2019 J.P. Morgan Global Payment Trends

2019 Global Payments Trends Report - United States Country Insights

UNITED STATES INSIGHTS REPORT


The U.S. is a large and dynamic market, characterized by a strong preference for domestic brands. Despite its well-established nature, there are still significant opportunities for growth, particularly the burgeoning app-based mobile commerce sales channel.

Introduction

 

As the U.S. economy enters its 11th year of growth, the longest-running expansion in the nation’s history, tame inflation, low unemployment and relatively few financial stressors could set the stage for continued growth into the foreseeable future. E-commerce continues to transform the retail landscape and consumer confidence remains relatively high as online and mobile commerce provides new ways to shop for and buy goods and services. Up to 2021, e-commerce sales are expected to expand by double-digit rates every year.1

 

This document is based on projected figures and is subject to change at any time.

High growth potential in an already vast market

 

The U.S. ranks as the second-largest e-commerce market in the world, second only to China in terms of sales. Business to consumer e-commerce sales are worth $744.1 billion,12 and sales are expected to increase at a compound annual growth rate of 10.2 percent to 2021.13

Despite appearing to be a highly established market, the U.S. offers significant opportunity due to the fact that e-commerce is still a minor shopping channel in the country. Online shopping accounts for just 8.9 percent of overall retail sales;14 there is still plenty of room for the market to grow and to steal share from traditional bricks-and-mortar commerce. In contrast, the Chinese e-commerce sector, which is valued at $1.15 trillion, already accounts for 23.1 percent of all retail sales.15 U.S. internet penetration is strong at 89 percent,16 with download speeds likely to increase as the country’s ‘National Broadband Plan’ to create a world-class internet infrastructure continues to be rolled out.17

 

Domestic brands dominate sales

 

The U.S. e-commerce industry is notable for its high uptake – 78 percent of citizens already shop online – and the dominance of home-grown online giants such as Amazon, eBay and Apple, which stand as the top three e-commerce merchants in the country by market share.18,19

Amazon alone takes just under 50 percent of all U.S. e-commerce sales.20 In turn, major domestic retail brands have begun investing heavily in their digital offerings. For example, Walmart’s e-commerce sales jumped 43 percent year-on-year in the last three months of 2018, fueled by better product offerings and investment in its delivery capabilities.21 The efforts of such economic giants will drive the online shopping market, and this progress will manifest itself in a growing average online basket spend, which is currently $2,929 per year.22

This rich domestic online marketplace has led to cross-border e-shoppers being in the minority – at present, only a third (34 percent) of e-commerce users have shopped abroad.23 The most popular markets are China (first), Canada (second) and the UK (third).24 However, ongoing trade disputes with China have the potential to disrupt sales from this country.25

 

Brands start to compete with logistics leaders

 

Within the U.S., e-commerce leaders are beginning to take responsibility for their own delivery and logistics operations in an effort to facilitate rapid delivery across all states. Amazon, for instance, is building its own dedicated air delivery network, Prime Air. The investment will see the creation of a fleet of 100 planes and the opening of a $1.5 billion logistics hub at Northern Kentucky International Airport by 2021.26 The aim is to be able to offer two-day delivery anywhere within the U.S.27 However, most e-commerce providers still rely on major U.S. delivery firms such as UPS, FedEx and the US Postal Service.28

As with fellow e-commerce giant China, the U.S. is a nation that has finessed one-day event and discount shopping. Black Friday, Cyber Monday, Amazon’s Prime Day in July, and Thanksgiving Day are all key online shopping events. Cyber Monday 2018 was the biggest sales day in history for U.S. e-commerce, with $7.9 billion taken in revenues.29 A significant challenge for merchants is ensuring listed items are in stock. Failure to carry adequate stock over the Thanksgiving weekend during sales events cost the U.S. e-commerce market an estimated $484 million in lost sales in 2018.30

Unlike several other countries included in this report series* where social media has become an increasingly significant sales channel, it appears that U.S. consumers have not yet firmly embraced this medium. For the Thanksgiving to Cyber Monday period, direct site traffic was by far the most popular route to sales in 2018, responsible for 27.2 percent of all transactions, followed by paid search [24 percent]. In contrast, sales via social media channels take just a 1.3 percent share.31

Mobile commerce sales set to receive 5G boost

 

The U.S. mobile commerce market is worth $282.8 billion32 and takes a 38 percent share of the overall e-commerce market.33 Sales are projected to grow at a compound annual growth rate of 16.5 percent to 2021,34 powered by rising smartphone adoption amongst older demographics and high usage among the 18 to 24-year old age group, where smartphones enjoy a 93 percent penetration.35

The U.S. is racing to become a world leader in 5G deployment, with the Federal Communications Commission working to remove regulatory barriers throughout 2018 and 2019.36 Should 5G quickly become widespread, sales via smartphone will be boosted due to a faster shopping experience.

 

Holiday periods characterized by app-based sales spikes

 

Mobile commerce during the 2018 winter holiday period leapt by 56 percent year-on-year, compared with just five percent for desktop. Despite the mobile nature of tablets, sales via these devices only rose by four percent during the same period.37 E-commerce merchants that develop apps capable of providing simple, fast payment options and deals relating to seasonal and one-off discounting events should find favor with shoppers.

The everyday use of apps to shop is already strong, with app-based sales accounting for 55 percent of all mobile commerce transactions.38 The leading apps, by number of downloads, include Amazon, Poshmark and sales platform Letgo.39 Coupons and online review capabilities are also popular mobile commerce activities – and offering these functions could also encourage sales.40

Digital wallet and contactless card use in the US is on the rise

 

Cards are the dominant online payment method in the U.S., used for 47 percent of all e-commerce transactions,41 or $348.74 billion in annual sales.42 The success of online card payments can be attributed to longstanding familiarity with the payment method: card penetration is one of the highest out of the countries included in our report, at 2.44 debit cards and 2.01 credit cards per capita.43 This is reflective of both a highly banked nation – 93 percent of the population have a bank account – and also a willingness to take on debt, with consumer debt surpassing the $4 trillion mark for the first time in 2019.44,45

The ubiquity of credit and debit cards has made them an enabler of digital wallets in the U.S. With smartphones, digital wallets have the potential to extend the benefits of physical cards by seamlessly integrating loyalty programs and personalized financing offers. Looking at payments through a generational lens, digital natives – Americans that have grown up with access to high-speed internet and smartphones—seem to have the highest comfort level with setting up and regularly using card-enabled digital wallets.

With just under a third of the U.S. population currently below age 24,46 merchants and payment providers must be prepared to serve the needs of digital natives. It appears U.S. merchants are adapting to this new landscape with over half (55 percent) of polled merchants saying they are likely to accept digital wallet payments within the next year including popular digital wallet providers like PayPal™, Google Pay and Apple Pay.47,48

Contactless cards are also on the verge of greater adoption and use in the U.S. Mastercard and Visa, in partnership with issuing banks, have begun rolling out contactless credit cards to consumers, with the rapid transit industry among the earlier adopters of the technology. It is expected that use in transit will drive adoption and usage in other verticals and among consumers. A recent study from AT Kearney has found that the shift to contactless cards increases the number of transactions per card by about 20-30 percent.49

Ports and airports prove to be e-commerce fraud hotspots

 

As with other growing e-commerce markets, incidences of fraud are rising in the U.S. Fraud is most likely to occur in areas near large ports of entry or airports. Credit agency Experian explains that this is because they are convenient locations to reship fraudulent goods, enabling perpetrators to move stolen goods quickly and easily.50 Incidences of billing fraud are particularly pronounced in Delaware, Oregon and Washington D.C. Using data, technology and comprehensive anti-fraud strategies should help cut e-commerce crime rates.51

 

Key takeaways

 

While the sheer size of the U.S. online shopping market presents an obvious attraction to international brands, it is highly competitive and dominated by major domestic brands – Amazon alone captures just under half of all U.S. e-commerce sales. Cross-border sales represent around 12 percent of total e-commerce, with U.S. consumers focused on a rich domestic marketplace. Only a third of e-commerce users have shopped abroad. While cards are currently the most popular method of payment for online transactions, they are expected to be eclipsed by digital wallets by 2021.

 

Data may vary from historical figures, due to certain categories being re-stated as new information sources have become available.

*J.P. Morgan 2019 Payments Trends – Global Insights Report series includes the following countries: Australia, Brazil, Canada, China, Hong Kong, India, Indonesia, Japan, Malaysia, Mexico, New Zealand, Singapore, Thailand, Turkey, U.S., Vietnam.

 

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Your J.P. Morgan Relationship Manager or visit: https://www.jpmorgan.com/europe/merchant-services/payment-insights

 

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© 2019 JPMorgan Chase & Co

 

1 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

2 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

3 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

4 World Bank Open Data. ‘United States.’ Accessed December 2018.

5 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation, 2015, 2016, 2017, Bureau of Labor Statistics, 2017.

6 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

7 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via United States Ecommerce Foundation Report, 2017.

8 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation, 2017.

9 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Deloitte Global Mobile Consumer Survey US edition, 2017.

10 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

11 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via The Federal Reserve Bank, World Bank, 2017.

12 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation, 2015, 2016, 2017, Bureau of Labor Statistics, 2017.

13 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

14 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Bureau of Labor Statistics, 2017.

15 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista.

16 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation, 2017.

17 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Federal Communications Commission, 2017.

18 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation, 2017.

19 VisualCapitalist.com, August 2018. ‘Chart: Amazon’s Dominance in Ecommerce.’ Accessed February 2019.

20 VisualCapitalist.com, August 2018. ‘Chart: Amazon’s Dominance in Ecommerce.’ Accessed February 2019.

21 DigitalCommerce360.com, February 2019. ‘Walmart's US ecommerce revenue grows 40% in 2018.’Accessed February 2019.

22 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

23 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation, 2017.

24 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation, 2017.

25 FT.com, December 2018. ‘Chinese ecommerce exporters bullish on prospects despite Trump.’ Accessed February 2019.

26 CNBC.com, February 2019. ‘Amazon is rapidly expanding its air fleet to handle more of its own shipping.’ Accessed February 2019.

27 CNBC.com, February 2019. ‘Amazon is rapidly expanding its air fleet to handle more of its own shipping.’ Accessed February 2019.

28 CNBC.com, February 2019. ‘Amazon is rapidly expanding its air fleet to handle more of its own shipping.’ Accessed February 2019.

29 PracticalEcommerce.com, November 2018. ‘Sales Report: 2018 Thanksgiving, Black Friday, Cyber Monday.’ Accessed February 2019.

30 PracticalEcommerce.com, November 2018. ‘Sales Report: 2018 Thanksgiving, Black Friday, Cyber Monday.’ Accessed February 2019.

31 PracticalEcommerce.com, November 2018. ‘Sales Report: 2018 Thanksgiving, Black Friday, Cyber Monday.’ Accessed February 2019.

32 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

33 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via United States Ecommerce Foundation Report, 2017.

34 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

35 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Deloitte, 2017, Telecompetitor, 2017.

36 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Deloitte, 2017, Telecompetitor, 2017.

37 Emarketer.com, February 2019. ‘Holiday Shopping on Smartphones Led to Strong Ecommerce Growth.’ Accessed February 2019.

38 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via United States Ecommerce Foundation Report, 2017.

39 SimilarWeb.com, February 2019. ‘Mobile App Ranking - Top App Store apps in United States – Shopping.’ Accessed February 2019.

40 Statista.com, February 2019. ‘Mobile commerce in the United States - Statistics & Facts.’ Accessed February 2019.

41 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

42 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

43 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via The Federal Reserve Bank, World Bank, 2017.

44 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

45 CNBC.com, February 2019. ‘Consumer debt hits $4 trillion.’ Accessed February 2019.

46 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

47 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

48 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

49 ChargeBee.com, September 2018. ‘E-wallet Payment Option – How’s the Scene in the US, Europe, and Asia Pacific?’ Accessed February 2019.

50 ChargeBee.com, September 2018. ‘E-wallet Payment Option – How’s the Scene in the US, Europe, and Asia Pacific?’ Accessed February 2019.

51 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

52 ChargeBee.com, September 2018. ‘E-wallet Payment Option – How’s the Scene in the US, Europe, and Asia Pacific?’ Accessed February 2019.

53 ChargeBee.com, September 2018. ‘E-wallet Payment Option – How’s the Scene in the US, Europe, and Asia Pacific?’ Accessed February 2019.

54 BankingJournal.aba.com, November 2018. ‘Payments Trends to Watch in 2019.’ Accessed February 2019.

55 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via E-commerce Foundation, World Bank, Global E-commerce Report, 2017.

56 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

57 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

58 Experian.com, April 2018. ‘E-commerce fraud attack rates hit new highs in 2017.’ Accessed February 2019.

59 Experian.com, April 2018. ‘E-commerce fraud attack rates hit new highs in 2017.’ Accessed February 2019.