6 Regional Insights From The BCG Global Payments Report

During my recap of the Top Payments News Stories in October 2015, I mention the Boston Consulting Group (BCG) report – Global Payments 2015: Listening to the Customer’s Voice. For me the regional insights were the most interesting part of the report and in this post I will share some of my notes. Please keep in mind the study focuses on retail payments, which for me broadly reveals where the payments industry is heading….

1. Global Payments – North America: Credit Cards

By retail payment revenues, North America is the biggest payments and transaction banking market in the world. The BCG report provides the following insights from the region:

  • The dominance of credit card payments in the US (60% of all retail payment revenues) and in Canada
  • Revenues from credit cards is likely to decrease as interchange fees drop and security around card payments increases
  • Interestingly, BCG propose that mobile wallets will “drive a move from card-not-present to card-present transactions”
  • Bank need to look at:
    • Offering more to their customers – BCG dont just talk about cross selling opportunities, but mention understanding their customers and offering services based on “trigger events” (college graduation) and customer segments (potential homeowners)
    • Partnering with value added providers to increase customer loyalty and engagement
    • Cost reduction and improving efficiency – referring to both the structure of the organisation and its efficiency
  • Mobile payments according to the report are “unlikely to grow to beyond 30 percent of U.S. retail transactions by 2020…. will not rapidly replace plastic cards”

2. Global Payments – Western Europe: Regulation

Its all about Regulation! In Europe, regulation – notably PSD2 – is seeking to:

  • Promote the adoption of non-cash payments (mobile payments)
  • Level up the playing field for both bank and non-bank providers (increase competition and innovation)
  • Increase payments security (consumer protection)

According to BCG, banks:

  • Need to focus on improving their interaction and relations with customers, particularly through mobile channels
  • Should improve their digital banking interfaces
  • Will partner with global card providers to compete with offerings from Apple Pay and Android Pay, or end up partnering with the tech giants themselves!
  • Must recognise how they will differentiate themselves from the technology giants entering their space

BCG also mention the growth of real time payments or instant payment solutions in the region…

3. Global Payments – India: Financial Inclusion

The key trend reported by BCG is the government actively spearheading various schemes to promote financial inclusion and digital innovation. These initiatives are resulting in above average growth of non-cash payments. For example:

  • A financial inclusion scheme launched in 2014 resulted in 125 million accounts within 6 months!
  • In the last 2 years alone, mobile banking transactions have grown more than three times – reaching 150 million transactions in 2014
  • There are more mobile wallet transactions than mobile banking transactions

4. Global Payments – China: Booming

The quoted statistics and changes from China are frankly staggering!

  • The number of bank cards issued increased by 21% to 5 billion (2014)
  • The value of mobile payments rose by 134% (2014)
  • Domestic and foreign companies are able to apply for a clearing services license – previously this was state controlled and only possible by China UnionPay
  • Technology providers such as Alibaba, AliPay and Tencent are very actively in the payments space and enticing customers in a number of innovative ways

5. Global Payments – Central Europe: Poland

BCG highlight innovation and the adoption of payments technology (for example NFC) in Poland:

  • Mention mBank as an example of a bank providing a “superior digital customer experience”
  • Collaboration within the banking industry to promote mobile payments
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6. Global Payments – Latin America: Innovation

This was really interesting for me because I was in Brazil last week. The report talks about how incumbent banks, worried about new providers, are finally getting round to “payment electronification and cash substitution”. Electronification – what a word?!?!

BCG indicate that some government are trying to promote electronic payments through tax incentives, improved regulation and the implementation of social-transfer-e-payments.

Based on my short trip to Brazil – i heard very little about improvements or simplification of the regions regulatory or tax set up. Actually, quite the opposite 😉

BCG – Global Payments Report

The BCG report is a pretty good read, it is not too long and gives you a quick flavour of what is going on around the world in the payments space. BCG mentions some really noteworthy trends and examples from North America, Europe, Asia and Latin America – but they miss Africa! The development and regional variation of mobile payments and financial inclusion in Africa is of particular interest to many people, and to leave it out altogether in a global payments report is a bit of a shame.


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