Monday , December 4, 2023

A2A Payments A Growing Force In Payments

Account-to-account payments is becoming a growing force in the payments landscape, totaling $525 billion in global e-commerce transaction value in 2022, up from $463 billion in 2021, a 13% increase, according to the FIS Global Payments Report 2023. The volume was funneled through about 70 real-time payment schemes providing high-speed payment rails, the report says.

FIS Inc. surveyed 46,000 consumers across 40 markets globally, conducted secondary research, and obtained validation of the data gathered by payments experts from each region to compile the report.

In the United States, growth in account-to-account payment volume mirrors the global trend, with A2A transactions totaling 9% of e-commerce transaction value in 2022. By 2026, A2A transactions are projected to grow to 11% of e-commerce transactions, the report says. The increase will be fueled in part by consumer use cases arising from the 2023 launch of FedNow real-time payments network, which is expected to launch in July, and will take a place alongside existing real-time payment networks such as RTP from The Clearing House and Zelle.

Use cases driving A2A payment volume include business-to-business, person-to-person, and person-to-business.

“It’s not hard to see why account-to-account (A2A) payments are gathering momentum,” Jim Johnson, president of Worldpay Merchant Solutions at FIS says in a prepared statement. “Account-to-account payments can reduce the cost of payment acceptance in comparison to cards, while offering the instant settlement of funds and boosting their cash flow. Some merchants are even offering customers incentives to pay with account-to-account, which is certainly helping it gain traction.”

In February, FIS announced plans to spin off its Worldpay merchant-services business within the next 12 months, less than four years after FIS acquired it for $43 billion.

Other global trends noted in the report include the continued growth of e-commerce transaction values and digital wallets, and a decline in the use of cash. Global e-commerce transaction values totaled about $6 trillion in 2022, a 10% increase. On a percentage basis, the increase was slightly less than the previous two years when the Convid-19 pandemic sent e-commerce volume rocketing the report says.

Digital wallets are projected to account for 54% of e-commerce transactions and 43% of transactions at the point-of-sale in 2026, according to the report. Fintechs, banks, neobanks, super apps, large technology companies, and device manufacturers are all competing as wallet providers.

The use of cash fell to 16% of global POS transaction values in 2022, down from 26% in 2019. By 2026, cash’s share of global POS transaction s is expected to fall to less than 10%.

In the United States, credit and debit cards accounted for more than two-thirds of POS transaction value in 2022, with credit cards accounting for 40% and debit cards 31%. When it comes to e-commerce, credit cards accounted for 30% of transaction values and debit cards 20%.

In spite of consumer preference to pay with credit or debit cards, digital wallets became the leading payment method among online shoppers in the U.S., accounting for 32% e-commerce transaction values. Nevertheless, credit and debit cards remain the dominate form of payment when using a digital wallet with 33% of respondents in the saying they funded their wallet with a debit card and 31% using a credit card.

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