A report from Worldpay from FIS forecasts how consumer payment methods will change by 2024.
COVID-19 disrupted much of the world. Lockdown and social distancing shuttered traditional, brick-and-mortar stores, forcing more consumers to shop online. As people’s shopping habits changed, so did their payment methods. Credit cards declined in popularity while digital wallets and buy now, pay later (BNPL) services surged.
While bank transfers, charge cards, cash on delivery and other services are expected to decline, credit cards remained the top e-commerce payment method among North American consumers in 2020 with 32 percent of the market. However, credit cards faced a 7 percent decline from 2019 and projections show that credit card usage will continue to drop by 2024, accounting for 26.7 percent of e-com payments in four years. Consumers will continue to depend less on credit because they’re worried about the recession and increasing unemployment, according to FIS.
COVID-19 also ushered in an era where consumer spending by digital and mobile wallets grew from 23.7 percent in 2019 to 29.3 percent in 2020. Digital and mobile wallet spending is expected to increase further by 38.2 percent by 2024, ultimately accounting for 40.5 percent of all North American e-commerce payment volume.
BNPL services also grew 78 percent between 2019 and 2020 to make up just 1.6 percent of e-com spending last year. Interestingly enough, BNPL services are expected to grow by another 181 percent by 2024 to account for 4.5 percent of e-commerce payment volume in North America.
That doesn’t sound like much, but it’s a relatively new space still. The industry’s continued growth will be a testament to how aggressive BNPL providers are in search of payments domination. It’s also reflective of how consumers are prioritizing careful spending and budgeting in a time when so many were dependent on government checks to keep them afloat.