Payment revenues ‘set to nearly double by 2030’

Bahrain’s payment revenues will nearly double to $485 million by 2030, fuelled by an accelerating decline in cash usage and increasing adoption of e-commerce, a new report by Boston Consulting Group (BCG) has forecast.

From 2015 to 2020, payment revenues in the kingdom increased by 23 per cent to $256m and are seen surging to nearly half a billion dollars by the end of the decade, says the report titled ‘Global Payments 2021: All In for Growth’.

Shedding light on how national markets will recover over the next decade, with growth set to be driven by newfound momentum – including in Bahrain, the analysis suggests that pandemic-driven trends such as a shift in purchasing habits from offline to online and cash to non-cash are set to endure.

“When examining the recent economic recovery in Bahrain, the country’s payments industry has certainly played its part,” explained BCG partner Mohammad Khan. “Changing consumers preferences and the emergence of various digital channels have been a key driver behind the industry’s contributions. These occurrences have ultimately placed the industry in the favourable position which it stands today, with every indication pointing toward a new chapter of sustainability and positivity for all concerned parties.”

The latest available data from the Central Bank of Bahrain (CBB) shows that more than 11 million cashless transactions were recorded in the country during September 2021, 55.5 per cent higher than the September 2020 figure.

E-commerce saw a 7.4pc jump in volume and a 30.4pc jump in value, further indication of a secular bounce-back into expansionary territory.

Furthermore, the kingdom has the potential to record sustained growth over the next ten years and beyond, with a compound annual growth rate projection of 6.6pc from 2020 to 2030. In line with findings published in BCG’s 19th annual analysis of the global payments industry, Bahrain shares many commonalities with other regional and international geographies, including manageable revenue losses considering recent turbulence and optimistic projections for the future.

The report also notes the Middle East’s young, international, digital-native population and mobile penetration of close to 100pc as a key feature of the region’s payments landscape.

Many governments are strong proponents of digital payments, which they see as an enabler for digitisation and economic development, it adds, citing Saudi Arabia’s goal of moving 70pc or more of all transactions to cashless payments by 2030.

Bahrain’s Information and eGovernment Authority (iGA) announced last December that the government has decided to process payments for services through digital channels only.

Having taken payment instruments including charge card, direct debit, cheque, high-value credit, electronic credit transfer, current account, and credit, debit, and prepaid cards into consideration, the report has revealed payments revenue and total transaction projections for Bahrain’s payments industry.

Over the coming years, the retail revenue of payments in the kingdom is projected to record sizeable increases.

In 2020, the retail revenue of payments amounted to over $211m. However, this figure is expected to rise to approximately $405m by 2030 – an increase of 92pc - with the number of related transactions also rising by almost 126pc from 114m in 2020 to over 258m by 2030.

The $485m overall worth of revenue payments by 2030 represents an increase of 90pc from 2020, while the number of transactions is expected to rise from approximately 126m to 228m during the same timeframe – an increase of 128pc.

“These transaction projections over the coming decade will transpire as a direct result of industry players placing a renewed emphasis on driving innovation,” said Markus Massi, managing director and senior partner, BCG.

“As the landscape becomes more competitive with the arrival of new players and long-time incumbents harnessing digital capabilities, heightened innovation will undoubtedly unfold. More and more services will become integrated with digital ecosystems, and customers themselves will contribute to retail segment vibrancy through the streamlined services and channels available to them.”

Merchant adoption is growing across the Middle East, as more commercial enterprises accept digital payments methods such as Apple Pay and Google Pay.

“In the years ahead, payments industry players in Bahrain will fully explore a raft of advantageous opportunities having embraced a new chapter of digital transformation,” added Mr Khan. BCG also found that the payments industry suffered an impact far less severe than initially anticipated due to the Covid-19 crisis as organisations not only accelerated e-commerce enablement, expanded fulfillment options, and streamlined point-of-sale and online checkout, but also providing debt relief, flexible installment purchases, supplier financing, and cash-flow management, thus helping people dealing with financial uncertainty.




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