Banks worldwide are getting down losing an amount of as much as $280 billion by 2025 in revenue they have been generating from operations of their payment business to new start-ups that are pushing in market and to more of the other firms that are entering into the business making it instant or free of sending money to individual as well as companies even across borders, a report unveiled while sharing its findings.
The global payment business covers everything from payment through cards to wire transfer of money overseas, and that remained dominated mainly by traditional banks in markets worldwide, which came to be worsen this year as its market share shrunk to $1.5 trillion, Accenture, a professional services firm, said in its report published early last week.
The banks were expected to be growing their revenue from global payment business to $2 trillion by 2025, but are now potentially be missing out an amount of $280 billion or about 15% of those revenues, as estimated Accenture.
All of this loss will be arising from the mounting competition banks have been facing from the likes of Square and Stripe, Silicon Valley based online payment system firms and other firms such as TransferWise, a London-based firm that is involved in offering foreign exchange related payments to retail and small business customers at fess which is lower than that charge the banks.
With the rise of fintech start-ups, global payment business markets have been seeing payments becoming more and more instant by eliminating the requirement of having credit cards which are the way of earning revenue for banks, and these fintechs are making use of new technologies to making those payments directly to the end merchants, Accenture said.
And more competition in that market could also results in squeezing margins and could also shifting the trend towards free payments, it added.