April 9, 2024 — More than 80% of U.S. small businesses and midsize companies are utilizing a non-bank service provider to meet their payments needs.  

As expectations regarding digital experiences continue to rise in the financial services industry and traditional banks work to respond, non-bank players have gained recognition and share of mind among commercial businesses as an acceptable part of their payments services provider mix. This growth and familiarity with these providers shifted into overdrive during the COVID crisis and today, usage of non-banks has become the norm. This is especially common among technology companies at a nearly 90% utilization rate, 85% in retail, and even 84% among traditionally non-technology focused industries such those in the industrial & manufacturing sector, according to new data from Coalition Greenwich. 

“There are fewer and fewer holdouts when it comes to utilizing non-banks for payment needs,” says Chris McDonnell, Head of Community, Commercial and Digital Banking Analytics at Coalition Greenwich. “More than half of companies not including these companies today in their basket of service providers say they will make the switch soon.”

The most popular non-bank digital payment platform in the U.S. is PayPal and is used by 53% of small businesses and midsize companies. The next most utilized non-bank providers are American Express and Square.

When it comes to selecting an online payments platform, companies place two factors above all other considerations: cost savings and fraud protection. Once those priorities are met, companies start thinking about day-to-day use. 

“Over the past 12 months, companies have started paying much more attention to things like integration between the provider’s platforms and their own systems, and easy-to-use interfaces,” says Amos Welder, Relationship Director at Coalition Greenwich. “As digital payments is now a standard part of everyday business, companies will gravitate toward platforms that provide the best and most seamless experience.”

New research by Coalition Greenwich tracked adoption and usage rates for non-bank digital payment platforms among U.S. small businesses and mid-sized companies. The study analyzes the criteria companies use when selecting a digital payment provider, the platform features companies find most valuable and the digital channels companies prefer to use for treasury activities.