Europe’s payments market is set to expand at a year-over-year rate of around 7% between now and 2020, driven by the growth in overall payments volumes and new types of payments, such as account-to-account (A2A), predicts Oliver Wyman.
Analysis by global management consultancy of the market is contained in its newly-published ‘European Retail and SME Payments’ report. Wyman estimates that European payments market revenue pools currently amount to approximately €38bn (US$40.4bn), covering a total of €190 trillion worth of transactions across various payments methods, which will grow to €55bn by 2020.
The report investigates all major payments instruments and types across 28 markets in Europe, excluding remittances, wholesale and bank-to-bank transfers, and cross-border payments. The future trends that it highlights include the following:
- Growth in acquiring revenues on traditional payment types may have peaked, but is being offset by the growth in value-added services.
- Growth in account fees.
- A2A will provide the impetus for additional revenue pools.
- Card use will continue to grow, although the growth in some markets will be slowed by the adoption of A2A transactions.
- Cash use is still expected to remain significant in Italy and Iberia, but electronic transactions (cards and A2A) are in growth mode in the UK and Ireland, France and the Benelux countries.
“The payments market is dynamic but remains a scale industry,” commented Matthew Sebag-Montefiore, partner, Oliver Wyman, and lead author of the report. “At-scale players participating in all areas will perform well, but many players are not at scale. They either need to have specific value-added services or consider participating in consolidation.
“Banks where payments serve as a non-core activity, for example, will need to decide either to become more committed or pull out altogether.”
The report advises that due to changes in the regulatory and technology landscape, players must consider their business response to the future payments scenario. Included is a health checklist for all player types, enabling them to see if their business is on course to succeed in an ever-changing market.