2024 in review: As the year comes to an end, we’re looking back at what changed in the payments industry and evaluating how the predictions we made last year (and updated halfway through the year) fared.
The five main trends we expected to see in 2024 included:
- Feature innovation transforming digital wallets into everyday commerce enablers
- Paze putting open-loop digital wallet leaders on notice
- FedNow taking a bite out of bill pay
- Physical consumer credit cards starting to disappear
- Credit cards responding to the BNPL subscription rewards threat
Here’s how we did:
Prediction 1: Two emerging commerce management features—enhanced event tickets and subscription management—will be commonplace across major open-loop wallets by the end of 2024.
- We were right when it came to enhanced event tickets becoming a mainstream feature in wallets. Apple Wallet began offering users a new ticket experience with information like venue maps, local weather forecasts, and recommended Apple Music playlists integrated directly in the wallet. Google Wallet also beefed up its event ticket feature in an August rollout, letting users digitize physical tickets by scanning them in the app.
- But subscription management features didn’t catch on. Instead, wallets fell behind card providers. In the spring, both Visa and Mastercard began piloting subscription management services for issuers, and Mastercard acquired subscription management software company Minna Technologies in October to expand its capabilities. Capital One partnered with Minna to embed the services within its mobile app that month.
Prediction 2: Paze will gain a 2% share of digital wallet ecommerce in Q4 2024 after ramping up earlier in the year.
- Paze’s rollout took longer than we expected, so the wallet likely won’t gain the 2% share of ecommerce volume we predicted until at least 2025. U.S. Bank didn’t roll it out at scale until September. It then went live with other major banks the following month. Paze also needs time to grow its acceptance network, which remains limited.
- While it may take longer than expected, we still expect Paze will have a profound impact on the digital wallet space. Its backing from banks, reduced fees, and innovative features like payment method optimization set it up to be a fierce competitor in the space.
Prediction 3: FedNow will capture recurring consumer bill payment share in 2024.
- Like Paze, FedNow also had a slower rollout than we expected. It’s not entirely clear how FedNow's financial institution partners have implemented the real-time payment (RTP) service. But FedNow’s payment volume is still a fraction of other RTP networks’ volume— and the large value relative to the number of payments means it’s unlikely most of these payments were for consumer bill payments. Instead, the service is likely mostly being used for business-to-business (B2B) or interbank transactions.
- We still believe FedNow will be a game changer for consumer bill payments, and FedNow touted bill pay as a main use case for the service in July. But it may take years before consumers can use the service more broadly—whether for bill pay or other use cases.
Prediction 4: A major US issuer will pilot a digital-only consumer credit card by the end of 2024.
- While virtual cards grew in popularity in 2024, issuers still offered physical cards alongside them. No major issuer in the US launched a digital-only card, likely due to consumers' reluctance to ditch their physical wallets. Many consumers still want a physical card on hand in case merchants don’t accept mobile wallets—or their phone dies.
- But virtual cards have momentum (whether or not there is a physical counterpart). For example, Visa launched its Flexible Credential product this year, a digital card that lets consumers pay with debit; credit; buy now, pay later (BNPL); or rewards.
Prediction 5: A major issuer will pilot a subscription-based rewards credit card by the close of 2024.
- Despite some subscription-based credit cards popping up in 2023, no major issuer piloted such a card this year. Issuers may have been skeptical about consumer uptake. The cards can have appeal for consumers with large revolving balances who want predictable monthly payments. But for non-revolvers, the cards’ fixed monthly fees could end up being more costly. And given current iterations of these cards carry lower credit limits, they could end up hurting consumers’ credit scores by encouraging them to revolve a large portion of their credit limit to make the card worth it.
- For a major issuer to launch a subscription-based rewards credit card in 2025, they will have to properly market it to debt-conscious customers. An issuer like Discover, which has a large base of lower-credit customers, could be a good candidate for such a launch.
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