Table of Contents
Overview
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- What you need to know
- Definition
Executive Summary
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- Overview
- The issues
- While brands increasingly invest in new payment technologies, cash remains a consumer favorite
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- Figure 1: Preferred payment methods, June 2018
- Inertia is an issue: most consumers see no need to change payment methods
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- Figure 2: Attitudes toward changing payment method, by age, June 2018
- Security concerns remain an obstacle, especially for women
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- Figure 3: Factors in changing preferred payment type, by gender, June 2018
- The opportunities
- Mobile wallets are becoming more mainstream
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- Figure 4: Mobile wallet usage in the past year, June 2018
- Many consumers use different cards when shopping online versus in-store
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- Figure 5: Payment behaviors, by race and ethnicity, June 2018
- When trying to change consumer behavior, consider rewards and discounts
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- Figure 6: Factors in changing preferred payment type, June 2018
- What it means
The Market – What You Need to Know
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- Noncash payment methods are rapidly growing in number of transactions and total value
- Total consumer credit accounts dip slightly, amidst long-term growth
- Online shopping is growing rapidly, but still comprises <10% of retail sales
- 9 out of 10 consumers owns a smartphone
Market Breakdown
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- Number and volume of noncash payments quickly growing
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- Figure 7: number and value of credit card payments, in person versus remote, 2012, 2015, and 2016
- Debit cards are the most common form of noncash payment, but for the lowest value
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- Figure 8: Distribution of noncash payments by type, number, and value, 2015
- Most consumers use a bank-issued debit and credit card
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- Figure 9: Credit, debit, and mobile payment app usage, November 2017
- Total consumer credit accounts dip slightly, amidst long-term growth
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- Figure 10: Number of consumer credit accounts, Q4 2012-Q4 2017
- Consumer debt reaches new heights
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- Figure 11: Outstanding consumer credit, revolving and nonrevolving, 1985-2018
Market Factors
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- Online retail sales expected to increase rapidly
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- Figure 12: Total US online retail sales and fan chart forecast, at current prices, 2012-22
- Figure 13: Total US online retail sales and forecast, at current prices, 2012-22
- Online shopping is growing rapidly, but still comprises a small share of total retail sales
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- Figure 14: Total US retail sales and online sales, at current prices, 2012-17
- Figure 15: Percentage of total purchases online, March 2018
- 9 out of 10 consumers owns a smartphone
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- Figure 16: Personal device ownership, by age, June 2018
Key Players – What You Need to Know
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- In the land of digital payments, PayPal is king
- Amazon Go stores re-imagine the purchase process
- Mobile wallet usage could soon begin to surge
What’s Happening?
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- With myriad options available, PayPal stands apart
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- Figure 17: Payment methods used in the past year, by age, June 2018
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- Figure 18: PayPal email, August 2018
- Point-of-sale microfinance emerges as a new payment method
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- Figure 19: Affirm online advertisement, July 2018
- Costco now accepts Apple, Google, and Samsung mobile wallets at all US locations
What’s Struggling?
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- Scam artists take to Zelle to defraud customers
- Inertia is a large barrier to changing current payment methods
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- Figure 20: Attitudes toward changing payment method, by age, June 2018
What’s Next?
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- Mobile wallet usage could soon begin to surge
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- Figure 21: Attitudes toward mobile wallets, by age, June 2018
- Amazon Go stores reimagine the purchase process
- Volatility plagues cryptocurrency, but blockchain offers hope
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- Figure 22: USAA email, May 2018
- Apple and Goldman Sachs team up for card launch
The Consumer – What You Need to Know
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- Credit and debit cards are the most preferred payment method
- Cash is not going away anytime soon
- PayPal enjoys robust popularity and market penetration
- Mobile wallets continue to polarize, while gaining traction
- Zelle overtakes Venmo in popularity
- One in ten 25–34-year-olds have used cryptocurrency
Preferred Payment Type
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- One word: “Plastics”
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- Figure 23: Preferred payment methods, ranked, June 2018
- Credit and debit cards appeal to different ends of the age spectrum
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- Figure 24: Preferred payment methods, by age, June 2018
- Cash is no longer king, though still royalty
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- Figure 25: Preferred payment methods, June 2018
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- Figure 26: Preferred payment methods, by race and ethnicity, June 2018
- PayPal is fourth-most popular consumer payment method
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- Figure 27: Preferred payment methods, PayPal versus bank check, June 2018
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- Figure 28: PayPal email, August 2018
Digital Payment Methods
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- Most consumers have used PayPal in the past year
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- Figure 29: PayPal usage in the past year, June 2018
- Venmo vs. Zelle
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- Figure 30: Venmo usage versus Zelle, June 2018
- Nearly 2 in 10 consumers have used a mobile wallet…
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- Figure 31: Mobile wallet usage in the past year, June 2018
- …but even more consumers consider it a hassle
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- Figure 32: Preferred payment methods, June 2018
- Walmart Pay is very competitive with other mobile wallets, especially in rural areas
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- Figure 33: Mobile wallet usage in past year, June 2018
Preferred Payment Method by Purchase Type
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- Online and in-store, consumers use debit and credit for everyday purchases
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- Figure 34: Preferred payment methods, in-store and online purchases, June 2018
- In-store, the young turn to cash and debit while older consumers use credit
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- Figure 35: Preferred payment methods, in-store purchases, by age, June 2018
- Mobile shoppers use credit, debit, or PayPal, depending on their age
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- Figure 36: Preferred payment methods, mobile purchases, by generation, June 2018
- For personal payments, cash is favored, with a litany of options vying for second
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- Figure 37: Preferred payment methods, personal payments, by generation, June 2018
- Most consumers pay their bills via the Automated Clearing House
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- Figure 38: Preferred payment methods, bills and recurring payments, by age, June 2018
- Large purchases call for credit cards
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- Figure 39: Preferred payment methods, June 2018
Factors in Changing Payment Method
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- Rewards and discounts have the greatest conversion potential
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- Figure 40: Factors in changing preferred payment type, June 2018
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- Figure 41: American Express email, June 2018
- Security concerns remain an obstacle, especially for women
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- Figure 42: Factors in changing preferred payment type, by gender, June 2018
- Ease of use and checkout efficiency can drive change
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- Figure 43: Factors in changing preferred payment type, by gender, June 2018
Payment Behaviors
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- Nearly 30% of consumers prefer to use cash wherever possible
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- Figure 44: Preferred payment methods, June 2018
- Only half of consumers use the same card in-store and online
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- Figure 45: Payment behaviors, by race and ethnicity, June 2018
- Roughly one third of consumers use different cards based on rewards
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- Figure 46: Payment behaviors, card usage based on rewards, by age and household income, June 2018
- One in ten 25–34-year-olds have used cryptocurrency
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- Figure 47: Payment behaviors, use of cryptocurrency, June 2018
Attitudes toward Payments
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- Inertia is an issue: most consumers see no need to change methods
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- Figure 48: Attitudes toward changing payment method, by age, June 2018
- Consumers are wary of merchants’ purchase-tracking ways
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- Figure 49: Attitudes toward payments, June 2018
- Majority of young consumers feel mobile payment security is improving…
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- Figure 50: Attitudes toward payments, June 2018
- …while most consumers are still afraid to store credit card data online
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- Figure 51: Attitudes toward payments, fear of storing card data online, June 2018
- Cashless future: pipedream or reality?
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Abbreviations and terms
- Abbreviations
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