BCG Report Highlights Urgent Actions Needed for Payments Growth

The payments industry is facing significant challenges as growth rates decline across North America and Europe, with global revenue growth projected to halve to a 5% compound annual growth rate (CAGR) through 2028. This slowdown is attributed to the maturation of the digital payments market, which limits opportunities for rapid growth in non-cash transaction volumes. In contrast, regions like Latin America and the Middle East and Africa are expected to experience higher growth rates of 9% and 7%, respectively, driven by the rise of digital payments in emerging markets. Investor expectations are shifting, with a growing focus on profitability and shareholder value creation. Historically, revenue growth was the primary driver of shareholder returns, but now, 33% of the payments industry's investor base is value-focused, seeking tangible returns through dividends and buybacks. This change in investor profile necessitates a strategic shift for companies in the payments sector to remain competitive. The emergence of central bank digital currencies (CBDCs) is also set to disrupt the industry, introducing programmable payments that offer new use cases and efficiencies in financial transactions. Companies must adapt to these changes to thrive in the evolving landscape. Generative AI (GenAI) is anticipated to revolutionize the payments industry, with early adopters already leveraging it to enhance customer service, operational efficiency, and fraud detection. As the sector reaches a critical juncture, decisive action is essential for companies to emerge as leaders and deliver lasting value to customers and shareholders.