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The Changing Payments Landscape: Credit Card Profitability Faces Challenges from COVID-19 and Competition

Global banking and finance news 28

DUBLIN, Dec. 31, 2021 /PRNewswire/ — The “Payments Industry Revenue Models in 2021 and Beyond” report has been added to's offering.

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As the world continues its uneven recovery from the global pandemic, the changes to countries, economies, businesses, and individuals that arose from the first lockdowns in 2020 continue to reveal themselves today.

The way people pay has seen major, if not unforeseen, transformation. The pandemic has accelerated the move away from cash towards digital payment solutions. This shift challenges traditional payment revenue models in a number of ways, including through convenient alternatives to card payments via digital wallets, payment network innovations, and simple, transparent substitutes for credit cards via buy now pay later apps.

This report discusses the existing revenue models in the payments market and evaluates the challenges they face from emerging technologies and business models. New solutions have the potential to allow merchants and customers to cut out a key part of the traditional payment loop, bypassing interchange fees, system fees, and service charges – with major consequences for revenues.

Report Scope:

  • Following a decade of strong growth, estimates place current global payment revenues at around $2tn.
  • Two key revenue streams – interchange fees and merchant service charges (MSCs), both specific to card-based transactions – account for around half of payment revenue. Together they will see growth of 25% between 2020 and 2023, when their value will reach $1.2tn.
  • The pandemic has slashed the use of cash across many regions, although in traditionally cash-dependent areas it will continue to dominate over the short term.
  • While payment cards remain the dominant payment mechanism in Europe and North America, the proportion of global transactions accounted for by mobile wallets has increased rapidly. This trend will continue out to 2023, driven by especially strong usage in Asia Pacific and growing adoption in the developed world.

Report Benefits:

  • Understand the payments value chain in full.
  • Find out where the growth opportunities are in the medium and long term.
  • Gain insight into coming regulatory changes that will affect payments revenues.
  • Find out how mobile payments affect the established elements of the value chain.
  • Learn where emerging technologies such as real-time payments and central bank digital currencies will impact the payments value chain.
  • Understand how buy now pay later services threaten revenue streams in the credit card market.

Key Topics Covered:

1. Executive Summary
1.1 Market overview
1.2 Key findings
1.3 Critical success factors

2. Payment Revenues in 2021: Market Overview
2.1 Revenue generated from payments totaled $2tn in 2020
2.2 The most commonly used payment methods and their costs

3. Social, Economic, and Political Changes are Impacting Payment Revenues
3.1 The impact of the pandemic continues to be felt, masking other key changes to the payments industry
3.2 COVID-19 has had long-term implications for the global payments landscape
3.3 Contactless limits were increased, encouraging more digital transactions
3.4 Mobile wallets are convenient, rewarding, and popular with younger customers
3.5 Businesses face fivefold fee increases when trading between the UK and Europe post-Brexit
3.6 Mastercard case could pave the way for further action against multilateral interchange fees

4. The Changing Payments Landscape: Regional Analysis
4.1 The payment mix varies around the world, and spotlights digital growth hotspots

5. Interchange and Merchant Service Charges are Key Revenue Streams
5.1 Global interchange income will reach $506bn in 2023f
5.2 Global MSC will reach $741bn in 2023f
5.3 New concepts and payment systems are emerging as an alternative to Visa and Mastercard
5.4 Open banking payment systems will account for at least 2 million transactions in 2021

6. Credit Card Profitability Faces Challenges from COVID-19 and Competition
6.1 Interest income was waning before the onset of the pandemic
6.2 Despite small changes, regional net credit loss remains relatively steady
6.3 Rollover rates in the UK have been affected by the pandemic
6.4 Substitution is another threat to traditional credit card providers
6.5 BNPL as a concept is growing globally

Companies Mentioned

  • PayPal
  • Klarna
  • Afterpay
  • Affirm
  • Visa
  • Mastercard
  • American Express
  • Apple
  • Facebook
  • Vyne
  • Plaid
  • TrueLayer
  • TIPS
  • MobilePay
  • Vipps
  • Amazon

For more information about this report visit

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The Changing Payments Landscape: Credit Card Profitability Faces Challenges from COVID-19 and Competition 3


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