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Consumer Payment Preferences and Behaviors - US - August 2016

Published By :

Mintel

Published Date : Aug 2016

Category :

Banking

No. of Pages : N/A

Increases in consumer spending and interest in technology foster a payments environment ready for continued innovation. Purchases via card are climbing, but consumers don’t feel totally comfortable leaving their house without cash. In a world where our lives are so digitized and move so quickly, financial institutions need to do more to allay security concerns; most consumers still do not feel comfortable embracing new forms of payment technology, including mobile pay. Younger consumers are more willing to embrace technological advances like P2P (peer-to-peer) payments, but the older audience remains skeptical.

Overview

What you need to know
Definition

Executive Summary

The issues
Consumers are slow to adopt new payment methods
Retailers are slow to adopt new payment systems
Worries about security surround mobile payment systems
Figure 1: Attitudes towards payment methods, June 2016
Consumers are uncomfortable leaving home without cash
Figure 2: Attitudes towards payment methods, by generations, June 2016
The opportunities
Noncash payments are on the rise
Figure 3: Total of noncash payments, 2000-12
Consumers look for rewards or discounts for using mobile pay and credit cards
Most consumers consider mobile payments necessary
Figure 4: Attitudes towards payment methods, June 2016
What it means

The Market – What You Need to Know

Majority of consumers own credit or debit cards
Non-cash payments are on the rise
One quarter of consumers have used a mobile payment system
Financial situations are “healthy”

Market Size

Noncash payments are on the rise
Figure 5: Total of noncash payments, 2000-12
Majority of consumers own credit or debit cards
Figure 6: Credit card ownership, March 2016
Credit card use has increased, but debit cards used most often
Figure 7: Number and growth of noncash payments, 2000-12

Market Factors

Consumer Sentiment Index slightly down, but generally positive
Figure 8: Consumer Sentiment Index, January 2007-May 2016
Financial situations are “healthy”
Figure 9: Perceptions of financial health, 2013-16
Spending due to increase or stay the same in a wide variety of categories
Figure 10: Perceived changes in spending – Spending more or about the same, by category, January 2016
Most mobile phone users have smartphones
Figure 11: Smartphone usage, by race/ethnicity, June 2013-16
One quarter of consumers have used a mobile payment system
Figure 12: Mobile payment systems used, June 2016

Key Players – What You Need to Know

Consumers continue to look for streamlined payments
The wallet comes out of your pocket and into your phone
Amazon and Google look to lead the way with new payment technologies

What’s Working?

Credit cards remain most popular way to pay in person and online
Most consider the future of mobile payments “necessary”
Younger, affluent consumers more willing to be tracked by merchants
Use of prepaid or debit cards keeps consumers out of debt
Digital wallet launches encourage payments innovation
EMV cards may contribute to decline in counterfeit card transactions

What’s Struggling?

Retailers slow to adopt new payment systems
The transition to EMV chip-and-PIN cards has been rocky
Security is hampering mobile payment use
Some still consider mobile payment to be “too complicated”
Interest in wearable payment technology has not increased

What’s Next?

EMV transactions need to speed up
Wearables go beyond the watch
Fitbit and Jawbone
Visa
Amazon looks to lead the way in voice payments
Google goes hands-free
Big banks seek partnerships with financial disruptors
J.P. Morgan
Citibank
Judge rules that Bitcoin is not really money

A More Efficient Payments Process

Retailers slow to adopt new payment systems
EMV chip-and-PIN
Mobile pay
Sam’s Club Scan & Go App
Figure 13: Ease of mobile payment options, by current users, June 2016
A streamlined, seamless payments process is considered ideal
Figure 14: PayPal email highlighting ease of payment, 2016
Figure 15: PayPal email highlighting ease of linking funding sources to PayPal, 2016
Figure 16: Discover email highlighting Android Pay, 2016
One-click and in-app purchasing shorten shopping times even further
Domino’s
Figure 17: Domino’s zero click ordering email, 2016
Stripe’s Relay

The Consumer – What You Need to Know

Credit cards remain most popular way to pay in person and online
Preferred method of payment remains consistent, with one exception
Cash is still preferred for personal payments
Millennials most likely to use mobile payments
A streamlined, seamless payments process is considered ideal

How People Pay

Credit cards remain the most popular way to pay in person and online
Figure 18: Payment method used, all purchase types, June 2016
Small transactions
Figure 19: Payment method used, purchasing small everyday items such as gasoline & food in person, June 2016
Medium transactions
Figure 20: Payment method used, purchasing medium priced items such as clothing in person, June 2016
Large transactions
Figure 21: Payment method used, purchasing large ticket items such as a television or furniture in person, June 2016
Online transactions
Figure 22: Payment method used, any online purchase, June 2016
Paying bills
Figure 23: Payment method used, paying bills such as mortgage payments or utilities, June 2016

P2P Payments – Why Do Consumers Still Use Cash?

Cash is still the most popular for personal payments
Figure 24: Cash payment preferences, June 2016
Younger Millennials’ adoption of P2P payments is the highest
Figure 25: Cash versus P2P payment preferences, by generation, June 2016
Figure 26: Chase online ad for Quickpay, March 2015
Figure 27: Venmo email detailing new payment capabilities, July 2016

Attitudes toward Payment Methods

Over half of consumers still unwilling to leave home without cash
Figure 28: Comfort level, leaving home without cash, by generation, June 2016
Most consider the future of mobile payments “necessary”
Figure 29: Consumer belief in future acceptance of mobile payments, by age, June 2016
Interest in wearables for purchasing has not increased year over year
Figure 30: Interest in using wearables to pay for merchandise, by household income, June 2016
Hispanics most interested in wearable use at retailers
Figure 31: Interest in using wearables to pay for merchandise, by race/ethnicity, June 2016
Younger, affluent consumers more willing to be tracked by merchants
Figure 32: CHAID analysis, attitude towards being tracked by merchants, June 2016
Figure 33: Attitude toward payment options – CHAID – Table output, June 2016

Mobile Payments

One quarter of consumers have used a mobile payment system
Figure 34: Mobile payment systems used, June 2016
Millennials most likely to use mobile payments
Figure 35: Mobile payment systems used, by generation, June 2016
Hispanic and White consumers use Apple Pay and Google Wallet
Figure 36: Mobile payment systems used, by race/ethnicity, June 2016
Some still consider mobile payment to be “too complicated”
Figure 37: Attitude toward using smartphone to pay in a store, by age, June 2016

Cards in the Digital Wallet

Credit cards are narrowly preferred in the digital wallet
Figure 38: Primary card in digital wallet, June 2016
Consumers aged 18-24 most likely to pay with debit card via mobile
Figure 39: Primary card in digital wallet, by age, June 2016

Increasing Mobile Payment Usage

Consumers still look for rewards/incentives to increase mobile payments
Figure 40: Mobile payment usage motivation, by current users, June 2016
Security is hampering mobile payment use
Figure 41: Mobile usage increase based on security and acceptance of mobile payments, by current users, June 2016
Current mobile pay adopters look to retailers for usage opportunity
Figure 42: Mobile payment usage motivation, by mobile payment provider, June 2016
Most consider the future of mobile payments “necessary”
Figure 43: Attitudes towards the future of mobile payment methods, by age, June 2016

Encouraging Mobile Payment Usage Among Non-users

Non-users will need lots of convincing
Figure 44: Incidence of those who do not want to use mobile payments, by age, June 2016
Security fears still haunt mobile payments, but rewards/discounts could be tempting
Figure 45: Mobile payment usage motivation, by non-users, June 2016

Debt Management

Debit, prepaid cards still considered good ways to stay out of debt
Figure 46: Agreement that debit cards and prepaid cards help manage debt, June 2016
The majority of consumers believe they have manageable debt levels
Figure 47: Consumer debt levels, March 2016

Bill Payment

Most consumers still prefer to receive and pay for bills offline
Figure 48: Bill pay behaviors, June 2016
Younger consumers more likely to receive bills online
Figure 49: Bill pay behaviors, prefer to receive bills online, by demographics, June 2016
Bill payment is most often completed via check
Figure 50: Payment method used, paying bills such as mortgage payments or utilities, by age, June 2016
Plastiq looks to bring more cards to bill payment

Appendix – Data Sources and Abbreviations

Data sources
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations
Terms

Appendix – CHAID Analysis Methodology

CHAID
Figure 51: CHAID analysis, attitude towards being tracked by merchants, June 2016

List of Table

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