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The landscape of global payments is rapidly evolving, ushering in an era of disruption and innovation. Fuelled by advancements in technology, the world has witnessed a significant shift from traditional cash transactions to digital payments solutions. Amidst this transformative wave, Africa stands out as the epicentre of unparalleled growth, with the continent predicted to become the fastest-growing fintech market between 2023 and 2030.
The latest insights from the 21st annual Global Payments Report by Boston Consulting Group (BCG) reveal that total payments revenues worldwide surged at an annual rate of 8.3% from 2017 to 2022, reaching a staggering $1.6 trillion by the end of 2022.
South Africa, a powerhouse in the African fintech landscape, played a pivotal role, contributing $10.3 billion to this global revenue pool, growing at an annual rate of 6% since 2017. South Africa’s payment sector is expected to skyrocket to $22 billion by 2032, reflecting the nation’s robust growth trajectory.
Globally, the report anticipates a slowdown in revenue growth to 6.2% annually through 2027, with the revenue pool reaching $2.2 trillion by then. This deceleration is attributed to a shift in the retail payments mix from cards to account-to-account transactions, coupled with compressed card margins in some markets.
However, Africa, buoyed by its unique operating environment and vast opportunities, is expected to continue experiencing growth rates in the double digits.
A remarkable highlight from the report is the explosive rise of payments-focused fintech companies. Currently numbering over 5,000 globally, these fintechs contribute approximately $100 billion to the industry’s revenues.
Projections indicate that by 2030, they could command a staggering revenue pool of $520 billion, intensifying competitive pressure on established players.
In Africa, where the fintech ecosystem is burgeoning, the top six fintech hubs boast a combined total of 681 companies. The continent is poised to outpace the rest of the world, with revenues predicted to surge 13 times faster than the global average.
“The impact and scale of disruption in Africa are amplified compared to mature economies. Even though the trends differ for each country, the continent sees more growth in payments, a high degree of disruption, and increased speed of transition,” remarked Tijsbert Creemers, managing director and senior partner of Boston Consulting Group (BCG) South Africa.
“Africa is indeed the place to be for global payments. We have seen the advanced speed at which regulators, banks, and fintechs have worked to enable new payment solutions. These solutions not only enable opportunities for the private sector but also play a crucial role in the continent’s economic development.”
The rise of digital currencies is also a notable trend. More than 90% of central banks globally are actively experimenting with digital currencies as a complement to cash. This shift from conceptualisation to reality could see retail and wholesale central bank digital currencies becoming operational in select countries within the next decade.
Furthermore, the report underscores the importance of technological modernisation and the emergence of GenAI in the payments landscape. GenAI-enabled software coding alone has the potential to boost productivity by 20%, revolutionising product development and operational efficiency.
However, amidst this era of transformation, regulatory scrutiny is intensifying. Regulatory authorities are expanding their rule sets and enforcement measures, testing the risk management and compliance practices of both traditional and non-traditional players in the payments industry.
As disruption continues to reshape the payments landscape, industry leaders are urged to refresh their strategies, revisit partnership structures, and modernise their technological infrastructure. Safeguarding shareholder value and embracing cost excellence will be paramount in preserving and growing shareholder value amidst this dynamic landscape.
To access the full Global Payments Report, click here.