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The Evolving Payments Purchasing Chain: How Digitization and Economic Pressures Are Changing the Ecosystem

  • Acquirers and processors are competing to enhance their value propositions
  • Card and automated clearing house (ACH) payment networks are dueling for volume
  • Issuers can lean on customer relationships and tranches of data to respond to innovation

Amid economic uncertainty, payments providers are making meaningful shifts to digitize and innovate as they continue to grow at a projected 8.3% compound annual growth rate worldwide between 2021 and 2026, per Boston Consulting Group. 

The Payments Value Chain

Insider Intelligence

The changing economic landscape is leading to consolidation and a stronger focus on innovation. Both large and small players in the space can adapt their products to address current market needs and press on toward digitization. Although driving towards digitization increasingly becomes the industry standard, networks like Visa and Mastercard will likely keep raising swipe fees under the argument that these fees are integral to funding security, innovation, and credit card rewards systems. As an alternative to networks, we are seeing strong adoption of instant payments (which nearly a third of US retailers are exploring, per a June 2022 survey) and buy now, pay later (which we forecast more than 2 in 5 US digital buyers will leverage in 2023). 


The rise of digitization and noncard payment methods could pose a large threat to issuers’ transaction-based revenues. In order to stay afloat, issuers will look to reap more value from existing customers. This should not prove to be a challenge anytime soon, as consumers in North America still trust banks more than fintech providers, according to a December 2021 Mastercard survey. However, as the Consumer Financial Protection Bureau makes moves to increase competition through regulation, consumers could find it easier to change banks in the future. To prevent a mass exodus, issuers will leverage customer data to create more personalized offerings. 


What is abundantly clear is that the diversification of the payments landscape paired with the threat of new regulation is creating more opportunities for the savvy consumer. In order to stay afloat, players must focus on the needs of their customers, convenience, and expanding their products to include more payment method options. Curious to learn more about the evolving payments purchasing chain? Click here to purchase this report directly from Insider Intelligence. Want more data? Click here to purchase The Payments Ecosystem collection.

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