Table of Contents
Overview
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- What you need to know
- Definition
Executive Summary
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- The issues
- Consumers are slow to adopt new payment methods
- Retailers are slow to adopt new payment systems
- Worries about security surround mobile payment systems
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- Figure 1: Attitudes towards payment methods, June 2016
- Consumers are uncomfortable leaving home without cash
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- Figure 2: Attitudes towards payment methods, by generations, June 2016
- The opportunities
- Noncash payments are on the rise
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- Figure 3: Total of noncash payments, 2000-12
- Consumers look for rewards or discounts for using mobile pay and credit cards
- Most consumers consider mobile payments necessary
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- Figure 4: Attitudes towards payment methods, June 2016
- What it means
The Market – What You Need to Know
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- Majority of consumers own credit or debit cards
- Non-cash payments are on the rise
- One quarter of consumers have used a mobile payment system
- Financial situations are “healthy”
Market Size
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- Noncash payments are on the rise
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- Figure 5: Total of noncash payments, 2000-12
- Majority of consumers own credit or debit cards
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- Figure 6: Credit card ownership, March 2016
- Credit card use has increased, but debit cards used most often
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- Figure 7: Number and growth of noncash payments, 2000-12
Market Factors
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- Consumer Sentiment Index slightly down, but generally positive
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- Figure 8: Consumer Sentiment Index, January 2007-May 2016
- Financial situations are “healthy”
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- Figure 9: Perceptions of financial health, 2013-16
- Spending due to increase or stay the same in a wide variety of categories
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- Figure 10: Perceived changes in spending – Spending more or about the same, by category, January 2016
- Most mobile phone users have smartphones
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- Figure 11: Smartphone usage, by race/ethnicity, June 2013-16
- One quarter of consumers have used a mobile payment system
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- Figure 12: Mobile payment systems used, June 2016
Key Players – What You Need to Know
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- Consumers continue to look for streamlined payments
- The wallet comes out of your pocket and into your phone
- Amazon and Google look to lead the way with new payment technologies
What’s Working?
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- Credit cards remain most popular way to pay in person and online
- Most consider the future of mobile payments “necessary”
- Younger, affluent consumers more willing to be tracked by merchants
- Use of prepaid or debit cards keeps consumers out of debt
- Digital wallet launches encourage payments innovation
- EMV cards may contribute to decline in counterfeit card transactions
What’s Struggling?
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- Retailers slow to adopt new payment systems
- The transition to EMV chip-and-PIN cards has been rocky
- Security is hampering mobile payment use
- Some still consider mobile payment to be “too complicated”
- Interest in wearable payment technology has not increased
What’s Next?
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- EMV transactions need to speed up
- Wearables go beyond the watch
- Fitbit and Jawbone
- Visa
- Amazon looks to lead the way in voice payments
- Google goes hands-free
- Big banks seek partnerships with financial disruptors
- J.P. Morgan
- Citibank
- Judge rules that Bitcoin is not really money
A More Efficient Payments Process
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- Retailers slow to adopt new payment systems
- EMV chip-and-PIN
- Mobile pay
- Sam’s Club Scan & Go App
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- Figure 13: Ease of mobile payment options, by current users, June 2016
- A streamlined, seamless payments process is considered ideal
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- Figure 14: PayPal email highlighting ease of payment, 2016
- Figure 15: PayPal email highlighting ease of linking funding sources to PayPal, 2016
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- Figure 16: Discover email highlighting Android Pay, 2016
- One-click and in-app purchasing shorten shopping times even further
- Domino’s
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- Figure 17: Domino’s zero click ordering email, 2016
- Stripe’s Relay
The Consumer – What You Need to Know
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- Credit cards remain most popular way to pay in person and online
- Preferred method of payment remains consistent, with one exception
- Cash is still preferred for personal payments
- Millennials most likely to use mobile payments
- A streamlined, seamless payments process is considered ideal
How People Pay
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- Credit cards remain the most popular way to pay in person and online
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- Figure 18: Payment method used, all purchase types, June 2016
- Small transactions
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- Figure 19: Payment method used, purchasing small everyday items such as gasoline & food in person, June 2016
- Medium transactions
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- Figure 20: Payment method used, purchasing medium priced items such as clothing in person, June 2016
- Large transactions
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- Figure 21: Payment method used, purchasing large ticket items such as a television or furniture in person, June 2016
- Online transactions
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- Figure 22: Payment method used, any online purchase, June 2016
- Paying bills
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- Figure 23: Payment method used, paying bills such as mortgage payments or utilities, June 2016
P2P Payments – Why Do Consumers Still Use Cash?
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- Cash is still the most popular for personal payments
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- Figure 24: Cash payment preferences, June 2016
- Younger Millennials’ adoption of P2P payments is the highest
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- Figure 25: Cash versus P2P payment preferences, by generation, June 2016
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- Figure 26: Chase online ad for Quickpay, March 2015
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- Figure 27: Venmo email detailing new payment capabilities, July 2016
Attitudes toward Payment Methods
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- Over half of consumers still unwilling to leave home without cash
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- Figure 28: Comfort level, leaving home without cash, by generation, June 2016
- Most consider the future of mobile payments “necessary”
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- Figure 29: Consumer belief in future acceptance of mobile payments, by age, June 2016
- Interest in wearables for purchasing has not increased year over year
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- Figure 30: Interest in using wearables to pay for merchandise, by household income, June 2016
- Hispanics most interested in wearable use at retailers
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- Figure 31: Interest in using wearables to pay for merchandise, by race/ethnicity, June 2016
- Younger, affluent consumers more willing to be tracked by merchants
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- Figure 32: CHAID analysis, attitude towards being tracked by merchants, June 2016
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- Figure 33: Attitude toward payment options – CHAID – Table output, June 2016
Mobile Payments
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- One quarter of consumers have used a mobile payment system
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- Figure 34: Mobile payment systems used, June 2016
- Millennials most likely to use mobile payments
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- Figure 35: Mobile payment systems used, by generation, June 2016
- Hispanic and White consumers use Apple Pay and Google Wallet
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- Figure 36: Mobile payment systems used, by race/ethnicity, June 2016
- Some still consider mobile payment to be “too complicated”
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- Figure 37: Attitude toward using smartphone to pay in a store, by age, June 2016
Cards in the Digital Wallet
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- Credit cards are narrowly preferred in the digital wallet
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- Figure 38: Primary card in digital wallet, June 2016
- Consumers aged 18-24 most likely to pay with debit card via mobile
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- Figure 39: Primary card in digital wallet, by age, June 2016
Increasing Mobile Payment Usage
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- Consumers still look for rewards/incentives to increase mobile payments
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- Figure 40: Mobile payment usage motivation, by current users, June 2016
- Security is hampering mobile payment use
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- Figure 41: Mobile usage increase based on security and acceptance of mobile payments, by current users, June 2016
- Current mobile pay adopters look to retailers for usage opportunity
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- Figure 42: Mobile payment usage motivation, by mobile payment provider, June 2016
- Most consider the future of mobile payments “necessary”
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- Figure 43: Attitudes towards the future of mobile payment methods, by age, June 2016
Encouraging Mobile Payment Usage Among Non-users
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- Non-users will need lots of convincing
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- Figure 44: Incidence of those who do not want to use mobile payments, by age, June 2016
- Security fears still haunt mobile payments, but rewards/discounts could be tempting
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- Figure 45: Mobile payment usage motivation, by non-users, June 2016
Debt Management
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- Debit, prepaid cards still considered good ways to stay out of debt
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- Figure 46: Agreement that debit cards and prepaid cards help manage debt, June 2016
- The majority of consumers believe they have manageable debt levels
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- Figure 47: Consumer debt levels, March 2016
Bill Payment
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- Most consumers still prefer to receive and pay for bills offline
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- Figure 48: Bill pay behaviors, June 2016
- Younger consumers more likely to receive bills online
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- Figure 49: Bill pay behaviors, prefer to receive bills online, by demographics, June 2016
- Bill payment is most often completed via check
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- Figure 50: Payment method used, paying bills such as mortgage payments or utilities, by age, June 2016
- Plastiq looks to bring more cards to bill payment
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – CHAID Analysis Methodology
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- CHAID
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- Figure 51: CHAID analysis, attitude towards being tracked by merchants, June 2016
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