By: Tom Pierce, Chief Marketing Officer, PSCU
Despite the uncertainty surrounding the COVID-19 pandemic, the main drivers behind a consumer’s choice in payment method – ease of use, convenience and speed – have remained consistent since 2019, which could likely indicate long-term shifts in consumer needs and behavior.
Welcome to part three of our blog series on Eye on Payments 2020. PSCU’s third annual consumer payments study examines payment preferences among credit union members and other financial institution customers (“non-members”) across the U.S. and how they evolved over the past year. For credit unions, the study shows how you can better meet these preferences and needs to drive member experience and growth.
In our second blog from our 2020 study, we explored how the pandemic has accelerated contactless payment adoption and usage, along with an increase in mobile wallet usage and digital banking. Today, we’ll dive deeper into the primary drivers behind consumer payment choice, as well as the importance of security, and debit – the preferred method of payment.
Consumers Prioritize Ease of Use, Convenience and Speed
For the second year in a row, ease of use, convenience and speed were the main factors in consumers’ purchasing decisions.
Contactless card and mobile wallet users agree they are easy to use, fast and convenient. For contactless, 55% of survey respondents who use a contactless card do so because it is easy to use, 54% because it is fast and 51% because it is convenient. For mobile wallets, 55% of respondents attribute usage to convenience and ease of use, while 52% attribute it to being fast. Respondents also reported using store-specific mobile apps because they are convenient (28%) and easy to use (27%).
Drivers of payment preference are consistent between new and traditional payment methods, with survey respondents agreeing debit and credit cards are also convenient, easy to use and allow for fast transactions.
Nonetheless, Security is Still Important
In 2019, four in 10 respondents agreed that they make decisions about how to pay for something based in part on which is the most secure. In 2020, this increased to eight in 10. At the same time, the number of respondents who reported being victims of card fraud or identity theft only increased slightly this year, up to 13% compared to 12% in 2019. The vast majority of 2020 incidents were attributed to a purchase made online, likely corresponding to the uptick in online shopping.
In 2020, 21% of respondents reported disputing a charge in the 60 to 90 days prior to completing the survey. Credit union members reported slightly higher incidences (25%) than non-members (13%).
The majority of purchases or charges disputed were related to everyday or retail purchases (49% and 45%, respectively). Nonetheless, the vast majority of disputes – nine out of 10 – were resolved.
In line with these findings, credit union members (75%) are more likely to utilize mobile alerts and controls than non-members (66%). The number of overall users utilizing mobile alerts and controls remained steady, increasing slightly from 72% to 73%.
Consumers Continue to Choose Debit
For the second year in a row, debit remains the first preferred payment method across all demographics, with 41% of survey respondents preferring debit and 35% preferring credit. Debit and credit emerge as the most frequently used payment methods in most types of purchase situations, including restaurants, retailers, grocery, pharmacy and gas/fuel, while credit remains the go-to payment method for major purchases.
Among credit union members, debit was reported as the first preferred payment method (40%). For point-of-sale or card-present purchases, credit union members are more likely to use a debit card than non-credit union members (69% versus 57%). In addition, six out of 10 credit union members agree they use both credit and debit cards now more than they did a few years ago, and over 75% also indicate that a credit or debit card is their first preferred payment method.
Although physical safety is a key factor in determining how consumers transact, traditional methods of payment are still important and preferred. As such, financial institutions should continue to prioritize and promote them.
Overall, consumers still value a personalized, frictionless experience and look to their trusted financial provider to deliver easy-to-use, convenient, simple tools that are just as secure and helpful as traditional offerings. Many members – 94%, according to the survey – consider their credit union to be that trusted financial partner. It is more important than ever for credit unions to continue educating members and act as a source of information on emerging technologies, fraudulent events and more.
For the third year in a row, both credit union and non-credit union members alike (79% of credit union members and 73% of non-members) report they make decisions about how to pay for something based in part on which is the most secure. It is imperative that credit unions continue to focus on safety and security while simultaneously meeting consumer demands and expectations, especially as fraudsters innovate and find new ways of attack.
Ensuring members have access to mobile alerts and controls and digital banking solutions where they can easily place cards on hold can give members a heightened sense of security when conducting transactions with their credit union-issued cards. Credit unions should consider partnering with a provider that can deliver strong fraud mitigation offerings coupled with an optimal member experience.
In part four of our blog series, we’ll explore the payment preferences of different generations and how credit unions can attract and retain members of all ages.
Want to learn more? Download the full Eye on Payments 2020 study now! Explore the key findings and takeaways that your credit union can leverage to effectively market to members and achieve enduring growth and success.
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.