The way people pay is constantly evolving. Digital wallets, Buy Now, Pay Later (BNPL) and real-time payments are becoming part of everyday life, driven by the demand for faster and more convenient options, both online and in-store.
In North America, this shift is happening at pace. A lighter regulatory approach and a strong focus on growth have helped accelerate innovation, though this often brings questions regarding security and consumer protection.
James Fry, Head of Enterprise Product at Worldpay, spoke with Payment Expert about the current state of payments innovation in the region, how the landscape compares globally and what trends are likely to shape the future of the industry.
Payment Expert: How would you describe the current state of product innovation in North American payments, and what key trends are shaping the market?
James Fry: The payments scene in North America is going through a big change, with more people using digital payment options like digital wallets, BNPL, and real-time account-to-account (A2A) payments. This shift is happening because smartphones are getting better, fintech companies are growing faster, and the rules are supportive.
Digital wallets are leading the way, making up 53% of online shopping and 32% of in-store transactions in 2024. Over the last 10 years, the use of digital wallets has skyrocketed, 10 times more, whether shopping online or in-store, showing just how popular these methods have become.
PE: How does North America’s approach to payments innovation compare to regions like Europe or Asia? What challenges and opportunities are unique to this market?
JF: In North America, digital payment methods have taken off quickly, much like in Europe and Asia, but with their own unique twist. While Asia is all about superapps that bundle a bunch of services together, North America leans more towards individual payment innovations.
This difference comes down to the unique rules in North America that prioritise consumer protection and data privacy. These regulations, along with what consumers prefer, play a big role in how fast and in what ways payment innovations develop in different parts of the world.
PE: How are traditional financial institutions and fintech startups navigating the lines between collaboration and competition in North America’s payments ecosystem?
JF: In North America, there’s a growing trend where traditional banks and fintech startups are teaming up. These partnerships aim to boost payment security and make transactions more efficient, especially as fraud detection becomes more complicated.
A great example is how Worldpay and Capital One are working together to improve how they handle payment fraud, aiming to cut down on fraud and increase the chances of transactions being approved. This teamwork shows how banks and fintechs are blending competition with cooperation to make the most of each other’s strengths.
PE: From Worldpay’s experience, has the US traditional banking sector been more receptive to working with fintechs and paytechs than in other countries and regions, or vice versa?
JF: From Worldpay’s experience, traditional banks in the US have been quite open to teaming up with fintech and paytech companies. This willingness is clear through strategic partnerships aimed at reducing false positive declines and boosting fraud detection. These collaborations are key to improving payment security and efficiency, showing the banking sector’s readiness to embrace innovation.
By tackling the growing challenges of fraud detection and prevention, these partnerships highlight how eager the US banking sector is to work with fintechs and make the most of technological advancements.
PE: Looking ahead, what do you see for the future of North American payments and fintech in the next 3-5 years? Are there any breakthrough technologies or trends on the horizon?
JF: Looking ahead, it’s clear that digital payments are going to keep growing in North America. Digital wallets are set to grab a big chunk of both online and in-store spending. Exciting new technologies like cryptocurrencies and embedded finance are also expected to play a big role in changing how payments work.
By 2030, digital payments are predicted to make up 79% of all online spending and 53% of in-store spending. These changes show a major shift in how people prefer to pay and how new tech is being woven into the financial world.
PE: How might political changes affect payments innovation and product development in North America, particularly for a global player like Worldpay?
JF: Political shifts can really shake up regulatory rules, which then affect how payments evolve, and new products are developed in North America. For a global company like Worldpay, being flexible and quick to respond to these changes is key.
Dealing with different regulations across regions can be tricky, but it also opens doors for innovation, as companies have to adjust to different legal and consumer settings. This ability to adapt is crucial for taking advantage of new opportunities and staying compliant with changing rules, helping to drive innovation in the payments world.
