Data: 88% of Consumers Still Prefer In-Person Grocery Shopping

As consumer habits change, payment preferences are becoming segmented based on shopping channels.

A PYMNTS Intelligence Report, How People Pay: Debit Leads in Stores, Credit Leads Online, reveals a distinct divide: consumers favor debit cards for in-store purchases while credit cards dominate online transactions, particularly in discretionary spending categories like travel.

Contrasting Shopping Trends: In-Person Grocery Preference vs. Online Travel Spending

Shoppers overwhelmingly prefer in-person grocery shopping, according to the report. In July 2024, 88% of consumers indicated they prefer to shop for groceries themselves, reflecting a strong attachment to the in-store experience. For grocery transactions, debit cards were used for 41% of payments, outperforming all other methods. This reliance on debit extends to restaurants as well, with 33% of in-person dining transactions made using debit.

While consumers lean toward in-store shopping, the landscape for online purchases tells a different story. In the travel sector, 53% of online transactions used credit cards, highlighting a preference for credit when making significant purchases. The average online travel transaction amounted to $397.20, much higher than the in-store average of $338.60. This discrepancy illustrates how consumers are more inclined to use credit for larger, less frequent purchases that often come with added rewards and benefits.

In-Store Payment Preferences: Debit Cards Take the Lead

The preference for debit cards in-store is evident across various spending categories. As of July 2024, nearly 40% of all retail transactions were completed using debit cards, exceeding any other payment method. This trend indicates an increased focus on cautious financial management, particularly in an uncertain economic climate with rising interest rates.

Historically, debit card usage in grocery transactions peaked at 47%, while retail reached 45% earlier in the year. Despite these fluctuations, the ongoing use of debit cards highlights a consumer focus on budgeting and avoiding debt. With more individuals concerned about their financial health, debit cards offer a straightforward method to manage spending without the risk of overspending associated with credit.

Discretionary Purchases: The Appeal of Credit Cards in the Digital Space

While consumers are using debit cards more for everyday expenses, credit cards continue to be the preferred choice for online discretionary purchases. The average online retail transaction was $87.70, about 11% higher than the average in-store transaction of $79.10. This difference is amplified in the travel sector, where online transactions averaged $397.20 compared to $338.60 in-store, marking a 17% increase.

Many credit cards offer rewards and fraud protection, making them particularly appealing for larger online purchases. In July, more than half of online travel transactions were paid with credit cards, a notable increase from earlier in the year. In the retail space, two in five online purchases were made using credit. Conversely, credit card usage in grocery and restaurant transactions remained low, with about 25% of consumers opting for credit in these categories.

In-person shopping for groceries and dining shows that businesses need to adapt to changing payment trends. To increase online spending in discretionary categories, retailers should enhance secure credit card payment systems and offer attractive rewards programs to foster customer loyalty. The report outlines clear preferences: debit cards are favored for everyday in-store purchases, while credit cards lead in online transactions, especially for larger amounts. Adapting to these trends is crucial for businesses looking to capture and retain market share.