Accelerating Winds Of Change In Global Payments
In 2009, the annual global payments revenue sat at around $1 trillion. From then on, that number increased every year until it reached just under $2 trillion in 2019. 2020 does not appear to be following this trend.
The year is not over, so we can not be sure what the total global payments revenue will be, but it is expected that it will be $140 billion lower than 2019. This shift away from what was expected - that the amount of global payments revenue would increase - was heavily influenced by the COVID-19 pandemic, declared on March 11, 2020.
How Might This Affect You And The World Around You?
The first, most obvious answer to this is that it could affect your income. People spending less money means that businesses are receiving less money to pay people’s wages. In Canada, the retail industry made $51.891 billion in January 2020 to make $35.352 billion in April 2020. Due to lack of funds, many businesses have had to permanently close their doors this year, while some businesses have had to reduce their workforce.
People having a lower income and buying less could also mean that the total amount of taxes going to governments could be lower than in previous years. Fewer taxes could mean that there will be less money going into schools, prisons, and publicly funded health care services. In times like these, where nearly 69 million people have had or still have COVID-19 (as of 09/12/2020), there is naturally going to be a lot of pressure on health care services and their funds. Even if the pandemic were to disappear tomorrow, that pressure would still be there because people who could not, or were too nervous to, see a general practitioner, dentist, or optician will now be going in waves.
What Factors Can Affect The Annual Global Payments Revenue?
One factor that has a large effect is war. When a country goes to war, it naturally increases the amount of money it spends on its military. This amount is rarely going to be small. For example, World War 2 cost $1.299 trillion globally. This is not the only way war affects the economy; it also affects the economy because more people are going to be fighting in the war, so fewer people are working at jobs that bring money into the economy. Money is spent on rebuilding places that were destroyed in the war and on healthcare for those injured by the war. The number of payments being made can be affected by a high number of fatalities as it means that there are fewer people to send or receive money.
Another factor is natural disasters, like floods or fires. 2020 has seen large fires in Australia, California, and Chernobyl, as well as floods in Venice and Kyushu. Like with war, natural disasters cause money to be spent on rebuilding damaged structures and on healthcare. If a country is continuously affected by natural disasters, they may spend money on putting measures into place to protect people. For example, the Mose project in Venice, which is designed to protect from floods, is estimated to cost $8.8 billion.
Migration can also influence the annual global payments revenue. There are currently 258 million international migrants, and many of them send money to their home countries to support their families. One in seven people are involved in either giving or receiving that flow of money. In 2018, the annual amount of money sent for this purpose was $689 billion.
It is not only big events that can affect how much money people spend, but also reactions to those events. When the world seems unstable, and the future is uncertain, people are wearier of spending money. The COVID-19 pandemic caused many countries to go into lockdown, which put people out of jobs or at risk of losing their job. Most countries are now coming out of lockdown, but some people fear a second or third lockdown. This uncertainty could cause them to try to save as much money as possible in case another lockdown costs them their job.
Many other factors are involved in the yearly changes to the annual global payments revenue that have not been listed. The world is constantly changing, and this year, those changes seem to be felt even more. Spending habits and, therefore, the annual global payments revenue will continually fluctuate as a result of these changes.