The U.S. Credit Card Industry Rides the Wave of Mobile Usage and Contactless Payments

This commentary analyzes the growth in electronic forms of payments relative to cash and checks. The digitalization of daily life and the adoption of mobile and contactless payments continue to facilitate this trend. The Coronavirus Disease (COVID-19) pandemic accelerated consumers' inclination to conduct more transactions online and use cash less frequently for point of sale (POS) purchases, significantly boosting digital payments.

Key highlights include:

-- The facilitation of payments in the U.S. through the use of credit, debit and prepaid cards continues to expand. Meanwhile, cash, check and money order payments continue to contract as a portion of the overall payment transactions.
-- Credit card payment volume accounts for the largest portion of the overall spending relative to other payment methods for both online and POS purchases.
-- Growing merchant acceptance of contactless payments and digital wallets should continue to propel the long term growth in card payments. The U.S. consumer adoption of POS mobile contactless payments has been steadily increasing with a notable jump occurring during the pandemic. This increased adoption is likely to endure.
-- The growth of e-commence and m-commerce as well as the payment optionality at the order checkout has also contributed to the emergence of alternate payment providers such as buy now, pay later providers.

“DBRS Morningstar sees this as a structural shift in consumer behavior that further supports the movement toward the electronification of payments. U.S. credit card issuers are well-positioned to benefit the most from these evolving trends as credit cards are the most prevalent payment method and remain top-ranked in consumers preferences relative to other payment options when it comes to convenience, security and acceptance.” said Yanni Koulouriotis, Vice President – Global FIG.