Examination of Current Market Directions
The latest available data from the Federal Reserve indicates that payments in the United States amounted to approximately $1.6 quadrillion. However, as this figure includes transactions such as company acquisitions and stock sales along with consumer payments, quantifying the total addressable market for B2B payments—and even more so, shifts between different payment instruments—is challenging.
This is precisely what
Hugh Thomas,
Lead Commercial & Enterprise Payments Analyst at Javelin Strategy & Research, sought to determine in his report on the
Commercial Payments Factbook. The report delves into the commercial payments market, identifies growth rates for various payment products, and outlines how financial institutions can engage with business customers.
Defining the Addressable Market
Of the total volume of payments reported by the Federal Reserve (the latest data was from 2021), approximately $1.4 quadrillion pertains to wire transfers. While wire transfers may be a standard practice for financial institutions, they typically do not drive growth in payment solutions.
“Wires are more often used at the end of events that aren’t necessarily transaction-focused,” Thomas remarked. “They’re just ‘moving funds around due to stock trades’ and don’t significantly impact treasury services.”
“We look at wire transfers as high-value, low-volume transactions, so they’re not part of our addressable market in wholesale payments businesses,” he added.
Excluding wire transfers leaves a substantial amount—over $200 trillion—in payments value. After removing customer payments, the total addressable market for commercial payments is estimated to be around $175 trillion.
The majority of these payments are ACH credit transfers, where initiators send funds directly to payees. The next most common type of payment is ACH debit, used in scenarios such as bill payments or loan repayments.
Still prevalent among B2B transactions are checks, though their usage has significantly changed over the years, roughly doubling in average transaction size and halving in volume between 2015 and 2024. Checks remain a solution for one-time payouts where other methods would be too costly or impractical.
Water Finding Its Level
As paper checks decline, some believe that real-time payments via FedNow or the RTP network could become prominent. However, the existing U.S. financial infrastructure has been adequate for commercial use cases so far. There has also seen modest growth in Same Day ACH since transaction limits were increased a few years ago, but it still accounts for only about 3% of total ACH transactions.
In B2B scenarios, card payments account for less than 2% of the total payment value. Visa and Mastercard have highlighted this as a significant opportunity in recent announcements.
Card-based solutions are gaining traction, with notable growth seen in many commercial cards, including fleet management, prepaid options, and small-business credit. There has also been substantial growth in small-business debit, reflecting the recognition among smaller enterprises of its cost-effectiveness for paying suppliers.
Beyond these areas, virtual cards represent one of the most promising payment types for B2B transactions. “We believe that virtual card spend will surpass purchasing card spend within two years,” Thomas noted. “This product has great potential to drive automation and security in payments, provide fungibility, and enhance working-capital management.”
With rapid advancements in technology, such as hashed card number solutions, the growth of virtual cards could be even faster, depending on industry adoption.
The 5 Sectors
The study further categorized B2B spending by sector and segment. Dominating real-economy spending are wholesaling, manufacturing, retail, healthcare, and social assistance instruction.
Despite manufacturing accounting for about a third of all spending, healthcare has significant business payment volume due to its multiplier effect. “You pay your insurance provider, who then pays the doctor or hospital, creating a large chain with many payments,” Thomas explained.
A Resource at Your Fingertips
Understanding the addressable market, predominant payment types, and sector breakdowns is crucial for financial institutions as they develop strategies to engage business customers. For instance, identifying slow-paying industries can help organizations improve cash management.
“We looked at businesses with high days payable outstanding who may need supply chain finance or other methods to speed up payments,” Thomas said. “Industries with longer payment cycles might require bridging solutions. This document aids providers in deciding which sectors to focus on and how to present financial solutions.”
With ongoing supply chain disruptions, many organizations are reevaluating their strategies, presenting an opportunity for providers to offer informed solutions. “It’s a good resource for anyone needing to answer questions about market size or sector percentages,” Thomas concluded.