By: Tom Pierce, Chief Marketing Officer
For the second year in a row, PSCU set out to uncover payment preferences among credit union members and other financial institution customers (“non-members”), and we saw some interesting shifts in results over the past year.
This year’s release of our annual Eye on Payments study was developed to gain a better understanding of the factors that influence consumers when it comes to their choice and usage of different payment methods, and how these factors may vary among different life stages. For our credit unions, this data shows how you can better meet these preferences and needs to drive member experience and growth.
Convenience and ease of use trumped security in 2019, and were reported as the main drivers behind a consumer’s choice in payment method. Last year, consumers were most motivated by convenience and safety. A decrease in the number of consumers impacted by fraud over the past year, coupled with mobile card alert advancements that give consumers greater control over their transactions, may help explain why security and safety are no longer the key deciding factors behind how consumers pay.
While our Eye on Payments study is available for download now, here are a few highlights from this year’s findings that you can put to use today.
Key Findings: Consumer Payment Preferences 2019
- Convenience Trumps Security
Sixty percent of consumers reported convenience and ease of use as the main drivers behind their choice in payment method for both credit and debit cards. In 2018, more than 75% of consumers reported making payment decisions based upon security.
- Safety Still Matters
Nearly 4 in 10 credit union and non-credit union members agree they make decisions about how to pay for something based in part on which is the most secure. Seven out of 10 reported using mobile phone alerts to manage their cards, which increases feelings of security and control among respondents.
- Consumers Choose Debit
Consumer preference has gravitated from credit (44%) to debit (45%) since last year, with 48% of credit union members alone preferring debit. Debit cards were preferred across all generations, at the majority of purchase locations and in most retail situations. The top reasons cited by respondents for preferring debit were ease of use (64%), convenience (62%) and comfort of use (51%).
- Debit is Trusted for Online Purchases
Ninety-six percent of all survey respondents report making online purchases at least a few times per year, with 57% of credit union and non-credit union members making an online purchase at least a few times per month. Additionally, over one-fourth of credit union members report using a mobile app for order-ahead food purchases at least a few times a month, and two-thirds use a streaming service like Netflix or Hulu. Overall, consumers prefer to pay for online purchases, order-ahead food and streaming services with a debit card, further supporting the finding that convenience trumps security.
- Younger Generations Embrace Mobile Wallets
Mobile wallet usage is on the rise, with three out of every 10 consumers reporting they use a mobile wallet to make purchases. Mobile wallet usage is even higher among the younger generations: six in 10 Gen Z and Millennials report using a mobile wallet, with almost half using the technology at least a few times per month. This presents an educational opportunity for credit unions to drive adoption and usage across all generations.
- Contactless Cards Primed for Rapid Adoption
About one-fourth of consumers have a contactless card and use it at least a few times per month. Of those that have and use a contactless card, convenience, ease/speed of use and security are the primary motivators for doing so, while the primary reason consumers do not use their contactless card is due to lack of acceptance at stores they frequent. The number of consumers using a contactless payment method is expected to increase as more merchants activate Near Field Communication (NFC) technology and accept tap-and-go payments.
- When it Comes to Rewards, Consumers Want Choice
Seventy-five percent of consumers receive rewards or benefits on their credit and/or debit cards. While cash back is the most common reward offering consumers currently have, they want choice. When asked what type of reward or benefit would encourage them to use their primary card more often, six in 10 wanted something other than cash back – like lower interest rates, waiving of an annual fee or points that can be used for online shopping or travel.
Adapting to ever-changing consumer preferences will remain key for future credit union competitiveness and growth. We encourage you to download this revealing study today and discover more about how you can optimize your offerings to meet the needs of consumers for 2020 and beyond.
Stay tuned for upcoming blogs, where we’ll dive deeper into key findings from Eye on Payments to help develop more nimble payments strategies for the road ahead.
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.