Discovering and Appealing to Consumer Payment Preferences
Understanding the customer and their journey must include understanding the final step in any purchase: payment. What do people want from the payment process, which payment methods are preferred, why do people have these preferences, and how much does it affect their proclivity to purchase? Unpacking the answers is pivotal, as 88 percent of consumers say that a retailer’s payment options impact their decision on where to shop, and of those, 30 percent say it greatly impacts where they shop.
Recently, 984 members of the DISQO audience shared their thoughts in more detail.
The Desire for Safety and Convenience
For most people (69 percent), privacy and security concerns are a high priority, with 42 percent considering it a top priority, and 27 percent considering it a second priority. Meanwhile, a notable majority (56 percent) expressed that speed and convenience are also important, with 21 percent considering it a top priority, and 35 percent considering it a second priority. As a result, most consumers cite credit and debit cards as their top choice for payment, as they're associated with both security and convenience.
Online vs. In-Store Habits
As more shopping dollars move toward e-commerce, it’s necessary to understand the differences in online payment habits vs. in-store — and what drives those decisions.
More people use debit cards for in-store shopping (65 percent) than for online purchases (59 percent). The primary motivators for debit card usage are its convenience and effectiveness as a form of budgeting. Conversely, credit cards are more often used online (56 percent) than in-store (47 percent), and the primary motivators are (again) convenience, but paired with reward programs and security.
Gift card payment also favors online usage (27 percent) over in-store (15 percent). Newer payment methods such as Google Pay and Apple Wallet also heavily lean online (with two times to three times more usage reported).
Given the ongoing trend toward more online transactions, we can expect to see overall movement toward the preferred online payment methods.
Another noteworthy online payment method of choice is PayPal (52 percent report using it for online purchases). Interestingly, most people choose PayPal for its security and safety, much more so than other payment types. When asked about the top benefits of PayPal, 44 percent noted safety and security, compared to 8 percent for debit cards and 24 percent for credit cards. While convenience is still a factor, the motivators for choosing an online payment appear to be more rooted in security.
In-store payment methods skew more heavily toward debit cards (65 percent), cash (55 percent) and then credit cards (45 percent). While convenience is still a key motivator, in-store customers are also more motivated to self-budget — which is a highly cited feature of using a debit card or cash. When opting for a credit card in-store, the primary reason is heavily skewed toward rewards at 53 percent, notably greater than convenience at 28 percent.
Retailers and payment providers need to consider what drives consumers to purchase, both in-store and online, and why they choose the payment methods they do in each environment. As this research shows, there are clear differences between the two, despite some overarching similarities.
Furthermore, emerging payment methods and the ongoing migration of dollars to e-commerce are parallel trends that cannot be ignored. While it may vary by retailer, brand and category, there’s no denying that more and more consumers are shopping online, thus shifting the overall habits of what payment methods are used and why.
What may be seen as convenient or secure one moment may be surpassed the next. It’s up to all of us — retailers, payment providers and researchers alike — to tune into shifting consumer preferences.
Carl Van Ostrand is the vice president of consumer insights for DISQO, an audience-first insights platform amplifying innovation via a symphony of high-fidelity data.
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Carl Van Ostrand is the VP of Consumer Insights for DISQO, an audience first insights platform amplifying innovation via a symphony of high fidelity data.
In his role, he develops new applications of behavioral data while helping clients address needs using behavioral data. Carl has 15 years of professional experience in digital market research, working closely with clients while leading and executing projects. Carl’s career has spanned full service agencies, innovative research technology companies, and global panel companies.