Global Payments 2024 Overview

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Questions and Answers

What is a common strategy employed by banks to serve SMEs in the merchant services sector?

Primarily focusing on large enterprises only.

Direct sales through branch networks combined with offering software platforms like NCR Silver. (correct)

Partnering with digital acquirers like Adyen and Stripe.

Exclusively using independent sales organizations for distribution.

Which of the following best describes the trend among traditional acquirers in the evolving payments ecosystem?

Becoming providers of commoditized payment processing. (correct)

Actively expanding their reach with specialized ISV solutions.

Increasingly dominating the digital native merchant sector.

Focusing on becoming ISVs themselves, avoiding payment processing services.

What is a key characteristic of digital-native merchants like Airbnb and Netflix in their choice of payment acquirers?

Seeking modern, global acquirers with extensive coverage and flexible operating models. (correct)

Opting for acquirers with limited payment method coverage.

Favoring traditional acquirers that prioritize cost-efficiency.

Preferring acquirers that do not prioritize digital platforms and omnichannel solutions.

How are ISVs (Independent Software Vendors) anticipated to evolve as the market shifts its focus towards profitability?

Moving towards payment facilitation and capturing revenue share along with risks. Signup and view all the answers

How are large banks like JPMorgan Chase and Bank of America approaching merchant services for SMEs?

They use direct sales through branches complemented with POS software from third parties. Signup and view all the answers

What action is Fiserv taking in response to the changing merchant services landscape?

Establishing a cloud-based POS platform called Clover. Signup and view all the answers

How is Elavon, a subsidiary of U.S. Bank, handling its ISV solutions?

It distributes its ISV solution, Talech, through its branches and independent sales organizations. Signup and view all the answers

Why are modern global acquirers like Adyen and Stripe becoming popular among digital-native merchants?

Their broad payment method coverage, omnichannel solutions, and flexible operating models. Signup and view all the answers

What is one of the primary developments being promoted by the European Commission?

An International Bank Account Number (IBAN) check scheme Signup and view all the answers

Which company is noted as a leader in retail cross-border payments?

Wise Signup and view all the answers

What percentage of UK SMEs use fintechs for cross-border payments?

23% Signup and view all the answers

What challenge regarding transaction visibility is faced by CFOs?

Limited real-time visibility of global transactions Signup and view all the answers

Which standard is mentioned as essential for modern instant payments?

ISO 20022 Signup and view all the answers

What opportunity exists for payment providers according to SMEs' willingness to switch providers?

Disruption potential due to superior customer experiences. Signup and view all the answers

What aspect of transaction processing is being digitized, according to the needs of today's CFOs?

Manual payment reconciliations Signup and view all the answers

Which countries are experiencing regulatory pushes for greater digitization of invoicing?

Brazil, Colombia, Saudi Arabia Signup and view all the answers

What is the main reason SMEs are attracted to one-stop solutions?

They provide integrated payment processing and software functionalities. Signup and view all the answers

What percentage of SME spending was captured by vertical-specific software solutions in 2023?

Over 50% Signup and view all the answers

Which of the following merchants are primarily impacted by disrupters?

Incumbent scale acquirers with legacy processing systems. Signup and view all the answers

When considering total C2B point-of-sale spending, what segment is primarily responsible for in-person transactions?

SMEs and local businesses. Signup and view all the answers

What was the total C2B point-of-sale spending in the US in 2023?

$8.6 trillion Signup and view all the answers

What percentage of online spending is attributed to platforms and marketplaces in 2023?

50-60% Signup and view all the answers

Which platform is cited as an example of an online marketplace for in-person spend?

Toast Signup and view all the answers

Which of the following percentages reflects in-person spending related to specific platforms?

50-60% Signup and view all the answers

What is the primary challenge for SMEs in managing technology stacks?

They lack resources and expertise. Signup and view all the answers

How did the trend in online spending change from 2018 to 2023?

It saw significant growth and consolidation. Signup and view all the answers

Study Notes

Global Payments in 2024

Global payments in 2024 are characterized by simpler interfaces but complex realities
The global payments industry handled 3.4 trillion transactions in 2023, generating $1.8 quadrillion in value and a $2.4 trillion revenue pool
Global payment revenues are projected to grow at 5% annually from 2023 to 2028
Asia-Pacific accounts for nearly half of global payment revenue
Commercial transactions account for 52% of global payments revenues, while consumer transactions account for 48%.

Trends Shaping the Global Payments Industry

Decline of cash: Global cash usage is declining at 4% annually from 2019 levels, with 80% of 2019 levels in cash
Growing adoption of instant payments: Instant payments are displacing other methods due to use cases like instant payouts, new use cases, and innovations such as QR code enablement, digital wallets, open banking, and biometric authentication
Digital public infrastructure: Digital public infrastructure (DPI) initiatives in markets like Brazil, Estonia, and India are supporting competitive, robust, inclusive, and efficient digital payment ecosystems
Intermediaries gaining share: Intermediaries such as Amazon, eBay, and Etsy are acquiring a larger share of payments, growing to 25-30% of spending in the EU and 35-40% in the US, largely consolidating into marketplaces.
Emphasis on security: Growing fraud costs are pushing regulators and players to invest in enhanced security measures.
Transaction banking mirroring consumer experiences: Transaction banking is evolving to mimic consumer experiences in order to cater to user needs, with newer interfaces and intuitive designs

Key Considerations for Businesses

Investment in real-time infrastructure is critical to sustaining a competitive edge, given the demand for faster, more efficient payment processes
Companies need to adapt to new regulations and consumer expectations
Growth in instant payments means expanding services to support this evolution, including solutions for areas such as cross-border payments, treasury management, payouts/refunds/payroll for customers and employees
Regulatory pressure to combat financial crime (AML/fraud) is impacting the industry, necessitating significant investments in compliance and prevention measures.

Other Key Points

Digital public infrastructure is critical for financial inclusion and innovation: The India Stack model demonstrates the potential of technological integration to streamline banking access and security systems
Increased market consolidation is expected: Companies are seeking economies of scale to compete with increasingly complex regulations and fraud considerations.
Payment experiences will become more seamless and aligned with consumer expectations and will accelerate the phasing out of cash and checks, moving away from traditional systems towards modern instant payment technologies

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Description

Explore the landscape of global payments in 2024 with insights into transaction volumes, revenue growth, and the decline of cash usage. This quiz dives into key trends such as the rise of instant payments and the geographical distribution of payment revenues, particularly in the Asia-Pacific region. Understand the implications of these trends for the future of the payments industry.