Spark Global Limited Reports:
Overview of payment processing industry
The power dynamics in the payments industry are changing as businesses and consumers shift dollars from cash and checks to digital payment methods. Credit cards dominate in-store retail channels, but the use of mobile wallets like Apple Pay is growing rapidly, paving the way for future payments.
At the same time, e-commerce will cannibalize brick-and-mortar retail as smartphones attract a growing share of digital shopping. As digital peer-to-peer applications become more attractive and useful than ever, they are replacing cash in the daily lives of generations of users.
The payment industry explains
In this report, Insider Intelligence will examine the current payments ecosystem and the impact of the pandemic on growth drivers and the future of the industry. The report begins by tracking the path of in-store and online payments for key stakeholders from processing to settlement. It then analyzes the changes in the use of various payment methods as a result of the pandemic and predicts growth, defining the drivers of key digital payment channels and transaction types as the pandemic accelerates digitisation.
Payment Industry Trends
In-store payment method
In-store payments fell a little more than 3 percent in 2020, but still accounted for the majority of sales. Debit and credit cards continue to lead the way, while cash and checks are slowly declining.
The growth of e-commerce
Booming e-commerce will continue to eat into brick-and-mortar payments’ share of the overall retail sector. Online retail sales surged to $794.5 billion in 2020, a record 14.4 percent of total U.S. retail sales, driven by growth in smartphone consumption.
However, the digitization of payments is not limited to retail, as real-time mobile P2P payments, digital remittances and digital business payments continue to flourish as change spreads across the ecosystem. Mobile proximity payments accelerated to $131.36 billion in 2020 as primary wallet users increased at a record pace, according to Insider Intelligence estimates.
The credit card
Payments via credit cards will grow from $1.75 trillion in 2019 to $1.82 trillion in 2024 with a 0.79% CAGR. High credit demand and strong incentive program –
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