When It Comes To Payments, The Customer Rules

Consumers may still be tied to cash and checks, but “digital is the most disruptive force the payments industry has seen in decades,” according to a recent white paper released by Accenture. Alongside this disruption, payment providers can broaden their relationships with customers in meaningful ways. The key is to focus on the customer experience, with a goal of moving beyond the “pure payments” mindset, and adding both peace of mind and personalized attention for users.

With insight gleaned through a survey conducted over several years in North America, and across 4,000 consumers, the white paper delved into the way people pay now – and how they expect to use technology to make payments five years from now.

The data uncovered a number of trends that are the hallmarks of the continuing shift toward digital payments, said the firm. Those trends can be broken down across five areas.

First, and most overarching…

The evolution in ways to pay continues – with no end in sight

Despite the fact that digital payments offers a range of options for consumers, the stickiness of cash remains prevalent. Of those surveyed, consumers tend to hew to traditional payment methods, with 67 percent reporting that they use cash most often when they pay. Debit cards come close behind, used by 59 percent of respondents, followed by credit cards at 50 percent. Checks bring up the rear, at 16 percent. Below are the results of the 2014 and 2015 surveys from Accenture that found a wide swath of usage and adoption across both traditional and digital payment methods.

Looking at the actual use of digital payments, “steady momentum” is in place, said Accenture. The most commonly used form of digital transactions takes place via PayPal, a method picked by 16 percent of respondents, closely followed by retail mobile payment apps at 14 percent. Apple Pay came in at 8 percent, noted the survey.

Drilling down a bit into demographics, millennials are (perhaps not surprisingly) proving to be early adopters of digital payments, opting for technology over cash and cards. According to Accenture, 23 percent of these younger, more tech-savvy users reported making a mobile payment at an onsite merchant location.

Looking ahead five years, the Accenture study found that consumers anticipate that they will use digital payments more often in 2020 than they do today – with cash usage to decline in tandem, from today’s 67 percent tally to 58 percent by 2020. They expect to also continue to spend more time using restaurant and retailer mobile apps, with a 57 percent boost over the same time frame, with both Apple Pay and Samsung Pay growing by 88 percent through the next few years.

So far, Apple Pay accounts for 68 percent of in-store mobile phone payments in the United States after less than a year on the market.

Accenture’s research shows that there is increasing knowledge of, and intent to adopt, various payment methodologies.

Mobile payments awareness higher than ever

What will drive that increased digital payments adoption? In a word: mobile. One key impetus is growing awareness of the technology itself that allows payments to be made virtually anywhere at any time. A slight majority of consumers – at 52 percent – said they are “extremely aware” of mobile payments as an option, which is up 9 percentage points since 2014. High-income respondents seemed more willing to move toward digital payments, at 38 percent. And while payments through a smartphone still mostly take place to pay for food, beverages and notably in a convenience store setting, there is a trend toward using the technology for taxi payments and even paying household expenses.

For payment providers to spur increased mobile and digital adoption, consumers have stated that they want to be reassured that fraud will be covered and that they will be notified by companies when suspicious activity surfaces.

Rewards can encourage mobile payments adoption

Another telling statistic, and one tied to mobile adoption that might make retailers sit up and take notice: 79 percent of users (the same tally that had been seen last year) said they would use mobile payments on a more frequent basis if discounted pricing and/or coupons were offered, and a whopping 78 percent would boost their mobile payments frequency if they were able to get rewards points.

Discount pricing or coupons also can go a ways toward bringing people to mobile use, with 54 percent of those surveyed stating that they would make mobile payments with those incentives.

In terms of where consumer trust lies, Accenture found that 86 percent of consumers trust their bank over all other entities to ensure that data is managed securely – a finding that Accenture posited gives major institutions a clear advantage in moving toward digital payments and fertile ground for loyalty-focused campaigns.

Peer to peer payments are on the move

Within the actual types of mobile payments, Accenture found that P2P payments had a relatively high level of adoption among respondents, with 46 percent having used that function to remit payments to other individuals. Faster payments remains a key desire among respondents, which Accenture said dovetails with current initiatives by the U.S. Federal Reserve to bring real-time payments into the mainstream.

Connected commerce is worth watching

Accenture also found that the continued movement toward connected devices will be a boon for mobile payment use. The survey cited data that projects 50 billion connected devices in use by 2020. And that translates into some staggering potential: every 1 percent of devices wired for payments means that there are between 250 million and 500 million “new initiation points” for commerce transactions. Consumers remarked that convenience and the ability to make purchases “only when necessary” are among the strongest benefits of using connected devices for payments.

And which devices garner the most interest? Of those surveyed, 21 percent say they have used a wearable device to make a payment at a merchant. And 20 percent of consumers were interested in device-initiated payments, for example, cars and appliances that can handle payment functions.

Please click the button below to download the Accenture Digital Payments Survey.