The payment industry's biggest trends in 2022—and the pandemic's impact on digitization in the payments landscape (2024)

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The payment industry's biggest trends in 2022—and the pandemic's impact on digitization in the payments landscape (1)

The payment industry's biggest trends in 2022—and the pandemic's impact on digitization in the payments landscape (2)

Meaghan Yuen|January 11, 2022

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  • The pandemic-driven shift to digital isn’t dissipating, as cash and check’s share of in-store retail and food services transaction value will tick down to 18.5% this year.
  • Debit usage will be sustained as the most used payment method in the US, but faces competition from credit and prepaid cards with borrowing on the rise again.
  • Do you work in the Financial Services industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research.

The pandemic accelerated payments industry digitization, with 2022 marking an inflection point in the way consumers and businesses cement the way they make their purchases. With insights from our annual Payments Ecosystem report, we define and explore the payments industry, evaluating key trends affecting consumers and businesses.

Digitization has been accelerated across peer-to-peer (P2P), business-to-consumer (B2C), and business-to-business (B2B) transactions beginning in 2020, but the second full year of the pandemic made it clear that they’re here to stay, even as spending levels normalize. Stakeholders that earn fees to help complete these payments—including acquirers and processors, networks, and issuers—are racing to keep up with changes in the way people and companies transact.

Analog payments plunged at the pandemic’s onset, and will continue slowing down this year as debit, credit, and prepaid cards duel for their share of usage. In fact, cash and check’s share of in-store retail and food services transaction value will tick down to 18.5% this year and continue its downturn into 2023, per our forecast.

In response to rapid digitization, merchants need to ensure customers can use their preferred payment method. This, in turn, is putting pressure onto point-of-sale (POS) providers to develop multichannel solutions that meet front- and back-end needs. In all corners of the payments industry, providers are racing to explore new transaction flows, reach new subsets of consumers and businesses, and embrace new devices and transaction technologies.

Like what you’re reading? Click here to learn more about Insider Intelligence’s leading Financial Services research.

Payments industry trends

In-store payment methods

In-store sales will remain the largest retail channel by both share and dollars as shopping habits normalize. From 2022 on, in-store’s share of retail sales will once again contract as customers gravitate toward ecommerce.

Card payments dominate in-store retail. In 2021, for the first time in 16 years, US debit spending surpassed credit as consumers aimed to limit financial risk during the pandemic—growth that’s meant to stabilize this year. According to our forecasts, debit spending will account for nearly 40% of in-store retail and food services dollars. The demand for contactless is also giving rise to alternative and experiential methods, such as proximity payments such as Apple Pay, in-store buy now, pay later (BNPL), and click and collect.

Ecommerce growth

US retail ecommerce sales will exceed $1 trillion for the first time this year, although growth will be distributed unevenly across channels: desktop sales will decelerate through 2025, while mobile purchases boom, accounting for 4 in 10 retail ecommerce dollars for the first time this year. That’s why checkout providers are focusing on optimizing the mobile payments experience, as well as exploring opportunities in social commerce.

The increasing need for brick-and-mortar sellers to migrate online is making gateways more prominent in the payments ecosystem. High-profile players across the industry are acquiring and partnering with gateways that will unify software across in-person and online channels.

Digital payments

The digitization of payments isn’t just contained to retail, though, with real time mobile P2P payments, digital remittances, and digital business payments continuing to blossom as change spreads through the ecosystem.

By 2025, over 7 in 10 smartphone owners will be mobile P2P payment users, with the potential to onboard two untapped audiences: Gen Zers gaining spending power and security-minded consumers who have avoided digital payments due to safety concerns.

Digital remittances are expected to jump 45% between 2021 and 2025, to $428 billion, according to a report from Juniper Research. The success of entrants such as Remitly and Wise (formerly TransferWise) is a sign of a changing market, putting pressure on incumbents to lower fees.

After dipping in 2020, US B2B payments are set for a second consecutive year of growth in 2022, with volume forecast to reach $28.611 trillion. To capitalize on the opportunity, payment providers will deepen their push into the B2B space, catering especially to small businesses—making up a significant share of the US B2B payments market—in search of accessible, affordable solutions.

Credit cards

At the start of the pandemic, credit card spending dipped due to overall spending declines and financial uncertainty. Credit card usage only saw gains pick up again in Q3 2021, gains that are expected to stabilize in 2022 as non-essential purchasing, especially in travel and entertainment, resumes.

For the first time this year, consumers’ lasting embrace of ecommerce will push online credit card usage past $500 billion. However, the payment method’s share of digital retail transactions and card transactions will decrease slightly, partly due to consumers’ rising preference for debit. Issues are set to combat this by releasing new cards with rewards and value propositions such as lower fees, payment flexibility, and financial management tools.

For the first time, Insider Intelligence’s annual Payments Ecosystem—a broad-based report catered toward the entire payments industry—will be broken out into four parts, allowing for more detailed-yet-digestible content that more specifically addresses the areas that matter to you:

  • Participants in the Payments Purchasing Chain: How Key Players Facilitate Transactions—and How Their Roles Are Changing
  • The Point-of-Sale: How Hardware and Software Providers Are Meeting Merchant Demands for Omnichannel, Full-Suite Products
  • Payment Methods and Funding Mechanisms: What Shifting Consumer and Business Payment Preferences and Habits Mean for the Industry
  • Payment Flows and Transaction Types: How Lasting Digitization Is Reshaping Providers Growth, Revenue, and Competitive Strategies

Each section will examine changing market dynamics and how it will impact stakeholders, as well as identify top trends for 2022, as informed by our in-depth forecasts and proprietary third-party data.

Click here to learn more about gaining access to Financial Services content like the Payments Ecosystem 2022 report.

The payment industry's biggest trends in 2022—and the pandemic's impact on digitization in the payments landscape (3)

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I am an expert and enthusiast based assistant. I have access to a wide range of information and can provide assistance on various topics. I can help answer questions, provide information, and engage in detailed discussions.

Regarding the article you shared, it discusses the powerful data and analysis on nearly every digital topic, with a focus on the payments industry. It highlights the shift to digital payments driven by the pandemic and provides insights into various trends and developments in the industry.

To provide information related to the concepts used in the article, let's break it down into different sections:

Shift to Digital Payments

The article mentions that the pandemic has accelerated the digitization of payments. Cash and check's share of in-store retail and food services transaction value is expected to decrease to 18.5% this year. Debit usage remains the most used payment method in the US, but it faces competition from credit and prepaid cards as borrowing increases again.

Payments Industry Trends

The article discusses several trends in the payments industry:

  • In-store payment methods: In-store sales will remain the largest retail channel, but the share of retail sales will contract as customers gravitate toward ecommerce. Card payments, especially debit spending, dominate in-store retail, and the demand for contactless payments is rising. Alternative and experiential methods such as proximity payments, in-store buy now pay later (BNPL), and click and collect are also gaining popularity.

  • Ecommerce growth: US retail ecommerce sales are expected to exceed $1 trillion for the first time this year. Mobile purchases are booming, accounting for 4 in 10 retail ecommerce dollars. Checkout providers are focusing on optimizing the mobile payments experience and exploring opportunities in social commerce.

  • Digital payments: The digitization of payments extends beyond retail. Real-time mobile peer-to-peer (P2P) payments, digital remittances, and digital business payments are continuing to grow. By 2025, over 7 in 10 smartphone owners will be mobile P2P payment users. Digital remittances are expected to jump 45% between 2021 and 2025. US B2B payments are also set for growth in 2022, with payment providers deepening their push into the B2B space.

  • Credit cards: Credit card spending initially dipped at the start of the pandemic but has seen gains pick up again. Online credit card usage is expected to surpass $500 billion this year. However, the payment method's share of digital retail transactions and card transactions will decrease slightly due to consumers' rising preference for debit. Credit card issuers are releasing new cards with rewards and value propositions to combat this trend.

These are some of the key concepts discussed in the article. If you have any specific questions or would like more information on a particular topic, feel free to ask!

The payment industry's biggest trends in 2022—and the pandemic's impact on digitization in the payments landscape (2024)

FAQs

How the payments landscape is changing? ›

Seven areas are changing today's payments landscape: open banking, real-time payments rails (RTP), buy now, pay later (BPNL), digital wallets and super apps, embedded payments, digital currencies and cross-border payments.

What is the strongest current trend in payment processing? ›

Changing trends in payments
  • The increase in global cashless payment volumes.
  • The acceleration of cross-border, cross-currency instant and B2B payments.
  • The use of data and analytics to streamline the customer journey.
  • Innovations in security measures to reduce digital payments fraud.

What are the problems with digital payments? ›

Security Risks

Payment digitalization can make your customers' transactions vulnerable to cyber-attack and fraud when not implemented correctly. It may lead to data breaches, identity theft, and phishing attacks, which may cause huge losses for your business.

What is the volume of digital payments in 2022? ›

The Digital Payments market has a global transaction value of US$8,487.9 billion in 2022 and is the largest segment within FinTech.

What is the digital transformation in payments? ›

What was once a paper-based model has now evolved; with the decline of cash payments, many customers are turning toward contactless payment options and streamlined e-commerce transactions. In fact, research shows that nearly half of the world's population may choose digital wallets by 2024.

What are the changes in the payment industry? ›

Traditional cash and cheque payments are giving way to more digital and contactless methods, spurred by technological advancements and changing consumer preferences. Digital wallets and account-to-account payment systems are gaining traction, offering convenience and real-time transaction capabilities.

What is the new trend in making payments in online? ›

Contactless payments are one of such digital payment trends that you'll see growing rapidly in the year 2024. Contactless payment allows customers to simply wave their smartphones or cards across the reader and make payments. This method is near-instant and more convenient than cash or swiping a card.

What is the fastest growing payment method? ›

Buy now, pay later (BNPL) is now the fastest-growing payment method. By 2024, an estimated $306.8 bn of e-commerce purchases will be made via BNPL, increasing from $97.2bn in 2020.

What are the trends and technology in e payment? ›

Key trends in digital payments include real-time payments, cryptocurrency adoption, A2A payments, Central Bank Digital Currencies (CBDCs), biometric authentication, and embedded finance. These trends reflect ongoing advancements in technology, changing consumer behaviors, and the evolving FinTech market.

Why are online payments failing? ›

Some Common Reasons for Payment Failure

The payment gateway does not support the online payment method chosen by the customer. If the bank flags the customer's account. If the account through which the transaction is initiated is closed or suspended.

What should be the most concern when making payment digitally? ›

Digital payments are vulnerable to security concerns such as data breaches, fraud, and identity theft. Data breaches occur when sensitive information such as credit card numbers and personal information is accessed without authorization.

Why digital payments are the future? ›

The future of the Payments industry is decidedly digital. With the surge in fintech developments, consumers and businesses are quickly adapting to cashless transactions. The use of mobile wallets, digital currencies, and open banking systems are expected to dominate the industry.

What is the world's largest digital payment platform? ›

Top 10: Digital Payment Platforms 2024
  • Samsung Pay. ...
  • Paytm. ...
  • PhonePe. ...
  • PayPal. ...
  • Google Pay. ...
  • Apple Pay. ...
  • WeChat Pay. ...
  • AliPay. Alipay is an eWallet app that lets users store debit or credit card details to make online and in-store purchases using their phones.
Apr 17, 2024

How big is the digital payment industry? ›

𝐃𝐢𝐠𝐢𝐭𝐚𝐥 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 𝐌𝐚𝐫𝐤𝐞𝐭 𝐒𝐢𝐳𝐞 / 𝐍𝐮𝐦𝐛𝐞𝐫𝐬

The size of the global digital payments market reached $89 billion in 2022 and is projected to reach $200 billion by the end of 2030, growing at a compound annual growth rate (CAGR) of approximately 15.6% from 2023 to 2030.

What percentage of payments are digital? ›

Not only has digital-payments penetration increased to 89 percent in 2022, but the share of respondents who report using two or more forms of digital payments has grown even more rapidly—from 51 percent in 2021 to 62 percent.

What is the payment landscape? ›

The payments landscape is made up of a combination of entities which interact with each of these during the payment transaction process. All of these entities play specific roles in the payment processing cycle. Users have ever-increasing ways to pay.

How is payments evolving? ›

From traditional cash and cheque payments to the advent of digital wallets, cryptocurrencies, and innovative fintech solutions, its evolution has been rapid, transforming legacy systems once considered the bedrock of payment processing through new technologies. Fintech startups have been leading this transformation.

How the rise of PayTech is reshaping the payments landscape? ›

New PayTech ecosystems are developing that can securely store, manage and leverage consumer and merchant data generated through payment transactions – representing radical data monetization opportunities and unique customer offerings.

What is the future of payments? ›

The future of the Payments industry is decidedly digital. With the surge in fintech developments, consumers and businesses are quickly adapting to cashless transactions. The use of mobile wallets, digital currencies, and open banking systems are expected to dominate the industry.

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