from tech firms and ecosystem competitors. These players increasingly target less-regulated areas like digital wallets and instant payment platforms, reshaping the value chain traditionally dominated by interchange fees and transaction costs.
