By: Tom Pierce, Chief Marketing Officer, PSCU
Over the past few years, digital payments, mobile wallets and contactless cards have been embraced by U.S. consumers – and their adoption was further accelerated by the COVID-19 pandemic. While the surge of these emerging payments might have started as consumers looked for cleaner forms of payment that limited physical contact, the use of mobile wallets, contactless cards and digital payments will only continue to rise now that consumers have experienced their convenience and ease of use.
Welcome to Part 2 of our blog series on PSCU’s 2021 Eye on Payments, our fourth annual consumer payments study released on Oct. 26. Eye on Payments examines payment preferences among credit union members and other financial institution customers (“non-members”) across the U.S., including how they evolved over the past year. The study also explores how and why payment method preferences differ among generations and regions. Key takeaways are also provided that credit unions can implement to better meet evolving payment preferences and member needs.
In this second blog from our 2021 study, we highlight the continued growth of mobile wallets, digital payments and contactless cards.
Embracing the Use of Digital and Contactless Payments
In the initial months of the pandemic, using cash at stores was discouraged to limit physical contact between consumer and cashier. Consumers were also wary of inserting their credit or debit card and touching the surface of a potentially germ-filled card reader. Many merchants upgraded their systems to accept contactless payments and mobile wallets – or began promoting such payment systems that they already had in place. There was also a boom in the amount of online shopping, even for items like groceries that were typically purchased in-store. All of that online shopping was facilitated through the use of digital payments.
As the pandemic reality continues, more and more consumers are turning to mobile wallets, digital payments and contactless cards or tap-and-go payments offerings to make purchases. In our 2021 Eye on Payments study survey, the number of respondents who reported using a mobile wallet in the past 60 days increased to 50% from 2019, with 30% of those reporting they use a mobile wallet at least a few times per month. Four in 10 respondents are likely or extremely likely to use a mobile wallet at some point in the next six months to pay for goods and services. Forty-seven percent of respondents agree that they like the idea of using their mobile phone as a form of payment, while respondents who use a mobile wallet do so primarily because they are convenient, easy-to-use and fast. Those who do not use a mobile wallet report not doing so because they don’t know what it is or how to use it, or they believe it is not secure or they feel it is inconvenient.
The distribution and usage of contactless cards has grown significantly in recent years, with the number of respondents reporting they have a contactless card increasing from 25% in 2019 to 56% in 2021. Consumers from all generations report using their contactless card now more than before the pandemic, with credit card holders most often reporting using a contactless card at a large/big-box retailer or grocery store.
The usage of digital payment methods has also increased. Fifty-seven percent of all respondents report using digital payment methods such as Venmo, Zelle, Apple Pay or another payment app at least periodically as opposed to 49% in 2020 and 42% in 2019.
At the regional level, our study found that consumers in the state of Georgia have noticeably welcomed using emerging payment options, with an increasing adoption of contactless card technology. Over half of Georgia residents surveyed agree or completely agree they have steered away from using cash as a result of COVID-19. Forty-three percent of Georgia residents with a contactless card say they never used it before the pandemic, but now, a whopping 92% of respondents from Georgia say they use their contactless card at least a few times a year. Almost four in 10 respondents use it as frequently as a few times a week or even daily. Georgia consumers are also very open to using digital payments, with only 45% saying they have no plans to use digital payments in the future, as compared to the national average of 57%.
Now more than ever, members expect their credit union to have robust digital payments offerings. As the usage of digital payments, mobile wallets and contactless payments continues to increase, credit unions will need to continue innovating to serve evolving member needs and achieve sustained growth. This can be challenging to do alone.
Consider enlisting the help of a CUSO, which understands the unique needs of credit unions and can help facilitate innovation strategies and solutions. Partnering with a like-minded organization like a CUSO can ensure your credit union has access to the most updated research, cutting-edge technology, and innovative products and services.
The financial services marketplace is crowded, with innovation playing an important role in who succeeds. Delve into the key findings and takeaways that your credit union can leverage to effectively market to members and achieve continued growth and success. Download the full 2021 Eye on Payments study now.
In his role as SVP, Chief Marketing Officer, Tom Pierce is responsible for leading and executing PSCU’s marketing and communications strategy. Pierce has successfully led marketing teams for more than 30 years, with the latter half of his career spent in the payments industry. Prior to joining PSCU, Pierce served as Chief Marketing Officer for Cardtronics, a global ATM organization serving the retail and financial services industries, where he directed a global marketing team in the development and execution of strategic marketing and communications initiatives.