A Federal Reserve survey revealed that Americans, especially younger adults, value speed, flexibility and convenience in payments, and they favor digital wallets offered by nonbanks. Digital wallet use surged 32 percent in 2023, outpacing mobile apps and debit cards. In addition, over half of Generation Z and millennials use digital wallets, with 80 percent valuing mobile payments. Also, ecommerce now represents 15 percent of U.S. retail commerce, but fraud remains a concern, with 54 percent of survey respondents worried and 16 percent having experienced fraud in the past year.
Despite the rise of digital wallets, cash and credit cards remain the most used payment methods, followed by debit cards and ACH. Consumers seek convenience and efficiency, with issues like fees, speed and processing errors being common.
Key beneficial use cases for fast, mobile payments include person-to-business (online shopping and bill payments), person-to-person (sending money to friends and family), account-to-account (transferring money between accounts) and business-to-person (payroll, contractor payments, insurance payouts, reimbursements).
Nearly 19 percent of Americans remain unbanked, but this may change with the adoption of faster payment mechanisms, according to the U.S. Faster Payments Council. The FPC's Faster Payments and Financial Inclusion report revealed progress among financial institutions in implementing faster payments, though challenges remain. Anthony Serio, chair of the FPC's Financial Inclusion Work Group, emphasized the need for inclusive solutions that address fee variability, cross-border payment capabilities and consumer protections.
David True from PayGility Advisors highlighted the need for better education, user experience improvements and enhanced collaboration to promote financial inclusion.
However, faster payments have increased opportunities for fraud. At a Senate hearing, Senator Richard Blumenthal cited significant fraud losses on Zelle, a faster payment network operated by Early Warning Services and owned by major banks. Blumenthal called for these banks to address the fraud issue, given their resources and expertise.
Apple is discontinuing its in-house buy now, pay later (BNPL) service, Apple Pay Later, in favor of installment payment plans through third-party lenders. Apple Pay Later allows consumers to make interest-free payments in four installments over six weeks for purchases up to $1,000. Apple will now partner with Citibank, Discover, Synchrony, Fiserv, and Affirm to offer these payment options starting with the iOS18 update this fall, and will extend partnerships globally with other lenders.
Apple affirmed it aims to provide flexible payment solutions through secure, private, globally accessible options. The change promises more flexibility and choice for users during online and in-app checkouts. BNPL usage surged during the COVID pandemic but remains relatively low, with 9.3 percent of consumers using it, up from 6.6 percent three years ago. It is particularly popular among those with limited credit. 
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