86% of US mobile wallet users have made a purchase via a retailer’s embedded mobile app
● 72% of US mobile wallet users shared that they would feel confident enough to leave their wallets at home and only rely on their phones for making payments
● 42% of US respondents said they use both traditional and digital banking providers
The age of embedded finance and digital financial services has reached an inflection point, with new payments and shopping solutions now commonplace in the US alongside legacy systems, according to a new survey from Marqeta, the global modern card issuing platform. The company’s 2023 State of Payments report released – surveying 4,000 consumers across three continents, including 2,000 in the US – shows how consumers are working with multiple financial services providers, both traditional institutions and a range of digital payment tools and new market entrants via embedded financial services to meet their needs and provide a simple, unified and branded shopping experience.
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“While our report shows a current balance between traditional and digital-first, embedded finance is challenging companies to think about how they build payment solutions into their offerings. Long-term consumer loyalty will depend on who can provide the most exceptional end-to-end user experiences.”
Marqeta’s 2023 State of Payments report marks the fourth time the company has surveyed US consumers about their purchase preferences. As consumers continue to adapt to the COVID-era boom in digital innovation, the preference for a unified payment solution has grown and driven the adoption of embedded finance services. Embedded finance is defined as the integration of financial services into non-financial products, and McKinsey estimates that it will be worth $40 billion in the next three to five years in the US alone. Marqeta’s report found that US consumers are steadily increasing their use of embedded finance. Eighty-six percent of US mobile wallet users now make purchases directly through a retailer’s mobile app, with a stronger payment rewards system being a driver for the uptick. In addition, the demand for frictionless checkout was high, with 43% of respondents saying they have abandoned a purchase because it required them to download a new app or payment method.
Marqeta’s report shows the confidence that consumers have in new digital payment technology and embedded finance. Almost three-quarters (72%) of mobile wallet users shared that they would feel confident enough to leave their wallet at home, and only rely on their phone for making payments, up from 61% in 2022. Digital payment processes are becoming less daunting to users of mobile wallets as well. Ninety percent of people surveyed who use mobile wallets reported that adding their card to their mobile wallet was much simpler than they had initially thought, up from 81% in 2022. As a result, 95% of mobile wallet users surveyed reported having one or more cards loaded into their mobile wallet. Beyond this, mobile payment methods continued to rise in popularity as convenient, frictionless payments took precedence:
● 80% of US consumers reported using peer-to-peer (P2P) payment transactions at least once
● 70% of US consumers reported using contactless payments in the past 12 months
● 67% of US consumers reported using a mobile wallet in the last 12 months
“Embedded finance is enabling brands to become financial service providers, offering consumers more streamlined payment experiences,” said Rachel Huber, Marqeta’s Market Intelligence Lead. “What our report shows is that after years of massive digital innovation, consumer confidence in modern, embedded payment methods is high and companies who don’t offer these can miss out on future adoption.”
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While demand for digital and embedded finance services grows, Marqeta’s report shows that when it comes to banking preferences, consumers haven’t yet abandoned their primary or traditional banks. Seventy-seven percent of US respondents surveyed said they used traditional banks as their primary providers and 50% reported having never changed their primary banking partner at all. Nearly two-thirds (60%) are storing the majority of their funds in these primary accounts. However, when it comes to completing banking transactions, the majority of consumers (62%) reported that they complete most transactions via computer, tablet or smartphone, with 24% saying they do most banking in person at a branch.
As evidenced in Marqeta’s report, consumers are balancing their loyalty to legacy providers and their desire for superior user experiences. Traditional and digital-first finance options have become intertwined, and consumers don’t want to give up either one, instead opting for multiple financial services providers to meet their needs: 42% of US consumers said they use both traditional and digital banking providers, and 56% reported that they would consider getting financial services from a non-financial provider, such as a large tech company, retailer or a social media platform, a 10% lift from 2022.
“We’re at an inflection point when it comes to legacy providers coexisting with new-age payment services,” said Huber. “While our report shows a current balance between traditional and digital-first, embedded finance is challenging companies to think about how they build payment solutions into their offerings. Long-term consumer loyalty will depend on who can provide the most exceptional end-to-end user experiences.”
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