Consumer Payment Trends in the U.S.

Apr 1, 2010
202 Pages - Pub ID: LA2445009
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Businesses routinely seek to appeal to consumers by understanding which goods or services they want to buy. But understanding how shoppers prefer to buy—that is, which forms of payments they favor, and why—is also critically important. Marketers, retailers, card associations and other product and service providers hope to make transactions easy and convenient for consumers, but they must also balance these requirements against their own needs. Meanwhile, in the post-recession U.S. marketplace the world of payments keeps evolving as consumers back away from credit cards, debit cards move toward saturation, online payment options proliferate, and contactless payments and mobile payments move closer on the horizon.

This all-new report from Packaged Facts examines consumer payment forms of all kinds, including credit cards, debit cards, gift/prepaid cards, cash, checks, online payment and emerging forms, with a focus on how consumer preferences have changed during the past five years and vis-à-vis the economic downturn and recovery. It includes:

  • Analysis of how Americans’ financial outlook influences their spending and payment preferences.
  • Demographic and psychographic profiling by payment form and consumer age, gender, race, geographic region, income, educational level, etc.
  • Focus chapter on cash, whose straightforwardness and immediacy makes it the payment choice of more than half of U.S. adults.
  • Focus chapter on checks, which despite declining usage remain popular for bill paying and are getting new legs via “digital reinvention.”
  • Focus chapter on credit cards, which have reached saturation and face other challenges including more restrictive legislation and declining usage among consumers looking to reduce their debt.
  • Focus chapter on debit cards, which continue to win followers but whose rise may be diverted by laws restricting overdraft fees.
  • Coverage of gift cards and other prepaid debit cards, which are creating a fast-growing “second-tier” banking system for those without access to traditional banks.
  • Focus chapter on new payment methods, including contactless, cell phone and Internet-based, all of which are jockeying for position in the next wave of payment forms.

Myriad data sources include primary data compiled by Experian Simmons and cross-tabulated by Packaged Facts to create customized profiles of those consumers shaping the U.S. payments industry now and into the future.

Read an excerpt from this report below.


Additional Information

Market Insights: A Selection From The Report


Responsible Spenders

Consumers who say they spend conscientiously and carefully are not likely to be particular fans of debit cards. Rather, they are more likely to prefer to use credit cards and checks. Those who agree that they’re “careful with their money” are 13% more likely to have a checking account or a check guarantee card (index of 113) and 12% more likely to have used a credit card in the last 30 days (112). While they are no more or less likely to pay bills with cash than their peers, they are 22% more likely to prefer to pay cash for the things they buy (122). This cash preference can be seen as a sign of responsible spending, since financial advisors in the media often recommend that consumers use cash as much as possible, because cash causes them to reflect on each purchase and to “feel” their spending, so to speak. Spending is still an abstraction with debit cards, even if debit cards do make it more difficult for consumers to fall into debt.

Levels of agreement with the lifestyle statement “I am very good at managing money” point to similar findings. People who agree with this statement are 22% more likely to often prefer to pay cash for the things they buy (122), 11% more likely to pay bills with a check (111), 13% more likely to pay bills with a credit card (113), and 15% more likely to have used a credit card in the last 30 days (115). [Figure 2-12]

Not surprisingly, people who manage their money well are more likely to feel financially secure. According to the results of a 2008 U.S. survey from global market research company Synovate, three keys to feeling financially secure are a cash emergency fund, a household budget, and carrying no long-term credit card debt. The survey found that 78% of respondents felt stress due to household finances overall. However, although 90% without an emergency fund felt stressed, only 56% of those with a six-month cash reserve did. Likewise, the stress level was higher among those who carried credit card balances and those who did not run a household budget (Chicago Tribune, December 21, 2008).

In the News


World of Consumer Payment Trends Continues Evolution as Credit Card Usage Falls and Online Payments Surge

New York, March 29, 2010 Though cash remains king in post-recession America, the world of payments continues to change as consumers back off checks and credit cards, debit cards move toward saturation, online payment options proliferate, and contactless payments and mobile payments move closer on the horizon.

Currently, 54% of U.S. adults cite cash as their preferred form of payment, according to market research publisher Packaged Facts in Consumer Payment Trends in the U.S., which relies primarily on data compiled by Experian Simmons’ Spring 2009 adult consumer survey.  Meanwhile, 68% of American adults have a debit card in their wallet and 67% have a credit card; though only 53% of adults may be considered active credit card users with transactions in the last thirty days.

Fear of the vicious cycle of debt associated with credit cards, in addition to consumer frustration brought on by the aggressive efforts by many credit card companies to squeeze more profits from their customers since the onset of the recession, have resulted in stagnant ownership and fewer transactions. The report reveals that the falling percentage of consumers who have used their credit cards in the last twelve months indicates that more people are keeping their accounts open for emergency purposes only while opting to use the equally convenient—and still popular—debit card instead.

More than half of American adults still pay bills with checks due to the security checks offer when sending payments through the mail and because they don’t expose consumer accounts to the electronic vulnerabilities that can be exploited by high-tech thieves. Nevertheless, the time-consuming disadvantages of checks appear to be outweighing the advantages, especially as Americans turn increasingly to electronic forms of payment.

“The two minutes required to process a check simply can’t compete with the contactless credit cards in development that require two or three seconds to complete a transaction,” says Don Montuori, publisher of Packaged Facts. 

Online payments are benefiting from the shift toward electronic forms of payment, and in many ways they are also helping to drive that shift.  Last year, 27% of U.S. adults—61 million people—paid their bills online, a testament to both the robustness of online payments and how quickly Americans have taken to it as a viable payment option.

Contactless payment has had the fastest deployment of any emerging payments technology. Since mid-2005, leading financial issuers have placed tens of millions of contactless credit and debit cards and devices into the hands of consumers worldwide.  The future for contactless payment will be the industry’s ability to convince consumers the new payment form improves on existing ones.

Consumer Payment Trends in the U.S. examines consumer payment forms of all kinds, including credit cards, debit cards, gift/prepaid cards, cash, checks, online payment and emerging forms, with a focus on how consumer preferences have changed during the past five years and vis-à-vis the economic downturn and recovery.

About Packaged Facts - Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer goods and retailing, foods and beverages, demographics, pet products and services, and financial products.  Packaged Facts also offers a full range of custom research services. 

 

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