Four payments industry trends to watch for

• The pandemic has fueled usage of various payment methods and changed the way consumers transact.
• Payments made via credit cards will grow from $1.75 trillion in 2019 to $1.82 trillion in 2024, marking a 0.79% CAGR. You can learn more in our Payments Ecosystem Report.
• Do you work in the Payments & Commerce industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research.

The payments space has accelerated at a faster pace than previously expected because of the pandemic and change in consumer behavior.

Last year, more consumers embraced different payment methods, including contactless payments. And it’s a behavior that will likely stick as more adults worldwide come to expect this option going forward.

In fact, nearly half of consumers (49%) said that offering contactless payment methods is one of the most important safety measures stores can offer, according to a November 2020 study from Visa. Respondents in that same survey also said that stores should provide a variety of digital options when consumers shop in-person. The ability to tap a credit or debit card, as well as pay with a mobile wallet, were among the payment options they expected.

Insider Intelligence

In our latest Payments Ecosystem report, we examine the payments ecosystem today—and what it’ll look like in 2021. Below is a glimpse of the trends that are changing the industry.

In-store payment methods

In-store payment methods dipped a little over 3% in 2020—but it still holds the majority of sales. Debit and credit cards continue to lead the segment, as cash and check usage slowly ticks downward. And surging contactless penetration is set to bring mobile payments in-store to prominence for the first time in the years ahead.

Ecommerce growth

Ecommerce will continue to eat away at in-store payments’ share of overall retail. Online retail sales surged to $794.50 billion, a record-breaking 14.4% of total US retail in 2020, thanks to increased spending on smartphones in particular.

Digital payments

The digitization of payments isn’t just contained to retail, though, with real time mobile peer-to-peer (P2P) payments, digital remittances, and digital business payments continuing to blossom as change spreads through the ecosystem. Mobile proximity payment volume accelerated to $131.36 billion, per Insider Intelligence estimates, as major wallets added users at a record clip in 2020.

Credit cards

Payments made via credit cards will grow from $1.75 trillion in 2019 to $1.82 trillion in 2024, marking a 0.79% CAGR. High credit appetite and robust rewards programs—which are set to expand as issuers aim to keep their payments solutions top-of-wallet—will entice spending and help the segment tick up, though growth will be slower than inflation.

More to Learn

Interested in learning more about the payments ecosystem, including the key trends impacting payments hardware and software providers, as well as our forecasts in key categories, such as ecommerce, mobile payments, remittances, and B2B payments? Here are some related reports that might interest you:

1. The Payments Ecosystem Report, which examines the payments ecosystem today, as well as the pandemic’s impact on growth drivers and the industry’s future.
2. The Buy Now, Pay Later Report, which examines what factors have made buy now, pay later (BNPL) providers increasingly popular with consumers and merchants, both before and during the pandemic.
3. The Embedded Finance Explainer Report, which defines the concept of “embedded finance” and explains its potential impact on how financial services and products are distributed and consumed.