Insights from the Global Payments Market: A Revenue-Based Analysis

– Income from consumer credit card transactions* is the most attractive segment for financial institutions in North America as they make 38% of their total revenue from this segment. Comparatively, financial institutions in Asia garner only about 7% of their revenue from credit card payments. The two key reasons for the phenomena are the relatively higher MDR (merchant discount rates) in North America which is pegged at 2.5% while in emerging markets like India, the MDR is around 1.5%. Since a credit card payment is a very healthy business in the Americas, we see more mobile wallet companies in the US with higher success rates. In emerging economies such as India and China, the presence of RuPay and Union Pay also bring down the MDR rates. Apple, which recently launched in China, has also reduced its fees comparatively keeping the same in mind. Apple charges 0.15% of the transaction value in the US while it is 0.07% in China. The second reason for higher revenue from credit cards is due to the penetration of credit cards in the region.

– Financial institutions in North America make a sizeable chunk of their revenue (12%) from commercial credit card transactions compared to their counterparts in APAC (2%) and EMEA (2%).

– A very small portion of the revenue of North American financial institutions come from consumers (13%) and business liquidity (8%) compared to Asia financial institutions who garner 26% and 40% respectively from consumer and commercial banking liquidity. Though the net interest margin for banks in the US (3.5%) is higher than that of India and China (2.5%–2.7%), the size of the Asian economies put together along with the weaker demand for loans in the Asian region leads to this situation. For this reason, even today, banks in India and other economies focus more on acquiring new customers by way of digitization rather than payments. Kotak Bank’s Jifi Saver Account is a very good example in this regard.

– Financial institutions in Latin America have a good balance of revenue between consumer liquidity (25%) and consumer credit card payments (26%).

– Financial institutions in the Americas garner more than 60% of their revenue from consumer businesses while their Asian counter make most from commercial banking (63%).

– Banks in Asia make most of their revenue – 66% – from interest revenue (consumer and business included), the next best being 42% for EMEA and Latin America.

– Income from commercial liquidity (40%) is higher than consumer liquidity (26%) in Asia while it’s the opposite elsewhere in the world.

– Income from cross-border commercial payment transaction is the highest for EMEA compared to other parts of the world.

– Income from domestic commercial payment transactions for financial institutions in EMEA is higher when compared to the rest of the world.

Which geographic markets should FinTech focus on?

– For a FinTech firm focusing on commercial cross-border payments, Asia is the most attractive market (45% of global revenue comes from this region) followed by the EMEA (30%).

– For a FinTech firm focusing on account revenues from corporate customers, Asia is the most attractive market (70% revenue share).

– For a FinTech firm focusing on corporate domestic payment transaction, both Asia and EMEA are equally attractive with 36% and 35% revenue share respectively.

– For a FinTech firm focused on credit card processing for corporates customers, North America is the most attractive market with 55% revenue share.

– For a firm focusing on consumer liquidity (saving accounts), Asia turned out to be the most attractive market (51% revenue share).

– For a FinTech firm focusing on processing consumer credit and debit transactions such as mobile wallets, North America is the most attractive market.


  • Income from cross-border transactions includes fees, float and FX revenue.
  • Liquidity revenue (revenue from account/deposits) includes net interest revenue and maintenance fees, if any.
  • Income from domestic remittance transaction includes fee and float revenue.
  • Income from credit cards includes annual fees, interest revenue and late payment fees on credit card accounts.

Source: McKinsey Global Payments Map and LTP analysis