eCommerce: Top Online Payments in the U.S.

Online Payment Methods in the U.S.:
Key Insights

• Card Dominance: Cards are the primary payment method in the U.S. digital commerce market, accepted by 99% of top online retailers, reflecting consumer preference and retailer confidence.

• Rise of eWallets: eWallets follow cards with an 81% acceptance rate, showcasing their emergence as a convenient alternative for online payments.

• Installment Plans' Popularity: Installment payment options, available at 37% of online platforms, highlight the increasing popularity of flexible payment plans among consumers.

• Visa & Mastercard Lead: Visa and Mastercard are the dominant players in the payment provider landscape, each with a 95% acceptance rate, while American Express and PayPal closely follows at 80% and 77%.

• Emerging Players: Google Wallet, Apple Pay, Amazon Pay, and Shop Pay are emerging payment providers gaining ground, signaling potential shifts in the future of digital commerce.

In our daily routine, we might scroll through the online checkout of our favorite shopping page, entering our payment data without thinking about why we exactly chose this method. We typically stick to familiar options like Mastercard, Paypal or Visa out of habit or for convenience.

At the same time, the selection of payment methods is expanding rapidly, ranging from electronic systems to eWallets. Digital wallets, in particular, are gaining traction as alternatives to traditional methods, such as bank transfers or invoicing.

The United States is home to major payment companies, but who leads the online payment trends in the country? Is it Visa, American Express or perhaps PayPal or Apple Pay? Let's cash out what lies beneath!

Consumers in the U.S. Prefer Cards, eWallets & Installments 

Based on a snapshot of the U.S. digital commerce market taken in March 2024, our data exhibits the types of payment methods accepted by 4,630 online stores in the country. Cards are overwhelmingly the most accepted method, featured by 99% of these retailers. eWallets follow at an 81% acceptance rate, while other assorted payment methods are accepted by 58% of the stores. 

Installment payment options are available at 37% of these online platforms, with bank transfers at 10%. Cash on delivery and invoicing options round out the list, accepted by 3% and 8% of stores, respectively.

The high acceptance rate of card payments emphasizes their integral role in the digital commerce landscape, indicating both consumer preference and retailer confidence in this established method. eWallets also affirm their status as a convenient and quick alternative. 

Installment options, accepted by nearly half of the retailers, point to the rising popularity of flexible payment plans. Bank transfers and direct debits are less commonly accepted, potentially due to longer processing times and lower consumer demand for these options. In addition, cash on delivery and invoicing, although rare, indicate that some retailers are willing to offer even more traditional methods for payment completion. 

Visa & Mastercard Lead
the Payment Trends

Visa and Mastercard lead the lineup, each with a 95% acceptance rate among 4,630 online retailers in the United States. American Express trails closely at 89%, and Discover is accepted by 80% of the stores. PayPal is featured by 77% of these online platforms, while gift cards have a 48% acceptance rate. 

Emerging eWallet payment providers also make an appearance. Google Wallet is accepted by 20% of these stores, Apple Pay by 18%, followed by Amazon Pay and Shop Pay accepted by 17% and 16%.

In summary, Visa and Mastercard recognized provider of U.S. digital commerce, followed closely by American Express. PayPal excels in convenience, and gift cards remain relevant. Emerging options like Google Wallet and Apple Pay are cautiously gaining ground, together with Amazon Pay and Shop Pay. 

Merchants’ Favorite Payment Method: Avoid Fraud, Boost Conversion 

Payment options serve as a critical tool in thwarting eCommerce fraud, but fraud prevention is just one among various considerations for merchants when selecting which payment methods to offer.

According to Cybersource's 2022 survey, 27% of merchants prioritize payment methods that lower fraud risk, such as delayed options like Buy Now, Pay Later. About 21% prefer methods that boost conversion rates, reflecting growing consumer digital payment use. Another 20% value immediate fund availability through eWallets, and an equal percentage focuses on reducing payment processing costs linked to credit cards and PayPal. 

To encourage the use of their preferred methods, merchants deploy various strategies. Tied at 42% are advertising preferred options on websites and displaying them before reaching the payment selection stage. Both tactics aim to cut down on cart abandonment. Additional methods include offering customer incentives like discounts or cash-back rewards, cited by 40% of merchants. Surcharges for non-preferred methods are less common, used by only 28% of merchants, possibly due to regulatory constraints.

Visa & Mastercard: Steady Growth Amid Market Fluctuations

The U.S. companies Mastercard and Visa are well-known companies in the payment industry with electronic payment systems that enjoy great popularity. These players have shown robust growth, despite global crises and inflationary pressures. 

Last year, Mastercard saw an 18% growth in net revenues, highlighted by a 45% increase in cross-border volumes. Its net operating margins are nearing pre-Covid levels, standing two percentage points shy at 55.2% in 2022. The company’s brand value isn't lost on industry experts and analysts. It was listed as the ninth most valuable brand in the Kantar BrandZ Most Valuable Global Brands Report for 2023.

Just as established providers like Visa and Mastercard serve as the industry's bedrock, upstarts like PayPal and Apple Pay are the wind in its sails. As these eWallet services battle for market share in different regions, they highlight the complexity of consumer preferences and the challenges facing the eWallet industry.

PayPal's Popularity Challenges in Markets 

Amid shifting dynamics in the electronic payment sector, eWallets are contending for user preference across various geographies. While PayPal continues to be the dominant payment service in the United States – as well as European countries such as Germany, France, Italy, the United Kingdom – the company is not immune to market pressures. This year, the company’s share has dipped by 1 percentage point in the U.S. and a more notable 8 points in the UK. 

Other significant players in the digital payments race, Apple Pay, Google Pay, and Amazon Pay are almost equally vying for market share in the U.S., capturing 34%, 31%, and 30% respectively, while PayPal stands at 81%. 

Furthermore, Apple Pay has seen a surge in France—moving from a 12% to a 19% market share – while leading the UK with a 37% share. Amazon Pay takes the lead in Germany with a 28% share.

Differing demographic preferences are also affecting market dynamics. Baby boomers overwhelmingly favor PayPal, with 89% sticking to this service. Millennials lean toward Google Pay and Amazon Pay, while Gen Z is showing a strong affinity for Apple Pay and the least for PayPal. 

However, PayPal faces limitations in markets like China and Japan, where its presence is notably lower. In these countries, as well as in Argentina, South Korea, and Serbia, PayPal's expansion is inhibited by the prevalent use of cash and strong preferences for indigenous platforms.

Online Payment Trends in the U.S.:
Closing Thoughts

The growing diversity of payment methods is a positive trend for e-commerce. It shows that retailers are listening to their customers and offering them a variety of options to make it easy and convenient to shop online.

At the same time, it is probable that the preference towards card payments will remain as presented, while the popularity of digital and online purchase methods is expected to continue to grow.

Sources: ECDB, secondary sources in the referenced articles.