In the brave new(ish) world of payments able to be made across any number of channels – and methods — from cash to debit to mobile via taps and swipes – the question remains: Just how do cardholding consumers like to part with their funds?
Recent research buoys the notion that, in North America, at least (that is, the United States and Canada) debit remains king (not cash!) and digital engagement is gaining traction.
The findings are part of a 2015 study conducted by global payments provider TSYS, that delved into preferred payment methods and how those cardholders like to be in touch with their chosen financial institutions.
This 2015 data represents the fifth annual study and surveyed more than 1,000 consumers across gender and educational subsets, in both Canada and the United States.
TSYS execs Sarah Hartman and Adam Smitherman told Karen Webster and those who listened in on their live conversation that debit rules in the United States, even if it’s down just a smidge.
Delving a bit into the numbers, 41 percent of respondents in the U.S. said they lean toward using debit transactions to make payments, which is still the strongest preference, though down a bit from the 43 percent tally for the 2014 study and 49 percent for the 2013 research. At the same time, credit use saw a slight uptick, at 35 percent. Yet, noted Hartman, the shift is not one from debit use to credit, but rather the availability of alternative payment methods, such as, for example, PayPal where credit cards may be more often registered. And, as consumers are feeling a little more economically comfortable, they may be more comfortable using credit vehicles, even if they pay off their balance at the end of the month.
One of the more surprising outcomes discussed was the finding that 60 percent of U.S. respondents said they were open to “receiving special offers from their financial institutions that collect data,” if in turn they would receive rewards tied to such opt-ins. Only 47 percent of Canadians said the same.
“This is good news for issuers,” Hartman surmised, as they can gain insight into what drives consumers and also cement relationships with them.
Special offers received by good old-fashioned snail mail (hopefully not because no one looks at snail mail anymore) – good news for the post offices.
Looking at the payments preferences north of the border, in Canada, Smitherman and Hartman said that 46 percent of users prefer credit cards as their method of payment, a push upward from the 34 percent seen in the year before. One factor, added Hartman, might be the fact that debit cards as a payment method have been only recent options to use to make purchases online, in Canada.
Another (perhaps unsurprising) element of the discussion is what influences payment methods — in fact identifying what are the most “attractive” features in a card that would lead to usage. In the U.S., it’s rewards, said the TSYS pair (such as cash back or merchandise), with a whopping 55 percent of respondents saying so. In Canada, noted Smitherman, the tally is similar, at 60 percent. Interestingly, the card brand has a relatively higher status as an influencer in the U.S. than in Canada (33 percent versus 19 percent, respectively), likely explained by the concentration of banks in Canada, and the wide number of options in the U.S. – some 14,000 financial institutions.
Communication was a key topic in the study as well — with a focus on how often, how and why. Once a month does the trick nicely, and the research shows consumers prefer email overall, with one important caveat: As Hartman pointed out, communication preferences in both the U.S. and Canada centered on phone calls in the event that there was a potential for unauthorized use of a card.
Social media, as a channel, on the other hand, barely registered a blip, perhaps offering an opportunity for FIs to reallocate their ad and promotional dollars.
As for mobile, we have not quite crossed the Rubicon yet. The research showed that consumers want to use their phones to access information about payments, but not to make payments in a physical store — yet. The key interest in mobile features tied to banking, said the TSYS executives, revolve around using phones to stop unauthorized transactions — immediately, as measured across 54 percent of U.S.-based respondents and 29 percent of those residing in Canada.
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