Mid-year United States Update 2018
If American Independence Day has been and gone, it means we’re over half way through the year! So, we thought it was about time we sat down with Casey Bullock, GM, eCommerce – North America to get an update on what’s been happening across North America this year.
What have been your top 3 highlights of 2018 so far?
- The excitement of bringing together Vantiv and Worldpay to form the largest and most innovative global payment and risk management company on the planet. Rarely does one get the opportunity to be part of something truly unprecedented in the business world. Now granted we aren’t curing cancer or solving the world’s hunger problem; however, we are bringing enterprise class payment solutions to companies in over 146 markets engraining ourselves as part of the fabric of commerce all over the world.
- The impending requirements around GDPR and PSD2 have not deterred our customers from expanding into new markets in Europe (and beyond). The partnership we’ve established with our customers goes beyond the trusted advisor role. Worldpay’s global reach has become, in many respects, a predictor of what’s to come in enterprise payments. We observed (early on) the accelerating adoption of wallet based payments and the rise of alternative, non-card-based payments as a viable alternatives to cards. We’ve been fortunate enough to be at the forefront of partnering with companies like Google, Apple, PayPal, Samsung, AliPay, WeChatPay and several of the major card brands in the expansion/realization of the accelerated rise of wallet based payment initiatives in several global markets.
- Companies (and consumers alike) demand simplicity, security, choice and ubiquity in their payment experience. We’ve observed a growing trend of consumer’s choosing payment methods that fit their lifestyle supporting options that are both easy to use and optimized for all manner of sales transaction execution including mobile commerce, web, desktop, internet of things enabled purchases and physical point of sale. Worldpay has worked hard to ensure that our merchant customers can maximize their revenue generating opportunities through choice. Choice in methods of payment…geographic reach…understanding of market dynamics as well as optimization of each method of payment utilized to ensure the highest level of payment conversion possible. Long gone are the days when simply processing a credit card transaction was the modus operandi. The North America payment landscape (and certainly the rest of the world) will continue to evolve as merchants continue to seek a greater degree of payment choice for their customers coupled with higher success rate in payment acceptance.
We predicted that the % of payments made via a credit card in the US would reduce by half over the next 5 years. Do you think we’re starting to see this decline?
- We’re starting to see a consistent increase in wallet-based payments, but the majority of those payments are still backed by a credit or debit card. Alternatives to card or card-backed payments are increasing, evidenced by the ability to link bank accounts as funding source for several of the mainstream digital wallets. It’s important to consider payment preference by market. For example, The Canadian eCommerce market represents $45 billion in spend with the majority of the payment transactions (70%) still originating via credit card. eWallets and bank transfers comprise 12% and 6% of spend respectfully with cash on delivery and debit cards representing 3% each.
- The United States is a $740 billion ecommerce market with credit card and digital wallet utilization at 26% and 23% respectively. Bank transfers and cash on delivery represent 8% of total ecommerce payment market utilization respectfully. You can see there are clear differences in payment preferences in Canada vs the US; however, the use of eWallets is increasing substantially. In many cases the funding source used within the wallet can be/is a bank account.
- Some segments – like B2B – card-based payments are still in the relatively early stages of penetration into the total addressable market.
And, if yes, what’s driving this? If no – why not?
- Simplicity of checkout, security, choice and ubiquity are the primary drivers for consumer adoption. The prevalence of credit cards and payment brand badged debit cards is evident in North America. Consumer’s demand choice in their methods of payment and eWallets represent that choice in an easy to use and secure format. Considerations around which methods of payment a merchants should deploy are less of a concern when eWallets offer that choice via a single platform option. One key challenge merchants face is which wallets to deploy. The answer to this question isn’t as simple as one may think. The merchant’s products, average transaction value, risk profile and global markets served are all key considerations.
- Despite the popularity of eWallets, we will continue to see growth in non-card-based payments such as bank transfers and direct debits, especially in the B2B space. There are millions of unbanked consumers in North America who don’t have ready access to credit options. Consideration must be given to their payment preferences (in many cases cash based payments). Understanding your customer is key in deciding which methods of payment to offer.