While growth for global payment revenues remains robust, they are set to grow at a slower pace - five per cent a year, compared to seven per cent annually from 2018 to 2023, predicts the latest McKinsey five-year forecast. Among the factors contributing to the slower growth are declining interest rates, the continued proliferation of instant payments, further fragmentation of the value chain, and the expanding cost of fraud. Nevertheless, McKinsey expects that the sector may still unlock an additional $700 billion of revenue to total $3.1 trillion by 2028. The report identifies six key trends:

The decline of cash will continue unevenly Instant payments will continue to displace other payment methods Growing adoption of digital public infrastructures will catalyze digital payments Intermediaries will continue to take share from incumbents Transaction banking will mimic consumer experiences CBDCs will set the baseline for digital currencies

Global cash usage now stands at 80% of 2019 levels and is declining at four per cent a year. In markets with low card penetration such as India and Malaysia, instant payments will continue to drive down cash usage fast, while in card -dominated places such as the US, the decline will be more gradual from a lower base. Instant payments will continue to witness huge growth in places like India and Brazil. In the US, their influence will be most heavily seen in the bill pay arena while in the EU, new regulations enforcing cost parity will see the number of instant-payment transactions increase from around three billion today to almost 30 billion by 2028. While enthusiasm for CBDCs has waned, McKinsey still sees them playing three roles in payments: First, they will set the minimum base level of functionality, cost, and services that users can expect from a digital currency. They also will provide an alternative to help keep the price of commercial offerings in check. And finally, they will serve as an alternative to large but often opaque private-sector stablecoins. Concludes the report: "We expect that increasing system complexity and regulatory pressure will fuel three trends that will characterize the future payments landscape. First, there will be increased market consolidation as players seek to drive down costs through economies of scale and replace expensive payment rails like wires and checks with more efficient digitized payment methods. "Second, the orchestration of payments will increase as players try to capture merchant and customer relationships while shielding users from complexity. And third, we will see more regulatory action to reduce costs and financial crime while increasing consumer protections and reliability. "Global payments are not yet ubiquitously safe, simple, quick, and cheap. But the industry is making progress on many fronts at once."