Payments Briefing: Incumbents are falling behind in consumer payments
- 74% of global consumer payments will be handled by non-traditional financial institutions by 2030, according to an IDC report.
- Incumbents need to update their payments infrastructure in order to stay relevant.
By the beginning of the next decade, nearly three-fourths (74%) of global consumer payments will be handled by non-traditional financial service institutions (fintech firms, non-financial brands, and emerging DeFi players), according to a new report published by IDC Financial Insights and payments firm Episode Six. This figure is a significant jump from 60% in 2020, putting added pressure on FSIs, which include incumbents such as banks and equivalent lending license holders, insurers, and credit unions.
Digital payments volume in 2030 will likely soar to over triple its size in 2020, reaching $476 trillion. FSI-processed payments are projected to grow at only 6% this decade, compared to 16% for non-FSI payments. Much of the non-FSI payments growth will be through mobile wallets and other digital payments such as BNPL, which are displacing credit cards in developed markets and cash in emerging economies.
The newest entrant in the space is central bank digital currencies, with China being the global pioneer and other markets such as Norway and the UK following suit. This segment is predicted to be the fastest-growing, up from 0% of digital payments in 2020 to 4% ($18.6 trillion) by 2030.
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