GCC payment revenue outlook dim: BCG

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BCG’s outlook suggests that the GCC’s payment revenue pool will expand from $23 billion in 2019 to $24.3 billion in 2024,

The payment revenue pool of the GCC will reach $23.1 billion by 2024, at a compounded annual growth rate of just 0.1 per cent, in a slow-recovery economic scenario evolving in the backdrop of the Covid-19 induced meltdown, according to Boston Consulting Group.

However, under a quick-rebound scenario, BCG’s outlook suggests that the GCC’s payment revenue pool will expand from $23 billion in 2019 to $24.3 billion in 2024, a CAGR of 1.1 per cent, said the report, which sheds light on the projected outlook for key economies in three revenue growth scenarios.

The revenue pool, under a deeper-impact scenario, is projected to shrink by a CAGR of -0.9 per cent, it said in a report ‘Global Payments 2020: Fast Forward into the Future’

Godfrey Sullivan, managing director and partner, BCG, said Covid-19 related headwinds such as decreasing oil prices, a slowdown in tourism, and a substantial rise in expatriate migration had slowed overall economic growth.

“While payments revenue growth in the region is projected to be restricted as a result of the pandemic, we are also seeing a surge in electronic transactions, pointing towards an opportunity of growth in digital.”

The report predicts that Covid-19 would boost the cash-to-noncash conversion, driven by evolving customer preferences, improved accessibility, and higher transaction limits.

“Across the GCC during the crisis, higher numbers of merchants welcomed contactless payments, including those of lower value. Likewise, consumers demonstrated the same enthusiasm, even in traditionally challenging markets. Governments may be interested in accelerating the cashless agenda, as research has shown that electronic payments can increase global GDP by as much as 3.0 per cent per year.”

BCG report noted that the pandemic would elevate ecommerce growth. “A fundamental consumption shift has occurred due to the pandemic, which will change the combination of payment options and, in some areas, lower the prominence of cards Mobility-dependent sectors such as entertainment and travel have already witnessed a drop in payments, and others, including food and home entertainment, will likely record greater growth. Providers should be prepared for such change and align payment choices to accommodate different industries’ purchasing trends.”

The report noted that mergers and acquisitions payments activity has been fostered through value chain ambitions, scale objectives, and the necessity to move money quicker. “Although the deal flow has predominantly revolved around payments processing and acquiring, it will likely spread to other value chain areas. GCC payment markets are still developing in comparison to others, and private equity, ecosystem participants, and local competitors seeking to build scale regionally will most probably drive M&A activity.”

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