Expansion persists in Q1 2024 for payment processors, according to recent reports
In the first quarter of 2024, the payment processing industry demonstrated resilience and adaptability, as reported by market-leading providers of cross-border payments data and intelligence. The sector showed consistent year-over-year growth for the fourth consecutive quarter, highlighting its robustness.
One of the key trends that emerged is the rapid growth of real-time payments (RTP). RTP transaction volumes continue to grow significantly, with the US RTP network seeing transaction values jump to $42 billion in Q1 2024, more than six times the volume from four years earlier. This growth is driven by wider adoption across financial institutions of all sizes and increasing usage in sectors like automotive sales for instant payouts.
Another significant trend is the expansion of instant payments platforms. The European TARGET Instant Payment Settlement (TIPS) service experienced a five-fold increase in transaction volume and an 87% rise in transaction value in 2024, underscoring its growing importance in instant payments within the Eurosystem.
Digital payments growth and evolving use cases also stood out as a key trend. The fintech payments segment is a primary growth driver, with projections showing massive industry expansion through 2030. Use cases gaining traction include online gaming, retail (both online and in-store), gig economy payments, and disaster relief distribution—all benefiting from faster, safer processing.
The surge in contactless and digital commerce payments was also evident. Nearly all in-person payments are expected to be contactless by 2025, and digital commerce platforms are forecasted to process $419 billion in gross payment value by 2025.
AI remains a key topic of discussion in the payment processing industry. Four of the tracked companies discussed AI in Q1 2024, with Lucy Ingham, Editor-in-Chief and Head of Content at the platform, stating that topics such as AI, as well as wider industry approaches to macroeconomic conditions, continue to be a focus for future quarters.
However, the varying usage of the term 'macroeconomic conditions' suggests that these factors are still influencing the payment processing industry, but their impact is not significant enough for companies to frequently contextualize their progress. Companies like Global Payments, Block, and PayPal discussed 'macroeconomic conditions' fewer times compared to Q1 2023, while DLocal and Worldline discussed it more.
Notable companies' financial performances were also reported. PayPal, a publicly traded company, leads the industry in terms of revenues, surpassing the combined total of Fiserv and Global Payments. Despite a 2% year-over-year decline in revenue, PayPal maintained its strength as a market leader with an EBITDA exceeding $1.2bn for the quarter.
Emerging markets player dLocal reported the strongest quarterly revenue growth at 34%, though this was the lowest YoY growth for the company since it went public. 'Partnerships' or 'partner' were consistently mentioned by the tracked companies, demonstrating their ongoing impact on the payment processing industry.
In conclusion, the Q1 2024 payment processing landscape is defined by strong momentum in real-time and instant payments, growing adoption of digital wallets and contactless methods, and diversification of payment applications enhanced by fintech innovations and industry collaborations. The sector's resilience and adaptability are highlighted by the consistent YoY growth, even amidst the ongoing discussions about macroeconomic conditions and the continued focus on AI and fintech innovations.
- The continued growth of real-time payments (RTP) in the payment processing industry, as seen in Q1 2024, demonstrates an intersection between finance, business, and technology, as wider adoption across financial institutions, increasing usage in various sectors, and the development of instant payments platforms propel this trend.
- The fintech payments segment, an area where technology plays a significant role, is experiencing extensive growth through 2030, driving digital payments growth and evolving use cases across diverse sectors such as online gaming, retail, gig economy payments, and disaster relief distribution, reinforcing the symbiotic relationship between the business, finance, and technology sectors.
