Payment & FinTech

Disruptive opportunities

The secular growth outlook for the European payments industry remains strong, particularly in eCommerce & mobile. Non-cash payments have been on a steady growth march – 10.9% CAGR 2015-20 – and consistently been gaining share from cash-based transactions. Within non-cash payments, eCommerce transaction values should continue to show the strongest growth. This is due to a healthy outlook for the underlying eCommerce sales, currently 10% of total retail sales globally. The generally still modest penetration of ecommerce suggests more growth runway ahead, as the principal attractions and advantages of online shopping vs offline remain compelling. In addition, the recent introduction of PSD2’s by the EU carried out an even greater market disruption creating enormous market opportunities for FinTech, payment start-ups, enterprise software companies and IT services. In this context, we believe the regulations’ ultimate goal is to inject more competition into the European payments industry and lower prices for transactions, for the benefit of EU consumers. Overall, we see the following mega-trends impacting the entire payments industry: (i) ecommerce processor consolidation, (ii) buying ecommerce for growth, (iii) enhance omni-channel offering, (iv) expand value-added services, (v) close vertical and geographical gaps and (vi) companies offering new technologies. Thus, in this fragmented and disrupted market we expect accelerating industry consolidation going forward.