Payments Industry Surges: A Recap of Record-Breaking Growth

In a whirlwind year for the global payments sector, 2023 emerged as a period of unprecedented growth, with real-time transactions skyrocketing to a staggering 266.2 billion—a remarkable 42.2% increase from the previous year. Globally, 575.1 billion real-time transactions are forecast by 2028. This represents a 2023-2028 compound annual growth rate (CAGR) of 16.7%. By 2028, real-time payments are expected to account for 27.1% of all electronic payments globally.

Performance of the Big Players

Major players in the industry have reported significant gains, reflecting the robust health of the market. Mastercard, for instance, exceeded market expectations in the first quarter, driven by robust consumer spending despite economic headwinds such as rising borrowing costs and inflation. Net revenue surged by 11% year over year, with a notable 10% increase in gross dollar volume and a 13% rise in transactions.

Similarly, Visa experienced strong performance, with payment volume climbing by 8% in the second quarter. The demand for international travel was particularly notable, evidenced by a remarkable 16% increase in cross-border volume excluding intra-Europe transactions. Visa’s processed transactions also saw a healthy 11% uptick during the period, accompanied by a 2.7% increase in share price, indicating investor confidence in the company’s trajectory.

Amidst the giant players, Adyen made a notable comeback, witnessing a remarkable 22% surge in share price earlier this year, circa February 2024. Despite facing challenges in the past, the company reported a resilient 21% year-over-year revenue growth and a 2% increase in EBITDA, demonstrating its ability to adapt and thrive in a competitive landscape.

Meanwhile, Stripe continues to disrupt the industry, achieving a significant milestone by processing over US$1 trillion in payments in 2023—a remarkable feat considering the modest growth in US e-commerce during the same period. The company’s commitment to profitability is evident in its robust cash flow positivity in 2023, with expectations of a repeat performance in 2024, delaying any immediate plans for an IPO.

Asian Being the Largest Real-time Payment Market

Asia Pacific is the largest real-time payments market, with 185.8 billion transactions in 2023, representing 24.0% of all electronic payments in the region. With four of the top five real-time payments markets by volume, the APAC region is projected to see over 351.5 billion real-time transactions by 2028, a 2023-2028 CAGR of 13.6%.

Moreover, efforts to extend real-time to cross-border payments are finally paying off too, with Asian countries are leading the way. Payments using India’s popular UPI scheme can now be made in Malaysia, Indonesia, UAE and France. Users of Malaysia’s DuitNow can now make QR code real-time payments from Indonesia, Singapore, Thailand and China.

The Takeaway

The remarkable growth and innovation in the payments industry present compelling opportunities for investors seeking high-growth ventures. With companies reshaping the future of financial transactions through innovation and record-breaking performance, the allure of the sector as an investment destination remains strong. As the industry continues to evolve, investors are poised to capitalize on the transformative potential of the payments landscape.