Banks could miss $385b worth of payment revenue by 2025
LONDON : Banks are set to miss out on as much as US$280 billion (S$385 billion) in revenue from their payments operations by 2025, as new start-ups muscle in and more of the business of sending money to individuals and companies becomes instant and free.
The global payments business, which covers anything from card payments to wiring money overseas, is dominated by banks and this year was worth around US$1.5 trillion, professional services firm Accenture said in a report published yesterday.
That is expected to grow to US$2 trillion globally by 2025 but banks are likely to lose out on US$280 billion, or 15 per cent of their global payments revenues.
Banks face rising competition from tech start-ups like payment providers Stripe and Square, as well as technology platform PayPal, and the likes of London-based TransferWise that offer foreign exchange payments with lower fees.
More payments are becoming instant - removing the need for credit cards that earn banks revenue - and will increasingly be made directly to the end merchant using new technology.
"We face an inevitable world of instant, invisible and free payments, which spells trouble for banks that don't want to be relegated to the plumbing of payments," said Mr Gareth Wilson, head of Accenture's global payments team.- AFP