Payment methods used in the USA

Payments overview

The US online payments space is dominated by payment cards. According to Visa, 8% of all consumer retail spending is carried out online. The same report also showed that 58% of in-store transactions are carried out by card. In the offline arena, cards are still predominantly magnetic stripe versions without a chip. Chip and pin or EMV payments are just being rolled out across the US in-store retail estate. The card schemes (Visa Inc, MasterCard and American Express) had a deadline of 1 October 2015 for businesses to install point-of-sale equipment that would allow chip and pin transactions. Failure to do so saw the liability for fraudulent transactions shift from the bank to the retailer.

In October 2016, Zooz reported that between 17% and 37% of all US merchants have adopted EMV POS terminals. The introduction of EMV-enabled cards in the store environment has seen an increase in attempted fraud online.


Many payment service providers (PSPs) have a global presence and accepting card payments though these organisations should not be difficult to organise. Many of these PSPs can also integrate with alternative payment methods to provide a streamlined service.

There are also several US-based acquiring banks. For example: First Data, Chase Paymentech, Vantiv, Elavon, Global Payments, Heartland, WorldPay, TSYS, BA Merchant Services, Citi Merchant Services, and Wells Fargo.

Common online payment types

As with the online market in the UK, credit and debit cards make up the mainstay of online payments in the US. According to a TSYS Payments survey in 2016, credit card usage was responsible for 47% of all online payments, up from 43% in 2015. Debit card usage was down from 30% to 26% over the same period and PayPal dropped from 14% to 12%.

Alternative payment methods

As with other markets, there is an ever-expanding list of payment innovators looking to disrupt the market. The biggest driver behind these is the rise of mobile technology and the ‘always-on’ shopping opportunities that multiple devices bring. There is also an increasing crossover between digital and physical channels where ‘pure-play’ digital payment methods are looking to become more relevant in the physical retailing world. Likewise, more traditional payment types, such as cards, are looking to become more ‘digital’ in their form factor and avoid the ‘hassle’ of customers having to add their card details on a small digital device.

The following is a non-exhaustive list of some examples of alternative payment types with a presence in the US market:

As in most markets, these ‘alternatives’ are gaining momentum but choosing which ones to accept should be based on expected customer usage and insight, dependent on the merchant’s brand, not what the overall market is doing.

TAKEAWAY: Merchants should make arrangements to accept US-issued Credit and Debit Card payments. PayPal acceptance is also worth adding whilst other ‘alternative’ payments types are currently niche.

Loyalty and vouchers

Customer acquisition and retention strategies can be very similar globally. However, the American retail market has long been known to be dominated by vouchers and coupons as a promotional tool. Some consumers are avid collectors and users and according to, 37% of surveyed shoppers want all coupons to be digital.

Not only are vouchers / coupons widely available, 93% of shoppers surveyed about their couponing use said that they use coupons when shopping. To set some context, 55% of US internet users use coupons.

As a promotional tool they certainly have their place, and distribution can be achieved via a number of focused voucher websites. The following table highlights the top 10 by estimated monthly visitors. Each have their benefits and slightly different way of operating. Choice will be down to a merchant’s retail proposition and appetite for discounting or value differentiation.

Where mobile devices meet digital couponing, women are more engaged than men when using applications for ‘voucher’ sites. King Retail Solutions report that 14% of US female smartphone owners use the Groupon app versus 9% of men, 9% use the RetailMeNot app, and 4% use the LivingSocial app. Only 1% of the men surveyed used the latter two.

Not all vouchers have the same impact, and there are regional differences to take into account. According to the UPS Pulse of the Online Shopper Study (2015) 61% of respondents in the US wanted a free product / gift certificate / cashback offer based on frequent purchases. Product discounts came in second at 58% and free shipping a close third at 57%.

TAKEAWAY: Couponing / vouchers are a key part of the US retailing landscape. Use tactically, as in any other market and be aware of the impact of high redemption levels.