4 immediate impacts of slowdown in payments industry

MUMBAI, INDIA: Even as the payments industry in India has started gathering momentum, a new report by McKinsey, has predicted its slowdown.

If this happens, the slowdown would certainly have a long term impact, but the immediate considerations may be as follows:

1.    Phil Brino, Analyst, McKinsey and an author of the study, told Bloomberg Business that the deceleration most likely will not be felt uniformly across the financial services.

2.    A lot of slowdown is certainly going to be regional, and we’re seeing it primarily in the regions which were growing fastest, said Brino.

3.    Asian markets have shown rapid gains with global payments revenue, but with the slowdown countries like China in particular could see more dramatic regression than other regions.

4.    Any negative effect on the Chinese economy could have a ripple effect on the global stage. About 20 percent of all transactions comprise cross-border payments, but these interactions drive 40 percent of revenues. Any fractional loss would be felt by innumerable nodes in the system.

According to McKinsey & Company’s annual Global Payments 2015 report, the growth acceleration experienced by many firms over the past year is expected to slow. The previous year predicted that banks, money-transfer groups and other entities would grow by 9 percent, but McKinsey’s most recent findings point to a more modest 6-percent growth rate through 2020.

Sound strategy:

Various start-ups have offered their proprietary solutions for a slowing global payments industry, with cloud-based architectures included that reduce the integrative burden on firms. However, with the global payments space projected to hit $2trillion by 2020, some financial companies might be content to simply wait out the rough patches and reengage when the market is up.