Examination of Current Market Directions
The latest available data from the Federal Reserve showed that there were approximately $1.6 quadrillion in payments within the United States alone. However, due to this data including financial economy transactions such as company acquisitions and stock sales, as well as consumer payments, quantifying the total addressable market for B2B payments—and even more so, the share shift occurring between different payment instruments—is challenging.
This task was precisely what
Hugh Thomas,
Lead Commercial & Enterprise Payments Analyst at Javelin Strategy & Research, aimed to undertake in his research report titled
Commercial Payments Factbook.
His study delves into the commercial payments market, identifies growth rates on a product-by-product basis, and details how financial institutions can impact business customers.
Defining the Addressable Market
Among the total volume of reported Fed data (from 2021), approximately $1.4 quadrillion was attributed to wire transfers. These transactions typically do not act as growth drivers for payments, serving more as a means to execute end-of-event financial actions that are not necessarily payment-focused.
“Wires tend to be used in situations where funds need to be moved following an event,” Thomas said. “For example, if a stock is traded and the funds need to be moved, this is when a wire transfer might be utilized. However, it doesn’t drive treasury businesses much as they are more about handling high-value, low-volume transactions.”
“In wholesale payments, we don’t consider wires addressable because they serve primarily as an exception solution,” he added.
Excluding wire transfers, the remaining market was valued at over $200 trillion. After removing customer payments, about $175 trillion represented the total addressable market for commercial payments.
The majority of these transactions involved ACH credit transfers, where initiators push funds to payees. The second most common payment type was ACH debit, which allowed payers with arrangements with their payees to draw from accounts, such as in bill pay or loan payments.
“Checks have maintained a significant share of B2B payments due to becoming an exception solution,” Thomas said. “Between 2015 and 2024, average transaction sizes doubled while the volume of transactions halved. Checks are primarily used as an exception solution when payees are not set up for ACH credit transfers or direct debits, are unwilling to receive them, or it is simply less economical to use a wire transfer.”
Water Finding Its Level
The decline of paper checks has led some speculation that real-time payments through FedNow or the RTP network could gain prominence. However, established financial infrastructure in the U.S. has been sufficient for commercial uses, and Same Day ACH transactions account for only about 3% of total ACH.
Card-based transactions are less prevalent among B2B compared to consumers, representing less than 2% of the total value. Given that B2B spending is roughly ten times larger than consumer payments, commercial payments present a significant opportunity for card companies. Visa and Mastercard have acknowledged this in recent announcements.
Substantial growth has been seen in various types of commercial cards, including fleet, prepaid, and small-business credit cards. Small-business debit card usage has also increased as more smaller enterprises recognize the efficiency and cost-effectiveness of these payment mechanisms.
A particularly promising type for B2B transactions is virtual cards. “We believe there are numerous potential use cases for virtual cards,” Thomas said. “Our forecast indicates that virtual card spend will surpass purchasing card spend within two years, potentially serving as the growth engine by making payments more secure and reliable.”
“The water has yet to find its level with this product, so there is much potential for faster growth, especially as networks introduce solutions like hashed card numbers and virtual card numbers,” he said. “This could have significant impact depending on how quickly these technologies are adopted.”
The 5 Sectors
The research also broke down B2B spending by sector and segment, revealing that there are five key sectors dominating real-economy spending: wholesaling, manufacturing, retail, healthcare, and social assistance.
While about a third of all spending comes from manufacturing, the healthcare sector significantly impacts business payments due to its multiplier effect. “For instance, you pay your insurance company, and if you go see your doctor, you also pay a copay,” Thomas said. “The insurance company might pay an HMO, which then pays someone who manages doctors’ wages. This entity could pay the doctor’s company, which in turn pays the doctor. There is a considerable multiplier effect due to this industry structure.”
A Resource at Your Fingertips
Understanding the total addressable market, predominant payment types, and sector breakdowns is essential for financial institutions when developing strategies to reach business customers.
For instance, identifying slower-paying industries can help organizations improve cash management. “We identified businesses with high days payable outstanding who might benefit from supply chain finance or other methods to accelerate payments if they want to hold onto their cash longer,” Thomas said. “This document can guide providers as they decide which industries to focus on and what solutions and messages to emphasize.”
Given recent supply chain disruptions, many organizations are reconsidering their strategies, making this a valuable resource for discussions about financial solutions informed by specific industry needs.
“It’s beneficial to have this as a reference point in 2025 when responding to questions about market size or sector percentages,” Thomas said. “It serves as a comprehensive guide for anyone looking to discuss payment solutions with their business customers.”