Do you know your customers’ wallets?
Whether tapping their device or dipping their card, today’s consumers are paying in many different ways. In order to stay ahead of the game, you need to know your customers’ payment preferences and the technology that will help you meet those preferences.
Here’s a look at what a 2017 Worldpay / Socratic Consumer Survey1 revealed about consumer payment preferences and what that means for your business.
Debit and credit dominate—but alternative payments are gaining ground
- Millennials are the only generation that prefers debit cards over all other payment types
- 64% of consumers believe they could go a whole month without using cash
- Gen Xers prefer using mobile payments more than any other generation
- Gen Xers are early adopters of wearables and voice-activated devices for payments
Key Takeaways: Mobile payments fit the do-it-yourself and brand-loyal style of Gen Xers and are gaining in popularity in all age groups. While credit and debit cards remain essential payment options, consider offering alternative payment methods, like eWallets and direct bank transfers.
Price point influences the payment type used
- Credit cards are the preferred payment method for big-ticket items
- Debit cards are preferred when buying groceries and everyday ticket items
- Consumers are most partial to cash when paying for transportation
- 38% of consumers are afraid they’ll overspend when using credit cards
Key Takeaways: Consumers feel more comfortable charging large purchases to pay later, rather than having large sums instantly withdrawn from their checking account. Budget-minded consumers are using debit cards to help keep expenses in check.
Rewards and points drive card usage
- Rewards and points are the primary driver of those who prefer credit cards
- Cash back and rebates are the rewards consumers are most interested in
- Rewards and points programs are a primary driver for consumers to switch cards
- 55% of Millennials and 69% of Gen Xers use credit cards whenever possible in order to earn points and rewards
Key Takeaways: Consumers are wooed by cash back and rewards. Whether you have a loyalty card or program, offering attractive incentives attached to purchases is an effective way to get customers’ attention.
Payment preferences differ by gender
- Men tend to prefer credit cards while women tend to prefer debit cards
- Men tend to use their credit cards for rewards
- Women are more likely to reserve credit card use for emergencies
- Women are more interested in using a wearable devices as a payment method
Key Takeaways: While men are thinking about the loyalty rewards they can earn by using their credit card, women have a budget in mind and prefer to save credit cards for special or unexpected occasions.Women may be more inclined to use wearables because of the functionality they offer beyond payments.
Tuning in to your customers’ payment preferences
- Offer bonus rewards or instant discounts to entice customers to enroll in your loyalty program
- Make returns easy and issue store credit via branded gift cards to ensure return visits
- Accepting traditional payment types may suffice for many high-volume/small ticket businesses, but you’re likely to get more traction by accepting alternative payment methods
- If your target market is disproportionately women, feature discounts or buy-one, egt-one offers through your loyalty program. If your customers are primarily men, focus your loyalty program on earning rewards.
- If you specialize in high ticket items, ask your processing partner about solutions that can help you leverage those purchases into greater loyalty
Considerations for financial institutions
Debit and credit cards are the go-to payment method for consumers. But staying top of wallet remains a major concern for financial institutions of all sizes, especially during peak holiday shopping periods.
How can financial institutions compete in credit card usage? Think about how to make your debit card program competitive in light of the rewards and points offerings that have made credit cards king of the wallet.
Considerations for enterprise businesses
Loyalty program participation is the Holy Grail—driving card usage tied to a loyalty program is an art form. Some major retailers have perfected consumer dedication, attracting customers that are fully engaged with their brands.
As consumers warm to mobile payments using eWallets, enterprise businesses should consider integrating loyalty programs with mobile payment applications. Doing so will help your enterprise move to the front of the pack in an increasingly crowded marketplace.
Considerations for small businesses
Smaller businesses can look to provide simple and streamlined shopping experiences, whether in-store, online or in-app. Being able to easily accept credit and debit cards is especially important as the dominance of cash recedes into history. Providing rewards at checkout is a great incentive for consumers to shop and spend more.
1 Socratic Consumer Survey and Worldpay worked together to provide the estimated statistics and, in turn, inferences in this article.
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