Market Trends of North America Payments Industry
Increasing use of digital wallets payments
- Digital wallets are growing more popular among consumers. The fourth quarter of 2022 e-commerce projection climbed 6.5 percent (1.1%) from the fourth quarter of 2021, while overall retail sales have increased 5.7 percent (0.2%) in the same time, as per the US Census Bureau. In Q4 2022, e-commerce sales amounted to 14.7 percent of total revenues. In the United States, wallets exceeded credit cards in 2022 and are estimated to account for roughly one-third of regional e-commerce expenditure by 2025, headed by Amazon Pay, Apple Pay, Google Pay, and PayPal.
- Mobile wallet usage is increasing in the North American payments sector, especially in the US, with more growth projected as contactless POS terminal adoption increases. As per Visa Inc., the number of Visa credit cards in the United States climbed from 368 million in the first quarter of 2022 to 369 million in the second quarter of 2022.
- Furthermore, the e-commerce platforms can accept various payment methods, making it easier for more users to access the business, such as major credit cards, gift cards, and so on. E-commerce platforms such as Amazon, eBay, and Shopify frequently charge monthly and transaction fees to cover online payment processing fees.
- E-commerce sales in the United States are increasing as digital payment experiences improve. This rise reflects consumers' growing comfort with online shopping and their increased use of mobile and handheld devices.
- The buy-now-pay-later (BNPL) service is gaining popularity among North American consumers as an alternative payment solution. Consumers in the United States utilize BNPL for a variety of reasons, including purchasing items that would otherwise be beyond reach, avoiding interest on credit cards, and borrowing money without a credit check. Market participants are implementing various tactics to expand the adoption of BNPL. For example, in May 2022, Affirm, the network of payment that empowers consumers while also assisting merchants in driving growth, and Fiserv, a leading supplier of payments and financial services technical services, announced a partnership to make Affirm accessible to Fiserv enterprise vendor clients. With this collaboration, Affirm will become the first purchase now, pay later service completely integrated within Fiserv's Carat operating system.
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United States to hold a majority market share
- Credit cards are the most commonly used payment method in the United States and Canada, both offline and online, with debit cards coming in second. According to the Federal Reserve Bank of New York, balances on credit cards increased by USD 61 billion in the fourth quarter of 2022 to reach USD 986 billion, surpassing the pre-pandemic high of USD 927 billion; loan balances rose to USD 11.92 trillion, auto loan balances to USD 1.55 trillion, and student loan balances to USD 1.60 trillion.
- Moreover, with the enhancement of digital payment experiences, the country's e-commerce sales are expanding. This growth reflects customers' growing comfort with online buying as well as their increased usage of mobile and handheld devices.
- Additionally, the Federal Reserve has integrated the United States' ACH system into local settling systems in Canada, the United Kingdom, the Eurozone, Mexico, and Panama, allowing individuals and companies to move cash directly from U.S. bank accounts to bank accounts in other countries. Financial technology firms are rapidly venturing into cross-border payments, notably peer-to-peer payments. Financial technology firms, for example, are joining the remittance sector, allowing users to fund "mobile wallets" online using their bank accounts and debit or credit cards and sending money straight to overseas mobile wallets.
- Moreover, retail instant payment systems execute small-value interbank transfers such that money is available almost quickly, as contrast to the possibly multiday settlement wait for retail transfers on some traditional bank payment systems. Like other retail payment systems, immediate payment systems often employ bank deposit money but eventually settle in central bank reserve balances. include the Clearing House's RTP Network (RTP), which began in 2017, and the FedNow Service, which the Federal Reserve aims to implement in 2023.
- Due to the growth of the digital payment market, mobile commerce has also changed the way brick-and-mortar businesses operate, particularly in terms of accepting cashless payments. Apple Pay, Samsung Pay, and Google Pay, for example, are among the leading competitors competing with market leaders in their respective countries. With consistent increases in mobile payment in several countries, the North American digital payment market is expanding rapidly.
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