Fintechs Address Rising Consumer Payment Adoption and Merchant Adaption

Discover^® Global Network, a leading global payment network, released the third portion of its 2024 Payments State of the Union, the most comprehensive study of its kind, with key insights into the payments ecosystem. Conducted in partnership with 451 Research of S&P Global Market Intelligence, Discover Global Network surveyed thousands of decision-makers across fintechs, merchants, and consumers to better understand if ecosystem priorities are aligned.

Over the past few years, the fintech industry has had a transformative effect on the way consumers and businesses leverage finances for their needs. Yet, some fintechs are at crossroads of satisfying both parties due to complex requirements from merchants and consumers. Striking the right balance between these needs has become essential for continued success. At Money 20/20 USA, Discover Global Network will share further insight into emerging trends from a regional and global perspective.

“The fintech ecosystem is having a transformative impact on our everyday lives. We’re seeing a lot of adoption and maturation of financial services from consumers and businesses,” said Jennifer Cruz, SVP, US Acceptance & Credit Issuing, Discover Global Network. “That said, fintechs walk a tightrope between consumers who expect instant and convenient payment experiences and merchants that demand seamless integration and security. As a leader in financial services and in our fourth year of surveying thousands of decision-makers within the payments ecosystem, this study should help fintechs with their persistent balancing act.”

Key findings from the 2024 Payments State of the Union survey include:

Consumer usage signals instant payments as a prime opportunity, but security is key

• Over the last 90 days, (73%) of consumers used instant payments. Consumers are interested in using instant payments for real-time bill payments (82%), real-time business payouts (80%), and real-time account transfers (76%).
• Being empowered with better fraud controls (38%) and the ability to make/receive instant payments (37%) are the leading areas of improvement consumers want to see from financial institutions.
• When deciding to use an emerging payment experience, (51%) of consumers see the security of their personal information as an important factor; followed by ease of use (33%) and convenience (30%).
• (71%) of consumers are willing to adapt to additional security steps for log in or checkout.

Merchants heighten focus on payments to solve slow payment transfers and fraud

• (61%) of merchants view accepting payments as a highly strategic focus for competitive differentiation. Merchants see payments as critical to the success of the customer experience (58%), business performance (58%), and customer loyalty (57%).
• Improving fraud prevention processes (75%) and providing a wide variety of payment options for consumers (75%) are important to the success of a merchant’s business.
• Tap to Pay on mobile (93%), instant payments (92%) and digital identity (88%) are the technologies merchants anticipate providing the most value to their business.
• (38%) of merchants identified reducing fraud/chargebacks as a top business payment priority in the next two years.
• Payment fraud (34%), new account fraud (27%), friendly fraud [customers disputing legitimate purchases] (26%), and bot attacks (26%) have increased the most in the last two years among merchants.

Fintechs track demands of consumers and merchants

• Fintechs see consumers (49%) and merchants (39%) as a growth opportunity in the next five years.
• Fraud prevention (92%), payment data security (92%), commercial/B2B payments (90%), and instant payments (93%) are important payment initiatives for fintechs.
• (93%) of fintechs say instant payments are an important emerging payment use case to their business.
  • Business-to-business payments (66%), business-to-consumer payments (57%), and consumer-to-business (55%) are the instant payments use cases fintechs are most interested in pursuing.
• Artificial intelligence (44%) is the topic fintechs are most interested in deepening their expertise in and (50%) of fintechs want to leverage artificial intelligence to pursue fraud prevention.

“The third installment of this year’s survey revealed significant opportunities for fintechs to address the needs of both consumer and merchant audiences,” said Jordan McKee, Research Director, 451 Research, a part of S&P Global. “Contrary to expectations, their priorities aligned more closely than anticipated, unveiling a clear path to current and future growth. Overall, the findings emphasize that instant payments and fraud prevention are key areas where fintechs should concentrate their efforts to drive success.”

Money 20/20 USA

When: Tuesday, October 29, 2024; 10:00 - 10:30am local time (PT)

Where: The Briefing Room Stage

Title: Payments in 2030: Building a Future Forward Payment Strategy

What: Consumer needs are in constant flux, making the key to success flexibility and integration with the right partners. In this session, we’ll delve into the current trends in the ecosystem, how payment partnerships are an innovation accelerant, and how enabling modular and highly composable payment stacks will be central to meeting specific business needs.

For a deeper dive into these findings, visit (or download) the full study.

Survey Methodology

A global survey of 1,067 fintech vendor respondents in VP, C-suite and founder roles, 2,258 merchant respondents in senior payments/finance and strategy roles, and 5,030 consumer respondents. Markets surveyed include US, Canada, Brazil, Ecuador, Mexico, China/Hong Kong, India, Japan, Singapore, UK, Germany, South Africa, and Spain.

About Discover

Discover Financial Services (NYSE: DFS) is a digital banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company issues the Discover^® card, America's cash rewards pioneer, and offers personal loans, home loans, checking and savings accounts and certificates of deposit through its banking business. It operates the Discover^® Global Network comprised of Discover Network, with millions of merchants and cash access locations; PULSE^®, one of the nation's leading ATM/debit networks; and Diners Club International^®, a global payments network with acceptance around the world. For more information, visit www.discover.com/company.

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