- Remain positive on global payments industry in 2024 with long-term growth drivers intact
- Payments players diversifying revenue mix towards value-added services, which is expected to grow at a faster pace
- Market leaders rising the bar through better payments infrastructure and lower costs
- Prefer selective names with a global presence, healthy revenue mix, and less sensitivity to the global economic cycle
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Riding on the cashless and digitalisation trends. Following robust growth of the global payments industry in 2023, we remain positive on this space amid long-term drivers like 1) Ongoing conversion from cash to non-cash transactions, 2) Rising adoption of e-commerce, and 3) Expanding partnerships worldwide and tapping into new payment categories.
The growth in cross-border volume is expected to outpace domestic payment volume, and this is primarily driven by resilience in travel and tourism, as well as booming e-commerce transactions. Payment players are diversifying their revenue mix towards value-added services (VAS), which is expected to grow at a faster pace compared to payment services. We expect companies with higher VAS mix to deliver low-teens y/y growth in revenue for FY24F and outperform peers with high single-digit revenue growth.
Digitalisation reshaping the competitive landscape. Market leaders of the payments network are raising the bar for digital payments through (1) Faster expansion of partnerships and (2) Entry to new payment categories worldwide. They are tapping on to new flows between individuals, businesses, and governments which provide potential access to more than 10 times the cash and check opportunities seen in traditional payments market.
Leading payment players continue to invest in innovative AI-driven solutions (such as fraud prevention products) to enrich VAS offerings. On the consumer side, new payments and credit rails are growing (this includes digital wallets and buy-now-pay-later (BNPL)) and capturing market share from traditional credit cards. Following years of unrestrained growth, BNPL players are facing mounting headwinds such as regulatory scrutiny, interest rate pressure and intense competition. This may have negative impact on their business.
Prefer names with global presence, healthy revenue mix, and less sensitivity to economic downcycles. We expect payments players to advance through 1) Secular growth in payment services with rising volume and stable take rate, 2) Expansion of partnerships and entry into new payment categories, 3) Scaling up of VAS revenue, and 4) Active support of innovative payment and credit sources, such as digital wallets and BNPL.
Leading payments companies are expected to maintain robust growth momentum. However, companies cutting contracts that previously offered high incentives will face short-term revenue pressure. Moreover, BNPL players are also facing pressure amid regulatory and economic headwinds.
We prefer payments names that possess 1) Global presence which enables them to ride on the digitalisation and e-commerce trends, 2) Higher revenue mix towards VAS, and 3) Lower sensitivity to economic downcycles, and thus, less impacted by consumption weakness and rising credit costs.
Figure 1: Global payment players’ payment volume, y/y growth (foreign exchange neutral)
Source: Company Data, DBS
Table 2: Peer Comparison Table
Source: Bloomberg,
DBS Data as at 1 March 2024
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