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The Mobile Money Ecosystem, North America

North America, like some of the regions covered in this blog series, has cemented its position as a leader in the global mobile banking space. Owing to its vast smartphone adoption, technological innovations, and highly consumer-driven services, the financial and banking space continues to evolve providing user-friendly, secure banking and convenient services.

Similar to Europe, as highlighted in the last blog post, the traditional, legacy financial systems in North America have widely adopted and deployed digital banking services and payment means, which is evident from the very low unbanked and underbanked population in the region. Explore North America's likeliness to Europe's payments and mobile money landscape here.

The discourse has favored the understanding that the fast adoption and usage of mobile money are influenced in regions where there’s a high reliance on cash to conduct transactions. In the North American context, cash is still widely used for in-person payments but the majority conduct transactions via card (debit, credit, and prepaid). With its well-established and functioning card system, it is safe to argue that the populace has access to non-cash, digital alternatives to conduct transactions. Across North America, consumers prefer credit cards for online purchases and the rising contactless and tap-to-go payment methods. Additionally, in the US, the credit card system is heavily linked to a rewards-based scheme, whether it is via cash back or other redeemable non-cash means. A lot of merchants partner with financial players to offer credit cards to their customers like Amazon Prime Visa, Capital One Walmart Mastercard, Gap Good Rewards Mastercard, Costco Anywhere Visa Card by Citi, Macy’s American Express, and the list goes on.

A plethora of options including peer-to-peer apps are also available from banks, tech giants and fintechs namely Zelle, Venmo, Apple Pay, Samsung Pay, Paypal, Square Cash (CashApp) and the list goes on. Quite a few are similarly popular in Canada. In the United States, the Federal Reserve launched its FedNow program in 2023 which is an instant payment platform that can process financial transactions in real time and around the clock.

Over the years, with the continued advancements in technology and the finance space, there have been shifts in consumer behavior and preferences, with the rise of alternative payment methods such as buy now pay later, digital credit or debit cards, cryptocurrency, contactless smartphone mobile wallet, and biometric payment technologies. More Americans and Canadians are becoming comfortable with sending payments via social media channels, QR codes, inputting email IDs/phone numbers, and using biometrics to authenticate store payments. There have even been evolutions with increasing adoption of digital remittances as opposed to cross-border transfers and payments going through money transfer operators and banks. Although the US and Canada sit on the send side (where funds are traveling from) in this respect, remittance users are now using app-based digital methods to send money to counterparts in and outside of the region.

Here’s a snapshot of the digital payments landscape. Is there any major brand/provider missing from this chart?

MobileMoneyEcosystemSource: LinkedIn, Amr Fahmy

The digital payments and mobile money ecosystem in North America is diverse and will continue to evolve to support the needs of the consumer market. Over the next few years, there’ll be continuous growth in the options available including buy now, pay later, cryptocurrency, and biometric payment technologies. The need for real-time, instantaneous, and interoperable transactions will continue to shape the future of payment.

To learn more about the future of digital payments in the North American ecosystem, you may preview the 2023 Canadian Payment Methods and Trends Report.

CBDC & the Future of Payments in North America

At a global level, it is highly probable that the future of money will consist of a mix of centralized and decentralized central bank digital currencies. If we’re talking digital payments then we must explore how CBDCs will expand the current landscape and foster greater inclusivity to those currently underserved and unbanked.

Some Central Banks have indicated their intent to explore digital currencies as a means to enable financial inclusion and support a growing digital economy. In North America, the focus has been on exploring and assessing the probable risks and benefits to be derived from launching digital versions of the United States and Canadian dollars. Several countries have led the thrust and launched their CBDC such as Brazil (Drex), Nigeria (Naira), and India (Digital Rupee), just to name a few. The world is now looking at North America and the path it will take and whether it can potentially become the gauge of change and progress in this regard.

Thank you for reading this blog post. Feel free to leave your comments and feedback on the concepts explored below.

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