The explosive growth of e-commerce during the pandemic drove a surge in digital payments. Today, retailers must keep track of online payment trends and accommodate consumer expectations for a wide range of options at checkout.
While consumers turned to e-commerce largely out of necessity over the past two years, research shows they aren’t turning back. A study from Jupiter Research found that the value of global e-commerce payment transactions will exceed $7.5 trillion by 2026, from $4.9 trillion in 2021 — a growth rate of 55% over five years.
Fueling this growth is a wave of innovation in digital payments to meet evolving consumer preferences.
Online payment trends: Keeping up with consumer demand
Digital payments were already growing at a rapid clip before COVID hit, but skyrocketed during the pandemic. In 2021, 82% of Americans used digital payments, up from 72% five years ago, according to a McKinsey & Co. report.
Online payments options have grown far beyond credit and debit cards. Consumers today flexible payment options and seamless transactions, and fintech companies are answering that call.
- Payment services and apps (e.g., Paypal)
- Digital wallets
- Cryptocurrency
- Buy now, pay later
- Omnichannel payments
Paypal led the way in online payments
PayPal is a prime example of fintech innovation. The service integrates with e-commerce sites to allow consumers to pay directly from a cash balance maintained in their account, draw funds from another source like a credit card or bank account, or even finance their purchase – all with a couple clicks.
Consumers don’t even have to enter their shipping address because it’s already saved in PayPal.
Numerous other fintech services have made it to market since PayPal’s debut in 1998. Amazon followed suit with Amazon Pay, a digital payment processing service that allows consumers to pay online using their Amazon payment methods on third-party websites. Amazon Pay uses the details stored on the shopper’s Amazon account to complete the transaction and provide a seamless checkout experience.
Venmo and Zelle are among the many other payment services available today.
Digital wallets & cryptocurrency
Digital wallets and one-click checkout buttons are rising in popularity due to their ease of use and prevalence. All smartphones are now equipped with a digital wallet, which enables users to store details for multiple payment types, including credit and debit cards.
Users don’t have to carry those individual items or share sensitive financial data. Instead, digital wallets like Apple Pay uses tokenization to securely transmit the information.
Cryptocurrencies are also gaining traction. With cryptocurrency, consumers pay for goods and services with blockchain-based digital currencies. Transactions are fast because payments are transferred directly between two parties; there’s no third-party validation.
Processing fees are often lower than those for credit or debit cards, and cryptocurrency can be converted to any fiat currency.
The Gen Z effect: Buy now, pay later
The buy now, pay later (BNPL) online payment trend is getting a big push from younger generations. According to Insider Intelligence, the BNPL industry will reach $680 billion in transaction volume worldwide in 2025.
It’s easy to see the appeal: BNPL allows consumers to complete a purchase at the time of sale and make payments over a few weeks or months, often interest free.
Also called point of sale installment loans, BNPL loans don’t impact the consumer’s credit score unless they fail to pay the money back or do so late.
And it’s often easier to get approved for a BNPL loan than it is a traditional line of credit. BNPL is so popular, traditional credit card companies are joining the likes of Klarna, Affirm, and PayPal to offer point-of-sale installment loans.
The rise of omnichannel payments
It’s not just the variety of payment options that are driving e-commerce payment trends – it’s also the prevalence of these options. Consumers expect the same services regardless of channel, whether online or offline.
The omnichannel retail experience will be a significant driver of the growth of e-commerce payment transactions, according to Jupiter Research. That means, for example, that options like Amazon Pay or cryptocurrency won’t be limited to online shopping. Consumers will have access to the same purchasing options in a physical retail location as they would online or on a mobile app.
Changing marketing, evolving needs
As global e-commerce payment transactions continue to grow, new trends are certain to emerge. This is a dynamic market that will continue to evolve to keep up with changing consumer preferences.
Going forward, it’s important for retailers to understand that payment preferences can vary from region to region and between generations. While consumers want seamless transactions and payment flexibility, it will be up to the retailer to understand their market to make the right options available.
