Financial Transaction Processing NAICS 522320

Jun 23, 2025 - US Government Transitioning to Fully Electronic Payments

• Paper checks draw closer to extinction as the US government transitions to a fully digital payment system which will permanently alter how federal payments are made. As of June 2025, out of 69 million social security recipients, only about 418,000 of those households receive payments through paper checks. An executive order from the Trump administration mandates that all federal payments - intergovernmental payments, benefit payments, tax refunds, and government vendor payments - become digital by September 30, 2025. The order intends to eliminate the costs of processing paper checks and reduce instances of fraud. Paper checks are susceptible to fraud through mail theft and are 16 times more likely to be reported lost, stolen, or undeliverable than electronic payments. The government will make exceptions for certain beneficiaries who do not have access to electronic banking or require emergency funds.
• Financial transaction processing industry employment stayed flat in April 2025 as AI plays an increasingly larger role to play in the industry and displacing some workers. Research from International Data Processing predicts that the financial services industry will spend $632 billion by 2028, of which financial transaction processing will account for 20%. Fraud detection has emerged as the primary benefit of AI. Mastercard asserts that last year it used AI to protect about 125 billion payment transactions, a scale that wasn’t previously possible. Automation is also a key benefit of AI with industry players able to simplify tedious accounting and compliance tasks and speed up transaction processing. J.P. Morgan predicts AI’s next application will be embedded finance, which is the inclusion of payment systems into non-financial apps and services.

• Social media company X announced in late January 2025 that it had signed a partnership with Visa for the credit card giant to be the main financial partner for X Money, its coming payment platform. It is part of X’s quest to become an “everything” app and compete with the likes of CashApp and Venmo in not only business transactions but peer-to-peer payments as well. Visa is keen on expanding its digital services with a particular focus on payments to influencers, content creators and marketplaces. A survey of social marketplaces from Visa showed that two out of three merchants wait too long for payment and it negatively impacts growth. Payment systems have been available across social media apps for years, but the X Money service is the first time such a technology is built directly into a social platform.
• Digital wallet penetration among Americans is approaching 90%, according to professional services firm McKinsey. A majority of Americans now use their digital wallets more frequently than traditional payment methods, according to Forbes. The most widely used digital wallet is PayPal, used by 40% of digital wallet holders, followed by Apple Pay at 28%, and Venmo at 22%. Apple Pay is the preferred choice among consumers who use their digital wallet for purchases five or more times a month, while those who use their wallet just once a month tend to favor Venmo and Cash App Pay.