As we begin to put 2022 in the rear-view mirror, it’s worthwhile to take a look back. Look back at certain aspects of the economic activity. Determine the effect on financial services, particularly with respect to payments.
Hangover from the Pandemic
This is what we recently did in our member research around the 2023 Outlook for the various services we cover. In the referenced article posted at Forbes.com, the author reviews various turbulent issues. These issues surfaced this past year. They remain as a hangover from the pandemic policy decisions and actions taken by sovereign countries that continue to impact global economic growth. The global payments industry however, continues to show resilience. The author does concentrate more on the fintech portion of this industry, suggesting that global payments are “fintech-dominated.” We might say that banks continue to dominate cross-border for high value and that fintechs are more entrenched in the P2P and B2C spaces. We also covered this in some recent member research, mostly covering B2B uses.
The piece goes on to discuss stock market valuations for these fintechs in the global payments space, indicating the three-quarters of publicly traded global payments company stocks have lower valuations than at the start of 2022, and IPOs for some related companies have also slowed.
The author goes on to discuss recovering valuations and creates a nice list of these companies with current market caps. One of the major impact factors cited is the strength of the U.S. dollar, which can have a dampening effect depending on where customers are spending money given currency valuations. Mostly US-based clients making outbound payments, especially B2B, would have had less of an impact. The author suggests that consumer money transfers should be impacted by inflation and slower economic activity, but we’re still waiting for that to happen since there is 5% growth this year, according to the World Bank. The piece gets into some of the other complex factors surrounding global payments behavior, and even points out the cryptocurrency failures but opportunities remain. The bottom line conclusion is that the world still needs payments and with ongoing innovation there is much to accomplish.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.