Table of Contents
Overview
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- What you need to know
- Definition
Executive Summary
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- The issues
- Consumers are resistant to change
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- Figure 1: Interest in changing current payment methods, by gender, age, and race/ethnicity, June 2017
- Credit cards remain most popular, especially for expensive or online purchases
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- Figure 2: Preferred payment method by type of purchase, top 3 methods, June 2017
- P2P has yet to be adopted by a majority of consumers
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- Figure 3: Use of P2P payments, by age, June 2017
- The opportunities
- Younger consumers prefer debit, but there’s potential for them to change
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- Figure 4: Preferred payment method for large-ticket items, by payment method preference, June 2017
- Consumers have shown flexibility in terms of payment card type
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- Figure 5: Use of same credit/debit card for payment, by gender and age, June 2017
- Customers want to save time at checkout
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- Figure 6: Motivation to switch payment type, June 2017
- What it means
The Market – What You Need to Know
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- Two in three consumers have a credit card
- Total of noncash payments steadily increases
- Personal and household device ownership nears 100%
- Consumers continue to adopt mobile shopping habits
Market Breakdown
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- Total of noncash payments steadily increases
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- Figure 7: Total number of noncash payments, 2000-2015
- Two in three consumers have a credit card
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- Figure 8: Credit, debit, and prepaid card ownership or usage, May 2017
- Monthly debit card use greater than credit card
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- Figure 9: Credit or debit usage in past 30 days, May 2017
- Consumer credit accounts total over $286 million
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- Figure 10: Total number of consumer credit card accounts, 2012, 2015
- Consumer credit outstanding
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- Figure 11: Outstanding consumer credit (revolving), 2012-2016
Market Factors
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- Personal and household device ownership nears 100% among internet users
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- Figure 12: Personal and household device ownership, January 2017
- Positive growth in online sales
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- Figure 13: Total US online retail sales and forecast, 2012-22
- Consumers continue to adopt mobile shopping habits
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- Figure 14: US retail mobile shopping sales and forecast, at current prices, 2014-21
Key Players – What You Need to Know
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- Visa rolls out “cashless experience” at soccer tournament
- clearXchange rebrands as Zelle to compete with PayPal’s Venmo
- Send friends money in Apple’s iMessage
- Consumers are resistant to change in payments
What’s Working?
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- Digital wallet competition heats up as Samsung Pay adds Discover
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- Figure 15: Discover card Samsung Pay email, August 2017
- Visa rolls out “cashless experience” at FIFA Confederations Cup 2017
- clearXchange rebrands as Zelle to compete with PayPal’s Venmo
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- Figure 16: Bank of America “split the bill” email, June 2017
What’s Struggling?
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- Women considerably less likely to be interested in using their smartphone as a wallet
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- Figure 17: Interest in using smartphone as wallet, by age and gender, June 2017
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- Figure 18: Wells Fargo credit card acquisition ad, July 2017
- Consumers are resistant to change
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- Figure 19: Interest in changing current payment methods, by gender, age, and race/ethnicity, June 2017
What’s New and What’s Next?
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- PayPal introduces 2% cashback card
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- Figure 20: PayPal cashback card intro email, June 2017
- Order ahead innovation
- Walmart lets customers pick up online orders via vending machine
- Five Guys, McDonald’s mobile order-ahead
- How, then, does this affect the payments industry?
- Curve introduces “Financial Time Travel”
- Send friends money in Apple’s iMessage
The Consumer – What You Need to Know
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- Credit cards remain most popular, especially for expensive or online purchases
- Debit card users utilize credit at same rate for expensive items
- One third of consumers aware of credit/debit rewards structure
- Overwhelming majority see a continuing need for cash
Preferred Payment Methods by Purchase
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- Credit cards remain most popular, especially for expensive or online purchases
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- Figure 21: Preferred payment method by type of purchase, top 3 methods, June 2017
- Less than 10% of consumers use more unconventional payment methods
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- Figure 22: Preferred payment method by type of purchase, June 2017
- Younger consumers have not lost preference for debit cards
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- Figure 23: Preferred payment method for everyday items, by age, June 2017
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- Figure 24: Preferred payment method for medium-priced items, by age, June 2017
- Hispanic consumers prefer debit, regardless of purchase level
- Debit card users utilize credit at same rate for expensive items
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- Figure 25: Preferred payment method for large-ticket items, by payment method preference, June 2017
Favorite Payment Type
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- Credit slides past debit as top payment method
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- Figure 26: Preferred payment type, June 2017
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- Figure 27: Direct mail acquisition from Discover card, August 2017
- Hispanics and Blacks prefer debit
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- Figure 28: Preferred payment type, by race, June 2017
- Consumers in rural areas more likely to use debit, cash than in cities
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- Figure 29: Preferred payment type, by geography, June 2017
- Consumers over 55 the biggest fans of credit
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- Figure 30: Preferred payment type, by age, June 2017
Payment Behaviors
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- P2P has yet to reach majority of consumers
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- Figure 31: Use of P2P payments, by age, June 2017
- Most consumers change up their payment card
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- Figure 32: Use of same credit/debit card for payment, by gender and age, June 2017
- One third of consumers aware of credit/debit rewards structure
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- Figure 33: Attention paid to credit card rewards structure, June 2017
- Younger consumers less likely to watch for rewards opportunities
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- Figure 34: Attention paid to credit card rewards structure, by generation, June 2017
Mobile or Online Payment Systems
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- Apple Pay most popular mobile wallet
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- Figure 35: Type of mobile payment wallet used, June 2017
- Consumers are satisfied with current payment methods, but still worry about mobile pay’s security
- PayPal is the most used online payment program
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- Figure 36: Type of mobile payment checkout system used, June 2017
- Venmo tops P2P apps
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- Figure 37: Type of P2P apps used, June 2017
- Higher income-earning consumers are the most likely to use mobile wallets, P2P apps
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- Figure 38: Type of mobile payment wallet used, June 2017
Motivation to Switch
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- Discounts and rewards are still top motivators
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- Figure 39: Motivation to switch payment type based on discounts/rewards, June 2017
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- Figure 40: US Bank email, August 2017
- Ease of use, reassurance of security important to new users
- Security is a moderate concern, while smartphone use not really a factor
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- Figure 41: Motivation to switch payment type, June 2017
- Some interest in shortening the checkout process
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- Figure 42: Motivation to switch payment type, June 2017
Attitudes toward Payment Methods
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- Overwhelming majority see a continuing need for cash
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- Figure 43: Attitudes on use and necessity of cash, June 2017
- Less than half of consumers consider mobile pay to be “a hassle”
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- Figure 44: Attitudes on use of mobile payments, June 2017
- Consumer opinion divided on importance of mobile payment security
- iGen, Millennials consider online payment systems to be faster
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- Figure 45: Attitudes on use of online payment providers, by generation, June 2017
- Hispanics are worried about merchants tracking their spending
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- Figure 46: Worry about merchant spending tracking, by ethnicity and generation, June 2017
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Consumer qualitative research
- Direct marketing creative
- Abbreviations and terms
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