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Consumer Payment Preferences and Behaviors - US - September 2015

Published By :

Mintel

Published Date : Sep 2015

Category :

Banking

No. of Pages : N/A

The payment industry is undergoing massive changes, driven primarily by new technology that is affecting all aspects of the industry. There is a huge difference in payment preferences and expectations among generations, with younger generations shying away from the credit cards older generations love and embracing other methods of payment.

Table of Content

Overview

What you need to know
Definition

Executive Summary

The issues
Fewer Millennials have credit cards
Figure 1: Credit card ownership, by generation, July 2015
Mobile payment is growing, but usage is still low
Person-to-person payments also growing, but usage is still low
Figure 2: Synovus email ad for P2P services, 2015
The opportunities
Incentives will help drive mobile payment usage
Figure 3: Would begin using mobile payment system if had incentives, July 2015
Figure 4: Would increase use of mobile payment system if had incentive, July 2015
Figure 5: Discover online bill pay email ad, 2015
What it means

The Market – What You Need to Know

Consumers are paying off debt
Mobile payments are coming of age
Interest in prepaid cards is growing
An improving economy
Smartphone sales
Interest in wearables

Market Size and Forecast

Credit card balances
Figure 6: Credit card balance, Q1 2003-Q1 2015
Prepaid cards

Market Factors

Strengthening economy
Figure 7: Percentage change in GDP, Q4 2011-Q2 2015
Consumer confidence
Figure 8: University of Michigan Index of Consumer Sentiment January 2005-July 2015
Growth of smartphones
Figure 9: Total US volume sales and forecast of mobile phones, 2009-19
Wearables are coming!
Figure 10: Interest in wearables, by gender and age, and Hispanic origin, July 2015
CHAID Analysis
Figure 11: Interest in wearables – CHAID tree output – July 2015

Key Players – What You Need to Know

Most want cash rewards
Millennials don’t like credit cards
Mobile payments are not yet mainstream

What’s Working?

Cash back rewards are most popular
Figure 12: Credit card reward preferences, by generation, July 2015
Figure 13: Share of offers, Q1 2013-Q1 2015
Figure 14: Discover It card mailing, 2015
Prepaid cards are gaining popularity in different areas

What’s Struggling?

Millennials don’t like credit cards
Figure 15: Credit card ownership, by generation, July 2015
Figure 16: Use of debit cards and prepaid cards, by generation, July 2015
Figure 17: American Express and Bank of America reward cards ads, 2015
Mobile payments are still struggling for mainstream usage
Figure 18: Methods of payment, by type of transaction, July 2015
How to increase usage?
Figure 19: Reasons would begin to use/use mobile payments more, by current use of mobile payments, July 2015
The future of mobile payment systems

What’s Next?

New payment systems
EMV Cards
Figure 20: EMV card
Wearables

The Consumer – What You Need to Know

Young people are a challenge for credit card issuers
Credit cards and rewards
Use of mobile payment systems
Consumers who use mobile payment systems like them
How to increase usage of mobile payment systems
Debit and prepaid cards are popular debt management tools
Banks versus billers online bill pay

Who Owns Cards?

Young people don’t like credit cards
Figure 21: Credit card ownership, by generation, July 2015
Debit card ownership is down
Figure 22: Debit card ownership, by generation, July 2015
Prepaid card ownership highest among mobile payment users
Figure 23: Prepaid card ownership, by various demographic segments, July 2015

How People Pay

Small transactions
Figure 24: Method of paying for small, everyday transactions, July 2015
Medium transactions
Figure 25: Method of paying for medium-priced items such as clothing in person, July 2015
Large transactions
Figure 26: Method of paying for large-ticket items such as a television or furniture in person, July 2015
Online transactions
Figure 27: Method of paying for any online purchase, July 2015
Paying bills
Figure 28: Method of paying bills, July 2015
Figure 29: Capital City Bank and First Merit Bank online pay incentive email ads, 2015
Money owed family and friends
Figure 30: Method of paying money owed friends and family, July 2015
The future of P2P
Debit cards are a popular payment method
Changes in Payment Methods

Attitudes toward Credit Cards

Using cards for rewards
Figure 31: Use credit cards to get rewards, by demographics, July 2015
Cash back is king
Figure 32: Reward card preference, by generation, July 2015
Purchases affect choice of card
Figure 33: Different cards owned, by household income, July 2015

Who Uses Mobile Payment Systems

Millennials, Hispanics, urban dwellers, and parents
Figure 34: Use of mobile payment system, by various demographic groups, July 2015
Mobile payments are used more by those with higher incomes
Figure 35: Use of mobile payment system, by household income, July 2015
Apple Pay? Google Wallet? Other?
Figure 36: Use of specific mobile payment system, by demographic segments, July 2015
Satisfaction with mobile payment systems is high
Figure 37: Satisfaction with mobile payment systems, by demographic groups, July 2015
Apple users are more satisfied than Google users
Figure 38: Customer satisfaction, by mobile payment provider, July 2015
What do Apple Pay and Google Wallet users want?
Figure 39: Reasons mobile payment system user would increase use, by mobile payment system, July 2015
Who is most likely to use mobile payment systems?
Figure 40: Key Driver Analysis – Who uses mobile payment systems, July 2015

Encouraging Consumers to Use Mobile Payment Systems

Incentives, incentives, incentives...and security
Figure 41: Reasons consumers would begin using mobile payment system, by generation, July 2015
Availability at more stores would help, too
Figure 42: Reasons Millennials would increase usage of mobile payment systems, July 2015
Better communication is necessary
Figure 43: Mobile payments are too complicated, by demographics, July 2015
Still resistance to mobile payments

Attitudes about Payment Methods

Cards help consumers stay out of debt
Figure 44: Using cards to stay out of debt, by demographics, July 2015
Is it necessary to carry cash?

Method of Bill Paying

Online bill pay
Figure 45: Online bill pay preferences, by generation, July 2015
More pay bills with tablets than with phones
Figure 46: Use of mobile payment services, by generation, July 2015

Appendix – Data Sources and Abbreviations

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

Appendix – CHAID Methodology

Methodology
Figure 47: Interest in wearables – CHAID – Table output, July 2015

Appendix – Key Driver Analysis Methodology

Appendix – The Consumer

Figure 48: Use of mobile payment systems, July 2015
Figure 49: Paying for small, everyday transactions, by household income, July 2015
Figure 50: Paying for medium-priced items such as clothing in person, by generation, race, July 2015
Figure 51: Paying for large-ticket items such as a television or furniture in person, by generation, race, July 2015
Figure 52: Paying for any online purchase, by generation, July 2015
Figure 53: Mobile payment system usage, by age, household income, July 2015

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