Table of Contents
Scope and Themes
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- What you need to know
- Data sources
- Consumer survey data
- Comperemedia
- Abbreviations and terms
- Abbreviations
- Terms
- Companies mentioned in this report
Executive Summary
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- The market
- Credit card and debit card transaction volume
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- Figure 1: Total payments volume for the four largest payments networks, 2011-12
- The consumer
- Unbanked and underbanked as potential markets
- Credit card income down as consumers cut back
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- Figure 2: Net income from credit cards at large credit card issuers, 2011-12
- Most like to pay with credit or debit cards, but preferences vary by age
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- Figure 3: Preferred payment method by type of purchase, net across all transactions, November 2012
- Figure 4: Usage of payment method for any type of transaction, net across all transactions, by age, November 2012
- Prepaid cards offer an opportunity
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- Figure 5: Belief that prepaid cards help control spending, by generation, November 2012
- More interest in prepaid than in online payment methods
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- Figure 6: Interest in payment method alternatives, November 2012
- The industry
- Visa is the leader in card payment volume
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- Figure 7: US. annual credit and charge card payment volumes, 2006-12
- Visa is also the leader in debit cards
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- Figure 8: Visa and MasterCard annual debit card purchase volume, 2005-12
- PayPal is the most familiar payments brand
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- Figure 9: Five most familiar payment brands, November 2012
- Mobile phone payments have a security challenge
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- Figure 10: Perceived security of payment methods, November 2012
- Market drivers
- Sales of smartphones continue to rise, albeit more slowly
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- Figure 11: Historical U.S. smartphone sales and Mintel 2013 forecast, 2007-13
- Tablet sales are growing, too
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- Figure 12: Growth of tablet unit sales, 2009-12
- Demographics of mobile device ownership will help mobile payments
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- Figure 13: Smartphone and tablet ownership, by age, February 2012
- What we think
Issues in the Market
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- Why aren’t consumers using mobile payments?
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- Figure 14: Reasons for not using mobile phone as a payment device, November 2011
- What needs to change to encourage usage?
Insights and Opportunities
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- Key points
- Move check writers to prepaid cards or online banking
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- Figure 15: Interest in payment alternatives, by generation, November 2012
- Prepaid cards
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- Figure 16: Usage of prepaid cards for any type of transaction, by age, November 2012
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- Figure 17: Attitudes about prepaid cards as a means to control spending, by age, November 2012
- Figure 18: Attitudes about prepaid cards as a means to control spending, by household income, November 2012
- Unbanked and underbanked represent potential
- Prepaid cards
- Mobile payments
- What are those concerns?
- Mobile wallets
- Additional uses for NFC technology will increase use of mobile wallets
Trend Applications
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- Trend: Help Me Help Myself
- Industry application
- Trend: Prepare for the Worst
- Trend application
- Mintel Futures: Access Anything, Anywhere
- Industry applications
Market Size
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- Key points
- Noncash payments continue to grow
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- Figure 19: Number of noncash payment transactions, by payment method, 2006, 2009 and 2010
- Credit card and debit card transaction volume
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- Figure 20: Total U.S. credit card and debit card transaction volume, 2011-12
- Credit card vs. debit card growth
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- Figure 21: U.S. Visa and Mastercard credit vs. debit volume, 2011-12
- Consumer debt staying stable
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- Figure 22: Amount of revolving consumer debt in U.S., 2008-12
- Average credit card balance inching up
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- Figure 23: Average credit card balance per borrower, Q1 2009-Q4 2012
Competitive Context
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- Key points
- Payment brands still largely unknown
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- Figure 24: Consumer familiarity with payment method brands, November 2012
- Figure 25: Consumer familiarity with payment method brands, November 2012
- SWOT analysis of leading mobile wallet companies
- Google Wallet
- PayPal
- V.me by Visa
- MasterCard PayPass
Segment Performance
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- Key points
- Credit card income down as consumers cut back
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- Figure 26: Net credit card income for largest credit card issuers/networks, 2011-12
- Figure 27: Credit card delinquency and charge-off rates at all commercial banks, not seasonally adjusted, 2008-12
- Check usage continues to decline
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- Figure 28: Preference for writing checks for any transaction, by age, November 2011
- Figure 29: Number of checks processed by the Federal Reserve, 2001-12
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- Figure 30: Average value of commercial checks collected by the Federal Reserve, 2011-12
- Prepaid cards
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- Figure 31: Dollars loaded onto closed loop and open loop prepaid cards, 2003-11
- Figure 32: Usage of prepaid cards at point-of-sale, by age, November 2012
Market Drivers
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- Key points
- The economy is in limbo
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- Figure 33: Changes in personal income, consumer expenditures, and personal savings, Jan 2012-Jan 2013
- Increased availability of NFC-enabled devices
- Sales of smartphones continue to rise, albeit more slowly
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- Figure 34: U.S. sales of smartphones, 2007-13
- Figure 35: Smartphone vs. feature phone sales, number of units, 2006-12
- Tablet sales are growing, too
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- Figure 36: Total sales revenue for tablet computers, 2009-12
- Figure 37: Tablet computers – total units sold, 2009-12
- Demographics of mobile device ownership will help mobile payments
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- Figure 38: Smartphone and tablet computer ownership, by age, February 2012
- Consumers are focused on reducing their debt
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- Figure 39: Financial goals for the next 12 months, August 2012
Leading Companies
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- Key points
- Visa is the leader in card payment volume
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- Figure 40: US. annual credit and charge card payment volumes for major networks, 2006-12
- MasterCard’s loss is American Express’ gain
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- Figure 41: Annual credit and charge card payment volume market share for major networks, 2006-12
- Visa dominates debit cards
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- Figure 42: Number of debit cards in circulation, as of Dec. 31, 2012
- Figure 43: Visa and MasterCard annual debit card purchase volume, 2005-12
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- Figure 44: Visa and MasterCard transaction volume, 2005-12
Innovations and Innovators
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- Key points
- Visa and Samsung team up
- Citibank’s Price Rewind
- U.S. Bank is introducing mobile photo bill pay
- AmEx and Twitter team up
- Facebook gift cards
- PayPal continues its expansion
- Chicago Transit Authority now uses contactless payments
- MasterCard MasterPass
- Paydragon simplifies online shopping and paying even more
- Moven’s move into mobile banking
- Justin Bieber’s new prepaid card
Marketing Strategies
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- Key points
- Direct mail advertising – segmentation data
- Credit card mailings targeting affluents
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- Figure 45: P$YCLE segment as a proportion of the population, indexed to proportion of mailings, April 2012-January 2013
- Figure 46: Top five direct mailers – Nielsen P$YCLE segmentation segments targeted, April 2012-January 2013
- Top mailers are targeting many of the same segments
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- Figure 47: Wealth Achievers segment – percent of segment targeted by DM mailers, April 2012-January 2013
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- Figure 48: Targeting by household net worth – top mailers, April 2012-January 2013
- Direct mail advertising creatives
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- Figure 49: Target direct mail advertisement, 2012
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- Figure 50: Chase direct mail advertisement, 2013
- Figure 51: Sam’s Club direct mail advertisement, 2013
- Print advertising
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- Figure 52: Fifth Third print advertisement, 2012
- Figure 53: Arizona Bank & Trust print advertisement, 2012
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- Figure 54: TD Bank print advertisement, 2013
- Email advertising creatives
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- Figure 55: American Express email advertisement, 2013
- Figure 56: Discover email advertisement, 2013
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- Figure 57: Wells Fargo email advertisement, 2013
- Online advertising
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- Figure 58: PayPal online advertisement, 2011
- Figure 59: Visa online advertisement, 2013
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- Figure 60: Sovereign-Santander bank online advertisement, 2012
- Television advertising
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- Figure 61: MasterCard/Google Wallet television ad, 2011
- Figure 62: Square Wallet television ad, 2012
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- Figure 63: V.me television ad, 2012
Consumer Payment Preferences by Type of Purchase
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- Key points
- Credit and debit cards are favored
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- Figure 64: Preferred payment method by type of purchase, November 2012
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- Figure 65: Overall preferred payment method, by age, November 2012
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- Figure 66: Overall preferred payment method, by household income, November 2012
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- Figure 67: Overall preferred payment method, by race/Hispanic origin, November 2012
- Payment method used for small purchases
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- Figure 68: Preferred payment method for everyday items such as gasoline & food, by age, November 2012
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- Figure 69: Preferred payment method for everyday items such as gasoline & food, by household income, November 2012
- Purchasing medium-ticket items
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- Figure 70: Preferred payment method for medium-priced ticket items such as clothing, by gender and age, November 2012
- Purchasing large-ticket items
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- Figure 71: Preferred payment method for large-ticket items such as a television or furniture, by gender and age, November 2012
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- Figure 72: Preferred payment method for large-ticket items such as television or furniture, by household income, November 2012
- Online purchases
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- Figure 73: Preferred payment method for online purchases, by gender and age, November 2012
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- Figure 74: Preferred payment for online purchases, by race/Hispanic origin, November 2012
- Paying bills
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- Figure 75: Preferred payment method for paying bills such as mortgage payments or utilities, by household income, November 2012
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- Figure 76: Preferred payment method for paying bills such as mortgage payments or utilities, by generation, November 2012
- Paying friends and family
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- Figure 77: Preferred payment method for paying money owed to family, friends, baby sitters, etc, by age, November 2012
Brand Familiarity
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- Key points
- Brand recognition highest for PayPal
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- Figure 78: Familiarity with payments brands, by household income, November 2012
- Figure 79: Familiarity with payments brands, by region, November 2012
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- Figure 80: Familiarity with payments brands, by generation, November 2012
Credit Card Ownership
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- Key points
- Credit card ownership depends on age, gender, race
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- Figure 81: Ownership of credit cards, by gender and age, November 2012
- Figure 82: Ownership of credit cards, by race/Hispanic origin, November 2012
Card Ownership and Payment Behavior
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- Key points
- Most people pay off monthly credit card balances
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- Figure 83: Type of credit card owned and payment behavior, by gender and age, November 2012
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- Figure 84: Type of credit card owned and payment behavior, by household income, November 2012
- Figure 85: Type of credit card owned and payment behavior, by region, November 2012
Shopping for Credit Cards
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- Key points
- Reasons for applying for cards
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- Figure 86: Reasons for applying for credit card, by age, November 2012
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- Figure 87: Reason for applying for credit card, by gender and age, November 2012
Attitudes toward Credit and Debit Card Usage
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- Key points
- Credit and debit card usage preferences
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- Figure 88: Attitudes toward credit and usage of credit and debit cards, by household income, November 2012
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- Figure 89: Attitudes toward credit and usage of credit and debit cards, by household income, by generation, November 2012
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- Figure 90: Attitudes toward credit and usage of credit and debit cards, revolvers and transactors, November 2012
- Figure 91: Attitudes toward credit and usage of credit and debit cards, revolvers and transactors, November 2012
Perceptions of Security of Various Payment Methods
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- Key points
- Mobile payments seen as far less secure than all other methods
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- Figure 92: Attitudes about payment method security, by type of payment, November 2012
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- Figure 93: Attitudes about payment method security, by generation, November 2012
Interest in Payment Method Alternatives
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- Key points
- Interest in low fee prepaid card higher than new mobile services
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- Figure 94: Interest in payment method alternatives, by gender, November 2012
- Figure 95: Interest in payment method alternatives, by household income, November 2012
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- Figure 96: Interest in payment method alternatives, by generation, November 2012
Cluster Analysis
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- Figure 97: Target clusters, November 2012
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- Figure 98: Preferred payment method by type of purchase, November 2012
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- Figure 99: Preferred payment method for purchasing small everyday items such as gasoline & food, by target clusters, November 2012
- Figure 100: Preferred payment method for purchasing medium-priced ticket items such as clothing, by target clusters, November 2012
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- Figure 101: Preferred payment method for purchasing large-ticket items such as a television or furniture, by target clusters, November 2012
- Figure 102: Preferred payment method for online purchases, by target clusters, November 2012
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- Figure 103: Preferred payment method for paying bills such as mortgage payments or utilities, by target clusters, November 2012
- Figure 104: Preferred payment method for paying money owed to family, friends, baby sitters, etc, by target clusters, November 2012
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- Figure 105: Familiarity with payments brands, by target clusters, November 2012
- Figure 106: Ownership of credit cards, by target clusters, November 2012
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- Figure 107: Cards owned and payment behavior, by target clusters, November 2012
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- Figure 108: Reasons for applying for credit card, by target clusters, November 2012
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- Figure 109: Attitudes toward credit and usage of credit and debit cards, by target cluster, November 2012
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- Figure 110: Attitudes about payment method security, by target clusters, November 2012
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- Figure 111: Interest in payment method alternatives, by target clusters, November 2012
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- Figure 112: Target clusters, by demographic groups, November 2012
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Appendix – Nielsen P$YCLE Lifestage Group Definitions
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- Younger Years
- Upwardly Mobile
- Metro Mainstream
- Fiscal Fledglings
- Family Life
- Flourishing Families
- Upscale Earners
- Mass Middle Class
- Working Class USA
- Mature Years
- Financial Elite
- Wealthy Achievers
- Upscale Empty Nests
- Midscale Matures
- Retirement Blues
Appendix – Trade Associations
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- American Bankers Association (ABA)
- American Financial Services Association (AFSA)
- Consumer Bankers Association
- Credit Union National Association (CUNA)
- The Electronics Payment Association (NACHA)
- National Credit Union Administration (NCUA)
- NFC Forum
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