Will nonbank intermediaries tip the balance towards instant payments?
McKinsey's latest global payments study finds a major portion of U.S. consumer payments takes place in places like Amazon, Walmart.com and other platforms and marketplaces. But a growing population of specialized, vertical payments venues, such as billing for lawyers and doctors, are also nibbling at banking's share of merchant processing. Could all these nonbank players give instant payments a strong nudge?
Commerce continues to migrate away from traditional bank merchant processors and towards consumer-oriented marketplaces and payment platforms, according to McKinsey’s 2024 global payments report. An increasing role will be played by marketplaces and platforms devoted to vertical specialties. In the process, the U.S. economy may see these players give instant payments a strong nudge.
Gains for these nonbank payment intermediaries are especially strong in the U.S. This includes platforms like Shopify, Square and Toast, which facilitate transactions for vendors, and marketplaces like Amazon, eBay and Etsy, which sell goods as well as handle the related payments processing. Some of the latter go further, such as Amazon offering its payments functionality on independent ecommerce sites and via its Amazon Pay wallet.
McKinsey estimates that 30% of consumer spending occurs via these intermediary channels globally. In the U.S. the firm thinks 35%-40% of consumer purchases go through these channels, and in the European Union, between 25%-30%.
“These platforms and marketplaces increasingly outsource processing to merchant acquirers such as Fiserv and Global Payments at wholesale prices while controlling the customer experience and earning higher margins on valued-added services,” the report says.
continue reading »