Thursday, February 29, 2024

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    The biggest shifts and trends driving short- and long-term growth in the future

    Payments Industry Evolution: Trends, Growth, and Future Outlook

    The payments industry is undergoing significant transformations, driven by shifts in consumer behavior and technological advancements. As businesses and consumers increasingly opt for digital payment methods, the traditional power dynamics are changing. Cards still dominate in-store retail, but the rapid adoption of mobile wallets, such as Apple Pay, is reshaping the landscape.

    Simultaneously, e-commerce is challenging brick-and-mortar retail, with smartphones playing a crucial role in digital shopping. Digital peer-to-peer (P2P) apps are becoming the preferred choice for day-to-day transactions across generations, surpassing the use of cash.

    This shift is not confined to retail; it is influencing larger industries traditionally dominated by cash and checks, such as remittances and business-to-business payments.

    In response to these changes, providers are engaged in fierce competition for market share. Consolidation within the industry is creating mega-giants, prompting providers to diversify in search of new transaction volume.

    New players, especially from the tech industry, pose a threat to established giants. As payments become more seamless, new types of fraud are emerging, posing challenges to data security and privacy. The increasing demand for enhanced payment offerings creates both opportunities and challenges, leaving the industry to find ways to adapt to significant changes that put trillions in transaction volume and billions in revenue up for grabs.

    This report by Business Insider Intelligence delves into the current state of the payments ecosystem, its growth drivers, and the anticipated future trends. The journey of an in-store card payment from processing to settlement across key stakeholders is outlined, providing insight into the central process that has slowly changed in the face of disruption.

    The report forecasts growth and outlines drivers for key digital payment types through 2024. Additionally, it highlights three trends shaping the payments landscape, including the impact of new market entrants and the rise of fraud, sparking changes across the entire ecosystem.

    Key players mentioned in the report include ACI Worldwide, Adyen, Amazon, American Express, Apple, and many others, reflecting the diverse landscape of the payments industry.

    Key Takeaways:

    1. In-store payment methods are still on the rise in the US, comprising 89% of retail volume this year. Credit and debit cards continue to lead, while cash and check usage slowly declines. Contactless penetration is expected to bring mobile in-store payments to prominence in the coming years.
    2. E-commerce growth will diminish in-store payments’ share of overall retail, with smartphones inching closer to becoming the primary channel for purchasing. New payment tools, such as voice assistants, wearables, and even cars, are set to provide consumers with more convenient payment options.
    3. The digitization of payments extends beyond retail to mobile P2P payments, digital remittances, and digital business payments, creating new opportunities for growth and innovation.

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