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Constant change in the North American payments landscape is a given, yet the COVID-19 pandemic has accelerated a shift to more modern channels.
A recent survey from McKinsey shows that US consumers are increasing their use of digital payments in a variety of ways, which can lead to a variety of new opportunities for providers.
Digital payment vehicles
The McKinsey 2023 Digital Payments Consumer Survey shows that almost nine out of ten Americans are currently using some form of digital payments.
In 2022, penetration of digital payments went up to 89% and those respondents using two or more forms of digital payments grew to 62%, up from 51% in 2021.
This covers a number of high-profile payment vehicles.
For example, more than two-thirds of Americans expect to have a digital wallet within two years, while those reporting an interest in using BNPL facilities have increased to 15%, up from 11% in 2021.
Among categories of digital payments, the leader of the pack continues to be purchasing online, defined as “buying things and/or paying for services through a website/browser on a computer, phone, or tablet.”
73% of respondents report making such a digital payment in the past year. More striking is the recent growth in the in-app and in-store categories.
Both categories dipped slightly in 2021, during declines in activities like ride sharing and shopping at brick-and-mortar stores.
As consumers return to such activities, many are applying digital behaviours they developed online. Use of in-store digital payments is particularly strong among 18- to 24-year-olds, whose 32% adoption rate is double that of the 55-plus cohort.
Digital-first strategy
While it is not expected that any single payment solution will dominate the market in the near term, modern payment technologies will become more and more imperative in delivering innovative solutions that can be tailored to the customer market and allow you to stand out in today’s crowded market.
One thing is certain, digitisation is the key to success.
There are a number of advantages when adopting an innovative digital-first strategy:
Designing and providing the best Customer Experience: Avoid churn, retain existing customers and attract new ones by leveraging on uniqueness, hyper-personalization and a feature-rich digital payment experience. Payments providers can offer simple, seamless and secure payment experiences
Optimizing and securing your business: Generate new revenues by addressing several segments, creating sophisticated business models, launching new and competitive products – while keeping costs down
Keeping up with changing market dynamics and improving Time To Market: Adapt dynamically to any market or regulatory changes with the ability to quickly launch new digital products, tokenization, virtual cards or alternative payment methods
Innovating today to create tomorrow’s payment experience: Offer digital and mobile products such as virtual cards, numberless cards, instant payment, AI, voice payment, accessibility and security for all with one-time PIN solutions, next generation and digital onboarding, BNPL, wallet, real-time or extended controls.
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