Learnings from the FIS' 2023 Global Payments Report

Trustly

FIS has recently released its 2023 Global Payments Report, highlighting the latest payment trends worldwide and providing insights into business and consumer payment statistics, trends, and forecasts. The annual report offers actionable insights into payments in 40 different markets. Changes to the landscape happen quickly; this year, real-time payments (RTP) have been cited as a noteworthy force. Let's break down the key payment trends in North America.

A2A Payments Explode in North America

eCommerce growth may have slowed slightly, but Account-to-Account (A2A) payments still took center stage and moved to the forefront. In 2022, A2A payments accounted for $525 billion in transaction value for global eCommerce. Although A2A payments have been around for years, one of the primary reasons for this explosion in growth is the widespread adoption of RTP.

RTP makes A2A a much more viable payment method via efficiency, speed, and irrevocability. Thus, merchants are attracted to A2A payments due to their low cost, and consumers prefer A2A's simplicity and instant access to funds when processed over RTP rails.

A2A growth was particularly apparent in North America, driven largely by the increased adoption of RTP payment rails: InteracOnline in Canada and The Clearing House’s RTP in the US. A2A payments accounted for 9% of all eCommerce transaction values in the US and 12% in Canada, with those numbers forecasted to grow by 2026. FIS' report mentions that "a growing number of US retailers have been encouraging shoppers to try Pay by Bank – an A2A/ACH solution that leverages Open Banking protocols."

The increased adoption of Pay by Bank isn’t likely to slow down. FIS projects, "Pay by Bank is likely to increase in popularity as merchants, banks, network cards, and payment providers promote it as a cheaper alternative to cards." A recent report from EY aligns with this projection as analysts expect the global RTP market to reach $193.07 billion valuation by 2030.

New RTP Rails in Canada and US

A2A payments are becoming more and more popular around the world. Canada and the US are launching new RTP rails, Real-Time Rail and FedNow, respectively, which will no doubt allow for A2A's continued projected growth in the coming years. FIS' report estimates that A2A will account for 11% of the US and one-fifth of Canada's eCommerce transaction values by 2026.

Digital Wallet Acceptance Becomes the Standard

In North America, there's an emerging trend of digital wallets as the top preferred payment method amongst consumers. FIS' Global Report forecasts that digital wallets will achieve 16% of the POS transaction value by 2026. It's become clear that digital wallets are becoming the rule and no longer the exception.

In Canada, consumers reached for digital wallets second only to credit cards as the preferred payment method for eCommerce transactions. In the US, digital wallets have surpassed credit card usage entirely. The ease of use, integration, and faster checkouts drive digital wallet adoption.

Despite slightly slower eCommerce sales than the pandemic peaks, consumers continue shopping online using digital wallets. While cards continue to be the primary funding source for wallets, the direct connectivity of Open Banking allows consumers to fund digital wallets using their bank account. The ability for consumers to pay using money they know they have and that is directly accessible via a digital wallet has contributed to the growth in Open Banking-fueled A2A payments.

Cash Still Persists

Cash use has fallen globally, with an accelerated decline during the pandemic. However, the sharp rate of decline has tapered off, and now cash is slowly phasing out. In the US, FIS projects that cash use will continue to fall at a -5% compound annual growth rate through 2026.

While the increase of A2A and digital wallets are phasing out cash, that doesn't necessarily reflect the imminence of a cashless society. FIS' report notes that despite projected declines in usage, cash remains an integral part of the global economy.

In 2022, cash accounted for over $7.6 trillion, or 16% of global POS value. Compared to 2021, cash accounted for roughly $7.8 trillion, or 17% of global POS value. While the decline is small, the downward trend is settling in, and by 2026, FIS forecasts cash use to reduce to less than 10% globally.

As a whole, we’re seeing more movement toward digital wallets and A2A payment methods. While credit cards are still a large part of transactions, credit card interest rates continue to be one of its limiting factors, and alternative forms of fast interest-free payments are steadily becoming the norm.

Even though eCommerce growth has slightly cooled off compared to during the pandemic, it is still a driving force in the overall shift to these payment platforms, with forecasts all concurring their growth in the coming years.

RTP is Positioned for Growth

Overall, FIS' global payments report shows that RTP has been gaining steam, and projections show no sign of slowing. Simply put, Open Banking is having a period of growth as globally, many countries are adopting RTP rails and payment methods. Businesses and consumers increasingly realize RTP's potential and benefits as eCommerce growth continues to rise in virtually every region.

Stay Ahead with Trustly

The ever-evolving nature of the payments ecosystem can take time to decipher. For over a decade, Trustly has been a leading innovator in the payments space, championing Open Banking and RTP to improve the financial capabilities of merchants and consumers. Contact Sales and see how Open Banking Payments can help you meet changing payment preferences.