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STATE OF THE INDUSTRY REPORT
Section 3: Understanding Ecommerce Ecommerce volumes have grown significantly in many countries in recent years. The expansion from in-store to online provides merchants with opportunities to engage with their customers in new ways. Online transactions also present merchants with challenges given their vastly different costs, fraud risks and approval rates relative to an in-store transaction. In an attempt to differentiate between the two, the card payments industry has created a distinction, which has created both clarity and confusion on the subject; transactions can typically be classified as either card-present (CP) or card-not-present (CNP). As of 2024, these designations continue to be determined by the global card network branded on the card. Control of these designations enables global card networks to develop rules and incentives that perpetuate cards as a dominant consumer payment method and encourage adoption of preferred network technologies, such as near field communication (NFC) digital wallets and network tokenization. • In the U.S., CMSPI has identified the average interchange and network fee cost difference between CP and CNP transactions was 21bps for credit cards and 58bps for debit cards in 2023. • Interchange and network fees paid by U.S. merchants increased an estimated $2.4 billion due to increased ecommerce spending between 2019 and 2023. 4 Section 4: Payment Methods Around The Globe The payments mix varies significantly by country and is ever-changing. Here are a few global observations from last year: • Cash is still relevant but steadily waning. • Cards continue to be dominant in many countries. • Digital Payment Methods, including Pay by Bank options, are growing rapidly where successful interventions are taking place. An updated Global Payment Mix as well as Payment Method Profiles can be found in Section 2 of this version of the Report. Section 5: Payments And Regulations The payments industry has caught the attention of policymakers and antitrust authorities since the 1970s with the introduction of the interchange fee. The intervention of governments and courts in payments has been seen globally and in various ways. Government interventions include interchange fee caps, co-badging, and surcharging. • Interchange caps are a price ceiling set by the government or voluntarily agreed to by the card network for the per transaction interchange revenues issuing banks receive. • Co-badging denotes a single payment card enabled with two or more unaffiliated payment networks, enabling transactions across multiple networks. • Surcharging is a merchant’s act of adding a charge to a transaction based on the customer’s selected payment method (such as card and other payment methods), card type, or card network.
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