US digital payments could soar past $3.8T in 2025: report

Getting your Trinity Audio player ready...

A recent report has indicated that digital payments in the United States are expected to reach an unprecedented high in 2025, driven by positive economic factors. 

A report by ResearchAndMarkets.com showed digital payments volume in the U.S. will soar past $3.8 trillion in 2025, dwarfing 2024 figures. The report predicts that mobile payments and the rising adoption rates of alternative payment methods will trigger a spike in volume. It also mentions the rise of account-to-account (A2A) transfers and other real-time payment solutions like Zelle and the FedNow Service.

Despite the rising levels of mobile-based payment, the report tips credit and debit cards to contribute a chunk of the digital payments revenue in 2025. Currently, the vertical holds a 70% market share over the industry and shows no signs of losing its hold over the payments space.

ResearchAndMarkets.com also stated that blockchain technology will play a key role in surpassing $3.8 trillion in digital payment volume. Digital asset and stablecoin users could reach the 80 million mark in 2025 after reaching the 72 million milestone in the previous year.

A wave of positive announcements from the White House and the Office of the Comptroller of the Currency (OCC) toward digital assets could trigger adoption rates. Banks have received the green light to dabble in digital currencies, complementing retail enthusiasm for the sector.

Furthermore, the buy now, pay later (BNPL) sector contributes its fair share to the projected volume by requiring participants to carry out transactions on digital platforms. The report notes that younger millennials and Gen Zs will be the demographics with the most significant contribution to digital payments volumes in 2025. 

“BNPL adoption continues to rise, with over 30 million millennials and 25 million Gen Z consumers using these services in 2024, reinforcing its role in digital commerce,” read the report.

While adoption rates for digital payments are rising, merchant adoption continues to lag, denting the $3.8 billion ambitions in 2025. An estimated 60% of small- and medium-sized enterprises (SMEs) are unlikely to accept payments from digital wallets while wholly embracing card transactions.

With the U.S. proposing new stablecoin regulations, the report predicts this could improve merchant adoption levels for digital payments. The U.S. has turned its gaze away from a central bank digital currency (CBDC) over privacy and surveillance concerns while other countries are turning to the offering to improve their payment landscape.

Visa making payments more seamless

Users keen on linking contactless cards and digital wallets in Saudi Arabia can achieve interoperability with a simple tap on their mobile devices. The Tap To Add Card offering leans on Visa’s proprietary Chip Authenticate technology, providing a one-time code to users to verify their identities. 

Prior to the feature’s commercial rollout, integrating contactless cards into digital wallets was an uphill climb for users. The slow pace of processes and the grim potential for errors stemming from manual input complicated the process.

The offering provides several benefits for participants in Saudi Arabia’s payment ecosystem, including reaping the rewards from linking their contactless cards to digital wallets and improving their shopping experiences. On the other hand, issuers and financial institutions are protected from high operational costs and fraudulent provisioning. The report indicates that the Tap To Add Card feature will decrease the number of inquiries to customer support while improving approval rates for users.

Given the elimination of data breaches, digital wallet providers are tapped to be the biggest winners from the rollout. The feature makes compliance with Visa’s security standards easier while revolutionizing “token provisioning efficiency.”

Nearly 80,000 digital card tokens linked to wallets have been activated in Saudi Arabia, underscoring the technology’s significant impact.

Visa has been improving the scope of its offerings, dabbling in blockchain technology for efficient payment processing. A string of partnerships has seen the payment giant inch toward stablecoins while joining ranks with banking regulators for CBDC pilots.

Visa’s new offering in Saudi Arabia follows a streak of digitization initiatives that have been rolled out in recent months. The Gulf country is progressing toward self-reliance in artificial intelligence (AI) by developing localized large language models (LLMs) and significant investments in the sector.

Furthermore, there are plans to train 7,000 residents on AI and other emerging technologies to deepen the local talent pool. An e-residency program is in the works following a partnership with Estonia, leaning on AI and Web3 technology for digital IDs.

Watch: Peer-to-peer electronic cash system—that’s micropayments