“Shifts in the macro environment are creating opportunities and obstacles for participants across the worldwide payments ecosystem.”

McKinsey, 2022.



Payment systems enable customers to transact with businesses in a way that also works seamlessly with financial institutions. Cash was the original payment system, and then cheques emerged as a form of “IOU” for transactions. Over the past decades, these forms of payments dropped off in favour of more digitised transactions such as bank transfers, debit and credit cards. But in recent years, payments have become even more interesting. We have digital currencies such as Bitcoin, we have buy now pay later options such as Klarna, we have digital facilitation apps such as PayPal, and integrated payment methods such as Apple Pay. In this article, we deep dive into the key factors influencing the changing tides of payment systems. According to the latest McKinsey payments report, six main forces are influencing the popularity and direction of payment systems. These are the macroeconomic environment, the geopolitical environment, capital markets, commerce, technology, and social responsibility.


Macroeconomic Environment

In many regions of the world, inflation is at its highest level in years, calling for changes to the business models of payment providers. Central bank responses to inflation may serve to expand interest margins, generating more income from this side of the payment equation. The combination of inflation and interest margins necessitates changes to cash management strategies for both businesses and consumers. Factors like global energy and commodities add to economic growth uncertainty and can increase the likelihood of an economic recession. This, in turn, impacts the liquidity and investment strategies of companies and households, altering payments economics from both demand and supply.


Geopolitical Environment

More regional and localised controls over infrastructure are emerging, moving away from globalisation. This is affecting the standardisation of solutions across different geographies. An increasing number of countries are looking to ensure local instances of payment services and key infrastructures. This is likely to lead to increased complexities in local regulations and other requirements.


Capital Markets

While aggressive payments companies significantly outperformed the broader market and incumbent payments businesses over the last few years, last year saw a significant drop in these numbers and a reset to this balance. Over the past 12 months, aggressive payments delivered a -70% return to shareholders, compared to -26% for incumbents. This valuation reset creates opportunities across the landscape as incumbent companies consider acquisitions and aggressors focus on sustainable growth and a path back to profitability.



A main driver behind past growth in fintech and payments aggressors was the expectation of revenue growth through expanding customer relationships. This opportunity persists as payments increasingly serve an integrated, value-added commerce role, rather than just delivering a single financial transaction. An example of this trend is commerce facilitation, extending beyond checkout and payment to enhance the commerce journey. Embedded finance, or integrating finance products into nonfinance ecosystems is most promising for the future of payments. Players that can monetize services and data are poised to capture a larger share of revenue pools.



After a long period of mostly incremental upgrades to networks and bank and business payment systems, companies are now making more structural infrastructure improvements. Banks are urgently modernizing their systems to real-time, third-generation and updating their payments infrastructures, mostly in response to the continued rise of instant payments, open-banking requirements, and cloud technology. Digital natives’ expectations for how those services are delivered will continue to exert pressure on providers to modernize their payment infrastructure.


Social Responsibility

There is an overall momentum for social responsibility in business. This is usually described as environmental, social, and governance (ESG) This is also contributing to the changing context for payments. Governance covers the need for banks to act as gatekeepers against money laundering, fraud, and other unauthorised access to payment systems. It’s a major catalyst of investment and operational change across the industry. Inclusion and customer protection are also increasingly central to payment players’ missions.

Over the years, payments have continued to evolve to serve the needs of businesses, customers and context. Six key factors influence these three pillars. They are the macroeconomic environment, geopolitical environment, capital markets, commerce, technology and social responsibility. Each of these has the power to influence, shape, drive or stall the progress or change to payment systems. By focusing on each of these factors in turn, businesses and institutions can prepare and buffer themselves against the tides of change, to ensure they come out on the side of success rather than obscurity.