Three in five Americans (58%) expect all payments to be digital in the near future, rising to two thirds among millennials (67%), according to a new survey by Temenos.
The ‘Cashing in on the rise of digital – key trends in US payments’ research comes as US adoption of instant payments is set to soar following the launch of FedNow, compounded by growing competition and collaboration between banks and fintechs to offer a range of payment solutions.
According to the Temenos survey of 2,000 US adults, almost a quarter (24%) never or rarely use cash, preferring to use cashless methods such as mobile banking and payment apps.
Of those surveyed, almost three quarters (71%) use mobile or online banking for payments with over one third (36%) sending account to account transfers via wire or ACH at least monthly.
Over half, 53%, use a payment app like PayPal or Venmo at least monthly, while 41% use a mobile wallet such as Google Pay or Apple Pay. Just over a quarter (26%) use QR codes for payments, while 16% do so using some form of cryptocurrency.
Philip Barnett, President, Americas at Temenos, commented: “It’s clear from this survey and our conversations with US banks that American consumers are looking for faster, cheaper and more convenient methods of payment.
“Temenos is working with US financial institutions of all sizes to modernise their payments capability to adapt and take advantage of these market changes. And we continue to invest in our single code base across core accounts and payments processing, making our offering the most compelling in the market.”
The introduction of new instant payment initiatives such as FedNow have allowed banks to elevate the customer experience and grow their payments business, with more than a third of Americans surveyed stating bank transfers today are “too slow and expensive”.
Adoption of new payment methods is being driven by younger cohorts, however. The survey finds Gen Z (18-25) and Millennials (26-41) are the most dissatisfied with the speed and cost of bank transfers.
Furthermore, more than half expect to use online banking, contactless and payments apps more in the next few years, compared to only around one third for older generations.
Erika Baumann, Director, Commercial Banking & Payments, Datos Insights, added: “At Datos (formerly Aite-Novarica Group), we are seeing increased adoption of digital payments in the US.
“A lot of factors are influencing this shift including market innovation, increasing choice of payment options and a surge in transaction volumes.
“As the shift to digital payments continues, more banks are reviewing their payments infrastructure with specific focus on technology and platform choices which enable them to innovate and scale as their business evolves.”
