Report: U.S. has highest card acceptance cost

U.S. merchants pay more to accept payments by card than merchants in any other industrialized country. According to a report just released by CMSPI, a payments consultancy to merchants, U.S. businesses shelled out $224 billion to accept cards in 2023. Only Japan and Mexico came close to matching that figure.

The lion's share of merchant spend, $143 billion, was interchange, the consultancy said in its just-released State of the Industry Report.

Between 2019 and 2023, as ecommerce grew, so, too, did interchange, to the tune of $2.4 billion, CMSPI reported. It came to this conclusion after analyzing data from Worldpay's Global Payments Report 2024, which reported that ecommerce as a total share of commerce in the United States rose from 9 percent in 2019 to 15.4 percent in 2023.

The cost difference between card-present and card-not-present interchange was 21 basis points (0.21 percent) for credit cards and 58 basis points (0.58 percent) for debit cards, CMSPI said. In the 14 countries analyzed for its report, CMSPI estimated ecommerce sales grew an average 41 percent.

Roughly 54 percent of global ecommerce transaction value in 2022 was made using mobile devices, the consultancy reported.

The cash angle

One of the biggest challenges facing ecommerce merchants is the lack of payment acceptance options. "Unlike in-store channels, the low-cost cash alternative doesn't exist online," the report noted.

Cash usage, however, varies widely around the globe. Cash remains the top preferred payment method in Mexico, where 39 percent of in-store transaction value in 2022 was in cash.

In India, where cash dominated just a few years ago, accounting for 71 percent of POS value in 2019, accounted for just 27 percent of POS payment value in 2022. The government in India strongly encourages electronic payments over cash. Back in 2016, the government scrapped two banknotes constituting 86 percent of currency in circulation in a move intended to combat corruption and undeclared income, according to published reports.

Unified Payments Interface (UPI), India's mobile-based real-time payment network, counted 14 billion transactions in May 2024, according to the National Payments Corporation of India. CMSPI's report also points to a remarkable shift in payment dynamics in Indonesia. Back in 2019, cash accounted for 77 percent of POS value; by 2022 cash accounted for 45 percent of POS value.

Europe is a different story altogether, with a diversity of cash penetration. In Germany, cash accounts for 39 percent of POS spend; in Spain it's 44 percent. Yet, in France, just 10 percent of POS spend is done with cash.

Cards and cards and cards

Card payments, both credit and debit cards, made up 50 percent of POS payments and 34 percent of ecommerce payments in 2023, the CMSPI report noted. In the United States, credit card usage is widespread, with 82 percent of adults possessing at least one credit card in 2021.

Debit cards are reported to account for nearly nine out of every 10 cards in Europe as of 2022. Australia and South Korea are very card dependent. In Australia, debit cards rule, accounting for 60 percent of all card transactions. On the other hand, the South Korean market is dominated by credit cards, with 80 percent of transactions there made using credit cards.

CMSPI's State of the Industry Report is based on publicly available data, including Worldpay's Global Payments Report, Federal Reserve surveys and Euromonitor, as well as interviews with payments experts. The consultancy stated the report "aims to empower merchants and advocates with the information they need to execute payments for their organizations in the market today."

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