Payments in EMEA in 2026: Competing in a multi-rail, always-on, world

Shouldering regional growth and structural change

Across EMEA, the payments industry continues to expand against a backdrop of dynamic regional growth and structural change. In Europe alone, the payments market, valued at roughly $221 billion in 2024, is projected to exceed $528 billion by 2032, reflecting a sustained double-digit growth trajectory.   Yet this headline growth masks an increasingly complex and pressurised environment, shaped by accelerating disruption.

As the overall revenue pool grows, competitive intensity is rising in tandem, especially as more non-bank providers enter the space. At the same time, fragmentation remains a defining challenge across EMEA. In Europe, although pan-European infrastructures – including those offered by the European Central Bank (ECB) and EBA CLEARING – offer a strong foundation for harmonisation, the market remains divided across national schemes and inconsistent retail payment experiences. As new payment rails emerge there is a risk that rather than being resolved, fragmentation will be replicated in new forms. 

Meanwhile across Africa, mobile-led platforms and rapidly expanding instant payment systems are driving financial inclusion and reshaping national payment patterns. For example, the share of the continent’s adults with a formal financial account, including mobile money has grown from 34% to 58% over the past decade, and instant payments now involve trillions in transaction value annually. 

By contrast, payments innovation in the Middle East is being shaped by strong national visions and proactive central bank support, with real-time payment schemes expanding across the region as a core pillar of financial infrastructure modernisation, economic diversification and financial inclusion.  

Banks must navigate this complexity both within individual domestic markets and increasingly across a cross-border payments environment. As clients operate and transact across jurisdictions, institutions are being compelled to remain connected to a growing array of payment rails and services that differ by market. 

At the same time, investment demands continue to rise on multiple fronts. Regulatory and compliance obligations continue to evolve globally, requiring sustained upgrades to systems, processes and controls, while growing expectations for real-time, data-rich and frictionless payment services are pushing banks to invest in industry initiatives and emerging innovations across markets.

Collectively, these considerations create a paradox: banks must invest more than ever to remain relevant and competitive, while their margins come under pressure from new market entrants and global policy objective  s seeking faster, more affordable payments. As a result, clients are increasingly re-evaluating how they extract value from transaction banking activities. In this environment, the ability to leverage the scale, resilience and cross-market capabilities of trusted banking partners is immensely valuable.

Rising regulatory demands and compliance costs

On the regulatory side, lawmakers are introducing new rules and supervisory priorities aimed at strengthening consumer protection and operational resilience across markets. For payment service providers (PSPs), complying with this expanding regulatory agenda requires continued, large-scale investment.

In Europe, the EU Instant Payments Regulation (IPR) that came into force in April 2024 – aimed at speeding up the provision and uptake of instant payments – mandated that PSPs offering (or being reachable for) SEPA Credit Transfers must also provide SEPA Instant Credit Transfers, prompting significant upgrades to infrastructure and connectivity. This was reinforced by the introduction of Verification of Payee (VOP) in the IPR, which, to bolster European fraud defences, requires PSPs to perform a real-time name check between the beneficiary’s name and account identifier, and the account name provided by the payer on all SEPA Credit Transfers and SEPA Instant Credit Transfers. 

Supporting this measure required banks to integrate new API-based portals and additional control layers to enable VOP checks. Moreover, new regulatory packages such as the third Payment Services Directive (PSD3), the new EU Payment Services Regulation (PSR) and the Sixth Anti-Money Laundering Directive (AMLD6), which aim to strengthen consumer protection and enhance AML and fraud-prevention capabilities, raise compliance expectations for PSPs.

The risk landscape remains equally demanding with more complex sanctions and Know Your Customer (KYC) obligations, which vary by jurisdiction. All necessitate deeper due diligence processes, more sophisticated transaction-monitoring capabilities and ongoing investment in compliance operations. 

The overall direction is clear: firms must navigate a patchwork of evolving rules while contending with ongoing geopolitical tensions, tariff uncertainty and broader macroeconomic volatility. For many PSPs, the combined effect is sustained pressure on resources and an imperative to invest merely to keep pace. 

Shifting toward always-on payments infrastructure 

Domestically, instant payment rails continue to gain momentum across EMEA, reshaping expectations around speed, availability and user experience. In Europe, the IPR is driving a sharp rise in instant payment volumes through PSPs offering SEPA Instant Credit Transfers, while in the Middle East (the fastest-growing real-time payments market globally), transaction volumes are set to rise from around $675 million in 2022 to $2.6 billion by 2027. 

The ease with which people send and receive money domestically mirrors the instant interactions of everyday digital life and shapes expectations for cross-border payments, too. Increasingly, clients expect international payments to move with the same speed, transparency and predictability. This demand is also being matched at a policy level. The G20’s Roadmap for Enhancing Cross-Border Payments, issued in November 2020, set ambitious targets to significantly improve the speed, cost, accessibility and transparency of cross-border payments by 2027. A wave of initiatives reflects this direction of travel. 

To this end, many jurisdictions are now exploring so-called “one-leg-out” models that use domestic real-time payment schemes to make one side of a cross-border payment instant. For example, the SEPA One-Leg-Out (OLO) initiative launched by the European Payments Council (EPC) in November 2023 leverages existing infrastructure building blocks, standards and procedures to enable the instant processing of the euro leg of cross-border transactions. 

At the same time, the ECB is actively exploring the extension of operating hours for its high-value payment infrastructure . Through ongoing discussions with T2 participants, the ECB is assessing how longer settlement windows could support evolving market needs, improve liquidity efficiency and enhance the resilience of euro-denominated payments in an increasingly real-time, cross-border environment. This direction of travel extends well beyond Europe: in the United States, the Federal Reserve has announced its intention to expand operating days for it Fedwire® Funds Service and National Settlement Service, with Sunday processing targeted for 2028,  while in the U.K. the Bank of England is consulting on a proposal to open CHAPS for settlement from 1.30 am on current business days. 

While these updates signal a gradual migration toward always-on financial infrastructure, progress is uneven, creating fragmentation. New payment rails and cross-border initiatives are being layered on top of legacy infrastructure that is difficult to retire, resulting in a patchwork of systems and standards. In parallel, as not all institutions can modernise at the same pace, many developments are introduced on an optional basis. While pragmatic, this approach reinforces divergence across platforms, channels and operating schedules, leaving the industry with a patchwork of old and new technologies.

From AI to stablecoins: The technology gap widens

Alongside regulatory compliance and keeping pace with industry initiatives, banks must also re-examine their technology stacks in the context of emerging innovations. 

Artificial intelligence (AI) is increasingly central to this conversation and rapidly proliferating across operations, client service, risk management, fraud detection and decision support. As such, an array of use cases is emerging, creating scalable efficiencies while opening the door to new forms of automation, insight and service delivery.

Concurrently, the payments landscape is evolving beyond traditional rails. Stablecoins – as supported by emerging regulatory clarity and maturing infrastructure – are introducing new possibilities for cross-border efficiency, intraday liquidity optimisation and 24/7 settlement models. While still early in their adoption curve, they signal a further shift toward a more diversified ecosystem in which value can move across multiple rails, depending on the use case. 

These trends matter more than ever because competition is no longer confined to traditional players, especially as non-bank providers move beyond retail payments to increasingly target small and medium-sized enterprises (SMEs).

As a result, banks must attempt a delicate balancing act: modernise their technology stacks and adopt emerging innovations while keeping costs down. One solution is to partner with larger transaction-banking players.

Staying competitive in a fragmented landscape

The investment required to keep pace with today’s EMEA payments landscape is increasingly unsustainable for smaller players. As fragmentation increases, it is not possible for banks to support every new scheme or comply with every operational requirement, particularly at scale across diverse markets.

Larger global institutions therefore play an increasingly central role in building bridges across this market. Smart routing, for example, enables them to take plain payment instructions and route them through the optimal rail – enriching data, translating formats and ensuring scheme eligibility – without imposing the cost or complexity of adopting each new mechanism on smaller banks. At BNY, we are focused on seamlessly connecting blockchain platforms with traditional systems — not replacing what works but enhancing existing foundations with tools that support various tokens and enable secure, efficient communication between different networks.

By partnering with a larger, cross-market institution, banks can focus investment on the areas where they genuinely differentiate themselves – be it client experience, trusted relationships or deep local expertise – while accessing the scale, resilience and connectivity required to compete effectively across EMEA’s increasingly complex payments ecosystem.