A Remarkable 18 Months

Welcome to Digital Transactions’ August issue, which is also our annual Buyers’ Guide. With this latest edition of the Guide, we thought we’d take a minute away from all the products and vendors that appear in the following pages to look at a few numbers that describe the industry. We think you’ll find the product or service you’re looking for in this Guide, but we also want to put in perspective some measurements that describe what’s going on in payments in the United States.

When it comes to this, there’s no better place to turn than the Federal Reserve, which has long been collecting data on the payments business with its triennial payments studies and their supplementary reports. The latest such report, for 2020, appeared not long ago and was full of fascinating figures.

Now, one can argue that 2020 was no typical year in payments. Much activity in the industry, after all, was heavily influenced by the onset of a pandemic that remains with us to this day. But the results that year demonstrated the resilience of the industry, a characteristic, we’d argue, that continues to define payments now.

One remarkable result noted by the Fed is that, for the first time, so-called remote card payments outnumbered in-person card payments. Remarkable, but not surprising, given the widespread fear of infection and the resulting turn to e-commerce. All told, in-person card payments fell by 11.7 billion in 2020 compared to 2019. “This drop was not only large in absolute and percentage terms but also represents the first one-year decline of in-person card payments seen in [Fed] data,” the Fed notes. That turn to remote payments is likely a permanent shift, even if year-on-year increases fall short of 2020’s results.

E-commerce, in particular, was the winner among remote payments once the pandemic had sunk its teeth into the American economy. The traditional “remote” payment categories, mail-order and telephone order, continued a long decline. All told, e-commerce accounted for two-thirds of remote card payments, and 59% of the dollar value, in 2020, up from 64% and 55% in 2019.

Payments via digital wallets, which can be either remote or in-person, also saw remarkable growth in 2020, though wallets’ overall share of payments remains small. They accounted for 2.6% of all credit and non-prepaid debit card payments, and 1.47% of the value of those payments, up from 0.50% and 0.23% as recently as 2017.

Well, that was all about 18 months ago. What about now? “Although some of the changes observed in 2020 were at least partly a continuation of longer-term trends, the data show some early evidence of stronger behavioral shifts that may persist,” the Fed study notes.

—John Stewart, Editor,  john@digitaltransactions.net