McKinsey on Payments 32

Our latest edition of McKinsey on Payments is a testament to the sector’s vibrancy, in both the regional diversity of market evolution and the thought leadership originating from an array of industry voices. These seven articles, which encompass the actions of established payments mainstays and pioneers advancing disruptive new approaches, explore shifting client preferences, promising technological innovations, and a variety of operating models and strategic plays.

Technology-led shifts and opportunities in card-based payments” considers the three aspects of legacy payments infrastructure that incumbent banks and processors must address in order to meet evolving customer preferences and compete with aggressive start-ups that until recently would have lacked the scale to mount effective challenges. The article also addresses how new technologies such as deep learning and blockchain are enabling these changes.

New trends in US consumer digital payments” provides context for the marketplace in which these new solutions are taking shape. McKinsey’s survey, now in its seventh year, charts the evolution of consumers’ trust in various providers and the adoption of financial products and delivery channels. New to this year’s cycle, the survey gathers unique insights on the rapid growth of cryptocurrency and “buy now, pay later” installment plans.

The future of payments in the Middle East” explores an intriguing market nearing an inflection point. Despite high smartphone penetration and a digitally savvy population, the region remains heavily dependent on cash. Rapid growth in card-based and other digital payments began even before the pandemic, however. Separate McKinsey surveys of Middle East consumers and payments practitioners shed light on the likely trajectory over the next five years, as well as potential growth avenues for banks and nonbanks alike.

Over the past several months, McKinsey launched an ongoing series of wide-ranging interviews with leaders of payments organizations, offering a healthy array of perspectives on key industry topics. For views from the Nordic countries, which have long been recognized as a case study in successful migration to a modern, paperless payments ecosystem, we held a roundtable discussion with three regional executives, including the CEOs of two bank-led fintechs/payments utilities. Their experiences illustrate the opportunities for innovation that can arise from industry collaboration.

McKinsey’s conversation with Payoneer CEO Scott Galit highlights how the New York–based fintech leveraged its early success in cross-border payments to establish a broad business-to-business value proposition. By contrast, our interview with Revolut CFO Mikko Salovaara sheds light on the UK firm’s intent to create a global consumer payments ecosystem from the start, with banking license applications pending in multiple countries.

To investigate a somewhat different business model, McKinsey spoke with Plaid COO Eric Sager. As Eric describes it, Plaid is a “developer company—for developers, by developers,” so its technology operates outside the customer’s line of sight, enabling the exchange of financial information across a variety of applications. Eric makes the case for transparency across all parties—customers, financial institutions, and fintechs—as an essential condition for a thriving ecosystem.

We hope you find this collection of articles thought provoking, and as always, we welcome your feedback and ongoing dialogue.


Alessio Botta is a senior partner in McKinsey’s Milan office, Jeff Galvin is a senior partner in the Tokyo office, and Marie-Claude Nadeau is a senior partner in the San Francisco office.

Technology-led shifts and opportunities in card-based payments

– New technologies are opening the way for innovation in payments; to take full advantage, payments providers need to modernize three elements of their legacy technology.

New trends in US consumer digital payments

– Consumers’ survey responses indicate that interest in digital payments continues to grow, including in new areas like “buy now, pay later” and cryptocurrency.

The future of payments in the Middle East

– As cash transactions give way to digital, what changes can the region’s banks and payments providers expect to see in the next few years?

Nordic payments: Where collaboration and competition lead to innovation

– Three industry leaders share perspectives on working across ecosystems and borders to provide world-class payments that deliver customer, business, and societal value.

Enabling global commerce: A conversation with Payoneer CEO Scott Galit

– While retail payments providers often become household names, most flows are between businesses. Scott Galit describes how B2B fintech Payoneer has grown by leveraging early success in cross-border payments.

Going global: A conversation with Revolut’s CFO Mikko Salovaara

– While other fintechs seek to establish a beachhead in a specific region or category, UK-based Revolut is looking to build a global ecosystem from the start.

Taking the friction out of financial services: A conversation with Plaid COO Eric Sager

– For Plaid’s operating chief, the future of payments will be built on increasing transparency for both customers and the banks and fintechs seeking to serve them.