Bahrain’s payments industry is projected to experience strong growth, with total revenues anticipated to reach $1.37 billion by 2028, according to the latest Global Payments Report 2024 from Boston Consulting Group (BCG).
Amid a global slowdown in growth rates, Bahrain is focusing on digital transformation and strategic investment to adapt to evolving market demands, securing its position within the GCC’s competitive landscape.
The Global Payments Report 2024 marks BCG’s 22nd annual analysis of the global payments industry. Aptly titled Fortune Favors the Bold, the report emphasises the importance of meeting shifting customer expectations, addressing heightened regulatory scrutiny, and leveraging technological advancements.
Maintaining resilience
While growth is decelerating globally, Bahrain’s commitment to digital transformation positions it to maintain resilience and capitalise on new opportunities in the region.
Globally, payments revenue growth is projected to slow significantly, with CAGR halving to 5% through 2028, resulting in a global payments revenue pool of $2.3 trillion. This marks a sharp decline from the 9% CAGR observed over the previous five years, which pushed the global revenue pool to $1.8 trillion in 2023. North America and Europe are expected to experience the most significant slowdowns, with projected annual revenue increases of just 3%.
In contrast, regions like the Middle East, Latin America, and Asia-Pacific are forecasted to see higher growth, with the Middle East projected to grow at a 7% CAGR, driven by accelerating digital payments in emerging markets.
Bahrain payments sector poised for expansion
Bahrain’s payments sector has shown strong growth in recent years, with revenue rising from $764 million in 2018 to $960 million in 2023, representing a 26% increase. By 2028, Bahrain’s revenue pool is expected to grow by another 43%, reaching $1.37 billion.
Transaction volumes in Bahrain are projected to increase significantly from 523 million in 2023 to 1.36 billion by 2028, marking a 160% growth. This transition is propelled by the country's ongoing digital transformation initiatives, increased fintech adoption, and the push to enhance financial accessibility across Bahrain.
As Bahrain’s payments sector transitions from growth-focused expansion to building a resilient, sustainable framework, Lukasz Rey, Managing Director and Partner, Head of Middle East Financial Institutions Practice at BCG, observed: "Bahraini firms are at a strategic juncture where modernising technology is no longer optional. To remain competitive, companies must adopt modular, cloud-native architectures that reduce tech debt, optimise operations, and support scalable growth.
“With advanced technologies like generative AI enhancing customer engagement and fraud detection, firms can deliver more secure and efficient digital services. Additionally, as global regulatory pressures increase, companies that incorporate strong risk and compliance frameworks into their operations will set new standards for reliability, building the trust necessary to thrive in Bahrain’s evolving financial ecosystem."
New strategies needed as industry faces transformation
The global payments industry is at a pivotal turning point, requiring companies to transition from rapid growth to strategic and sustainable approaches. Reporting highlights that digital payments are nearing maturity in leading markets like the US and UK, where less than 10% of transactions involve cash. The industry’s approach to shareholder value is also shifting, with buybacks and dividends now comprising over one-third of total returns as profitability takes center stage.
Furthermore, real-time payments are becoming standard in over 60 countries, while central bank digital currencies (CBDCs) are poised to transform the payment landscape further. Generative AI drives significant efficiencies, with early adopters reducing operational costs by up to 70%, making technology modernisation essential for competitiveness.
Future-proofing for sustainable success
As emerging technologies like generative AI, real-time payments, and digital currencies reshape the global payments landscape, Bahrain is positioned to advance through innovation and modernisation.
Nabil Sadallah, Managing Director & Partner at BCG, added: "Bahrain’s payments industry is entering a critical growth phase, with transaction volumes expected to rise by 160% by 2028. Achieving this potential, however, requires a strategic pivot away from conventional models towards flexible, high-margin infrastructures.
“Bahraini firms can enhance interoperability with third-party services by fostering open architectures and adopting API-driven platforms, adapting swiftly to changing market demands. Companies focusing on capital efficiency, regulatory alignment, and customer-centered innovation will build the foundations to capture long-term value, positioning Bahrain as a proactive leader in the GCC payments landscape."--TradeArabia News Service
