Consumers tend to reach for cash or debit cards for everyday purchases when they are concerned about managing their spending. These payment methods offer more control, helping consumers stay within their budgets and track spending.
On the other hand, the ability to earn perks and cash back often motivates credit card users. Who doesn’t like to be rewarded for their spending? Consumers are left to choose between payment methods that promote monetary discipline and ones that offer financial incentives.
This tension between managing budgets and maximizing value appears across both in-store and online shopping. Consumers’ choice of payment reflects their broader priorities, from convenience and security to long-term financial goals.
These are just some of the findings detailed in “How People Pay: Budgeting Anxiety Drives Debit Card Usage,” a PYMNTS Intelligence exclusive report. This edition examines the reasons consumers use different payment methods online and in stores and draws on insights from a survey of 2,552 U.S. consumers conducted from Aug. 12 to Aug. 23.
Spend Management Drives Debit Card Use for In-Store Shopping, While Rewards Drive Credit Use
Convenience and budgeting concerns motivate many consumers’ in-store payment choices. Credit card users, however, are an exception: They tend to be more motivated by perks. Forty percent of those who paid using credit cards in-store in the previous 30 days cited rewards or cash back as the reason they did so.
Often, consumers who use debit cards or cash do so for spending management and budgeting reasons. Twenty percent of cash users said they chose this payment method to help them stay within their budget. Fourteen percent of debit card users said the same. Conversely, just 6.2% of credit card users chose the payment method to better manage their expenses.
Relatedly, 20% of consumers using debit cards in-store did so to easily track their payments. Less than half of that share said the same about credit cards.
Convenience is more of a driver for cash and debit card use, but not credit card use. Forty-seven percent of those who used debit cards in stores said they did so for convenience. Fifty-four percent of those who used cash in-store said the same. In contrast, just 29% of credit card users cited convenience as their main reason.
Those who were concerned about the security of their payments tended to choose cash over either type of card. Cash users were nearly twice as likely to cite security as their main motivator compared to debit or credit card users when shopping in-store.
When Shopping Online, Budget-Minded Shoppers Choose Debit Cards While Security-Focused Shoppers Use Credit Cards
Consumers who want to keep track of their spending tend to opt for debit cards when shopping on digital channels. Roughly one-quarter of those who used debit cards online cited the ease of keeping track of payments as the reason. In contrast, just 5% of online credit card users said the same.
In addition, 14% of online debit card users said they did so because they wanted help staying within their budgets. Online credit card users, in contrast, did not even rank this in their top five reasons for their payment choice.
Meanwhile, consumers concerned about the security of their digital transactions are considerably more likely to choose credit over debit. Among online credit card users, 8.3% cited better security as the motivating factor. In contrast, 4.8% of online debit card users said the same.
Whether shopping in-store or online, credit card users are, above all, motivated by perks. One-third of these consumers cited rewards or cash back as motivators for paying with their credit cards online. In contrast, debit card users’ top motivation is convenience. Forty-four percent of online debit users cited this as their reason, versus 29% of online credit card users.
Convenience Drives Digital Wallet Usage — Especially for eCommerce
Convenience is especially important to digital wallet users. Forty-seven percent of digital wallet users overall cite convenience as their reason for using this payment method.
This need for ease and efficiency is particularly pronounced in online transactions. Fifty-five percent of those who used digital wallets online said they did so because it was the most convenient. This is considerably higher than the share that said the same for debit cards and credit cards.
Convenience is also the top reason consumers use digital wallets in physical stores. However, it wins out by a smaller margin, with 39% citing this as the determining factor. This share is slightly lower than the portions of in-store debit card and cash users motivated by convenience.
Consumers are notably more likely to list convenience as their driver for using some digital wallets than others. Fifty-three percent of Google Pay and Apple Pay users said they chose the payment method for this reason. In contrast, roughly one-third of PayPal users said the same.
For their part, PayPal users are much more likely to cite their trust in the FinTech’s brand. Twenty-two percent of PayPal users said trust in the provider motivated their choice of payment method. Just 12% of Google Pay and Apple Pay users said the same.
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Methodology
“How People Pay: Budgeting Anxiety Drives Debit Card Usage,” a PYMNTS Intelligence exclusive report, is based on data gathered from a survey of 2,552 U.S. consumers, conducted from Aug. 12 to Aug. 23. The report delves into the factors influencing what payment methods consumers use in different situations. Our sample was balanced to reflect the U.S. adult population across key demographic variables: 51% of respondents identified as female, 36% were college educated and 30% reported annual incomes between $50,000 and $100,000.
