By: Tom Pierce, Chief Marketing Officer
PSCU’s recently published white paper, Eye on Payments, was developed in response to some common and important credit union questions: What are the preferred payment methods for members, and which factors influence those choices?
As it turns out, security is a leading attribute credit union members factor into their decisions on which payment method to use. Beyond this primary human need for safety, choice in payment method is driven by the type of retailer, type of purchase and perceptions and attributes of each payment method consumers are facing. As indicated in the findings, credit, debit and mobile wallets are three payment methods where this study provided additional clarity.
While the Eye on Payments white paper is available for download, we wanted to provide you with some helpful, at-a-glance highlights from the study findings that you can use to your advantage immediately.
Top Three Consumer Payment Preferences
- Credit – Credit cards remain the preferred payment method for both credit union members and non-members. Given their ease of use and convenience, credit cards represent the most commonly used method of payment across the majority of retail purchase locations. Sixty-one percent of survey respondents from the Eye on Payments study report being most comfortable with credit cards as a payment form, and 60 percent noted convenience as a factor in making them a preferred payment method.
Predominantly used for tangible goods, routine purchases such as groceries and large purchases over $200, including restaurant-venue dining, credit cards retain a steady place in the day-to-day lives of consumers and consequently have strong foundational potential for credit union loyalty programs and incentives. Ninety-three percent of credit card users get rewards and benefits that help maintain their preference for credit – a fact that will remain important as adoption of mobile payments increases and consumers link their credit cards to their mobile wallets.
- Debit – Despite credit cards being the preferred payment method for those surveyed, debit cards are a close second, particularly at routine retail locations and for credit union members. Consumers from the survey indicate that they choose to use a debit card for convenience and ease of use, particularly for in-store purchases. As with credit, people across all age groups feel debit cards are still a safe payment option. When asked the reasoning behind choosing debit cards as a payment method, credit union members in particular responded by saying that debit cards are something they are comfortable using both for convenience and maintenance of a budget.
Credit union members specifically feel more comfortable using a debit card than non-members do. Only 34 percent of non-members report feeling comfortable and are more likely to use debit to avoid in-store overspending.
- Mobile Wallets – Both credit union members and non-members across all age groups are understanding more about mobile wallets as they start to interact with them in their daily lives. Inertia is one reason consumers are slow to adopt, as they continue to prefer the physical credit or debit card. Once consumers experience the use of a mobile wallet and learn more about the security features that are in place, they have the potential to migrate to this form of payment as an alternative to other methods. One important takeaway is the role credit unions can potentially play here – education by credit unions on mobile wallet security features could be the ultimate turning point for mobile wallet adoption.
The top places for mobile wallet usage were identified as grocery stores, fast food restaurants and fast casual restaurants, although they were still low in usage compared to other payment forms. Mobile wallets were identified by respondents as being helpful for paying back money to a friend or family member, for receiving money from a friend or family member and for paying a babysitter.
As the payments landscape continues to change in very different ways and at a very different pace globally, it’s important for credit unions to understand that members rank security very highly, and demand choice when it comes to payment methodology. Some crucial questions for credit union consideration: What are we at the credit union doing to ensure the protection of members’ personal and financial information? And how are we communicating these safety measures back to members?
With a little planning and help from sources such as PSCU Risk Management, we’re quite confident that all payment roads ahead lead to winning outcomes for members, and healthy growth for credit unions.