Citi Perspectives 2024 E-commerce Edition

1 https://apnews.com/article/check-fraud-banks-organized-crime-5f033b93bd87e2cbeb82b4ab4865a916 2 https://www.forbes.com/advisor/banking/digital-wallets-payment-apps/ 3 https://www.federalreserve.gov/publications/2023-economic-well-being-of-us-households-in-2022-banking-credit .htm 12 | Services Citi Perspectives Reimagining Payouts: Simplifying the payment experience while providing impactful optionality Making quick, easily traceable payments to gig economy workers or to customers can be frustrating for any company. While payment acceptance has been transformed and can be seamlessly integrated into everyday life, B2C payouts have not evolved at the same pace. Traditional payment methods such as ACH and checks can fail and create friction, both for companies and the people they want to pay. Companies in the United States saw a significant increase in check fraud following the COVID-19 pandemic. 1 Thus, it comes as no surprise that digital wallets are now more commonplace in the U.S. with over half the population using them more often than traditional payment methods. 2 Digital wallets can offer a more secure experience though multilayered encryption, two- factor authentication and faster payments to reduce delivery time of goods. In some cases, workers may be reluctant to share their bank account information with their employer for fear of data breaches, while some workers may not have bank account details to share. According to the Federal Reserve, in 2022, 6% of the overall U.S. population was unbanked, while 17% of adults taking home less than $25,000 a year did not have a checking, savings or money market account. 3 Prioritizing the payee experience Companies across all sectors are revamping their payout strategies to attract and retain freelancers, drivers, content creators, project- based workers and other part-time employees in the gig economy. But competition to