Payment declines are becoming less common, with payment declines overall falling from 18% to 12% in two years. However, financially struggling consumers continue to experience them at high rates.
These consumers often experience payment declines that prevent them from purchasing even essential goods. In fact, 7.1% of grocery payments attempted by struggling consumers came back declined — 12 times higher than the share among financially stable consumers.
At the same time, debit card transactions are making up a greater portion of payment declines. Debit declines now outnumber credit more than threefold.
These are just some of the findings detailed in “How People Pay: Paycheck-to-Paycheck Consumers Grapple with Payment Declines,” a PYMNTS Intelligence exclusive report. This edition examines the issue of payment declines. It draws on insights from a survey of 2,261 U.S. consumers conducted from Sept. 9 to Sept. 20.
Financially Struggling Consumers Are Dramatically Likelier to Face Payment Declines
Between September 2022 and September 2024, declines fell considerably. The share of consumers who reported experiencing a payment decline in the previous 30 days fell from 18% to 12%. This drop could be partly due to the emergence of new technologies to head off false declines. Payment card companies are improving their ability to flag fraudulent operations.
Still, many consumers who live paycheck to paycheck with difficulty paying bills each month continue to face payment declines. Twenty-three percent experienced at least one decline in the previous month, down from 32% two years prior. Despite this decrease, they experience declines at nearly double the population-wide average.
Consumers in this group are nearly four times as likely as those who do not live paycheck to paycheck to have faced these declines. Just 6.3% of consumers in the latter group had encountered this issue in the previous 30 days as of September.
Consumers living paycheck to paycheck without difficulty paying bills are less likely to face these declines than their struggling counterparts. However, they are more likely to experience this than those not living paycheck to paycheck. For paycheck-to-paycheck consumers who do not have trouble paying their bills, 9.1% encountered a decline in the last month. This share is nearly 50% greater than the share of financially stable consumers who said the same. However, it is 61% lower than the share of those with more financial difficulties.
Financially Struggling Consumers See Payment Declines When Trying to Purchase Essentials
Payment declines are all the more pressing when occurring for essential purchases. Financially struggling consumers are also more likely than consumers not living paycheck to paycheck to experience declines when trying to meet their basic needs.
Among paycheck-to-paycheck consumers with issues paying their monthly bills, 7.1% of grocery payments came back declined. This share is nearly 12 times higher than that of consumers not living paycheck to paycheck. It is also 58% greater than the share of grocery payments declined among paycheck-to-paycheck consumers comfortably paying their bills.
Matters have improved considerably since September 2022, when 15% of financially struggling consumers’ grocery payments came back declined. However, they have worsened since this spring. In May, just 3.3% came back declined.
Payments for retail purchases are generally more likely to come back declined than those for groceries. Among paycheck-to-paycheck consumers struggling to get by, 8.1% of payments for retail transactions came back declined. In contrast, just 2.1% of such payments for paycheck-to-paycheck shoppers who can comfortably pay bills were refused. This share is similar to the 1.9% of retail payments declined among those who do not live paycheck to paycheck.
Debit Card Transactions Are Declined More Than Three Times as Often as Credit
Debit declines now account for more than half of all declined transactions. The share of consumers reporting that their declined payment was on a debit card has risen 40% since June 2022. Over the same time, the share of declines coming from credit cards dropped by half, falling from 32% in June 2022 to 16% this September.
This drop in credit card declines comes as consumers increasingly gain access to tools that allow them to manage their credit card payments. With the rise of mobile banking apps, consumers can access their credit limits and see where they fall instantly. Conversely, debit card payment declines could be due to less preventable issues. Debit card declines are unavoidable if someone does not have enough money in their account to cover the purchase.
We find consumers are using credit cards less overall. Between September 2022 and September 2024, the share of consumers purchasing groceries using credit cards fell from 31% to 28%. The share using these to pay for retail products decreased from 35% to 31%. For travel purchases, the figure dropped from 52% to 44%. For restaurant orders, the drop-off was less pronounced, dipping from 31% to 29%.
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Methodology
“How People Pay: Paycheck-to-Paycheck Consumers Grapple with Payment Declines,” a PYMNTS Intelligence exclusive report, is based on a survey of 2,261 U.S. consumers conducted from Sept. 9 to Sept. 20. The report looks into how payment declines impact consumers across financial lifestyles. Our sample was balanced to reflect the U.S. adult population across key demographic variables: 51% of respondents identified as female, and 30% reported annual incomes between $50,000 and $100,000.
