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Payments report: Regional payments revenue growth estimates Europe + North America

In an earlier review of the Global Payments 2020 PCM looked at the impact of COVID-19, modelling three scenarios for payments revenue growth estimates. In the next two posts PCM takes a look at what is likely to happen in the major regions arounds the world.

Despite near-term disruption, the five-year forecast for most regions remains largely positive. This post outlines the major developments.


Payments revenue growth across Europe are on track to grow modestly, although at a lower rate than over the past five years. From 2019 to 2024, growth could range from 2.3% under a quick-rebound scenario to –0.9% in a deeper-impact scenario.

Eastern Europe, which captures 30% of the region’s revenue pool, will continue to notch the highest growth rates, with Russia remaining a strong driver of growth in the region. From 2019 to 2024, payments revenues could increase by a high of 4.7% annually in a quick rebound.

Western Europe, which accounts for 64% of regional payments revenues, will see a CAGR of 1.1% in a quick rebound down to a low of –1.6% in the deeper-impact scenario, while the Nordics, which make up 6% of the revenue pool, should see revenue growth hover at 0.1% to 2.9%.

European and North America payments revenue growth forecasts

Although banks across Europe have implemented the Payments Services Directive 2 (PSD2), Open Banking innovations have not yet had a meaningful market impact. Recent M&A activity (such as PayPal’s investments in the open-banking platform Tink, Mastercard’s acquisition of Finicity, and Visa’s acquisition of API leader, Plaid) could change this, however, and usher in new use cases and greater standardization of APIs.

Bank-FinTech collaboration is also on the rise. For example, TransferWise has created APIs that enable the company to push its products through traditional banking channels and allow banks, in turn, to provide customers with richer features.

Open Banking aside, European banks and regulators are increasingly concerned that without better regional coordination, foreign card schemes, wallets, and tech giants could challenge Europe’s monetary autonomy and displace the region’s fragmented payments infrastructure.

To address this risk, 16 European banks have banded together as founding members of the European Payments Initiative (EPI) with hopes of creating a card scheme, digital wallet, and person-to-person (P2P) instant payments system that will become the default payments method in Europe.

Both the European Central Bank and the European Commission have welcomed this undertaking, which comes on top of other infrastructure-related initiatives such as the TARGET Instant Payments Settlement System (TIPS).

The European Digital Payments Industry Alliance (EDPIA), an advocacy group formed by four independent European payments processors, is another effort to improve coordination. The alliance seeks to accelerate a digital single market and monetize A2A payments capabilities.

North America

Projections show that payments revenue growth in North America will grow by a moderate CAGR of 2.0% from 2019 to 2024 under a quick-rebound scenario and would turn slightly negative if the region experiences a more protracted recovery.

Debit cards still account for the largest proportion of transactions (44%) in North America, followed by credit cards (28%) and checks (8%). If past patterns hold, debit use could spike in the near term.

Following the 2008–2009 financial crisis, for example, US consumers shifted significantly more of their spending to debit cards in order to keep household debt in check. By 2011, however, credit expenditures had returned to pre-crisis levels, and they grew quickly in the years that followed.

From a product perspective, buy now, pay later (BNPL) providers are gaining traction as a result of the challenging economic environment and the shift in spending toward e-commerce channels.

Afterpay, for example, saw a 40% rise in its active user base in 2020. Partnerships are also growing in this area. Examples include QuadPay and Stripe, Klarna and H&M, and Shopify and Affirm.

In A2A payments, peer-to-peer schemes have seen growing adoption and more diverse uses, from paying rent to splitting the cost of meals. App downloads for Square, Zelle, Venmo, and PayPal all rose by more than 50% in April and May 2020, compared with the year before.

Many players benefited from crisis-related interventions that allowed government stimulus funds to be deposited directly into these apps, a move that helped position these schemes as the primary transacting account for many consumers.

Across the payments space, FinTechs continue to erode incumbent market share. In addition to an active domestic scene, several foreign FinTechs have entered the region over the past few years, including Afterpay, Klarna, Monzo, and N26.

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