tsys 2015 u.s. consumer payment study · 2020-02-24 · 2015 u.s. consumer payment choice study...

2015 U.S. Consumer Payment Choice Study

TSYS® is excited to present the results of our ffth annual U.S. Consumer Payment Choice

Study. This year the report compares key consumer payment choice information with that

of previous years, and also addresses some new topics that are currently being discussed

in the industry. We believe that the presentation of consumer payment choices as well as

the addition of new information that addresses popular industry topics makes the report an

informative tool that will contribute to industry discussion and help participants craft strategies

to address the consumer payments market.

The payments industry continues to evolve quickly through innovation and the availability of new products. Companies that have not traditionally participated in payments are also now looking at the industry as an opportunity for both growth and a more robust customer experience. We believe the expanded consumer choices will help drive the progress and innovation of payments.

Debit continues to be the most preferred payment type overall, although in the last two years of the study, we have seen a decrease in the percentage of consumers who prefer to use their debit card. For certain merchant types, respondents indicated that they prefer credit cards or cash over debit cards. Mobile continues to gain traction, with consumers particularly interested in using the technology to view account activity and manage fraud.

The interest in using a mobile device to make a purchase continues to grow, but still remains relatively low. We believe this growth will continue as more mobile payment options become available to consumers.

New to this year’s survey were questions around mobile app usage. We found that apps provided by fnancial institutions were highly adopted and frequently used. We expect the emphasis on digital engagement and technology to continue as innovation increases and new products become available to consumers.

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2015 Consumer Payment Choice Study

These fndings — and many others — were obtained from quantitative research with more than 1,000 U.S. consumers. The respondents covered a diverse demographic, including gender, age and income. We once again required that respondents have at least one debit card and one credit card. The majority of our survey questions remained consistent with prior years’ studies to facilitate observation of trends in respondents’ answers year over year.

Online Survey Results

Participants in the survey were asked both general and specifc questions concerning payment preferences, technology adoption and their relationship with their fnancial institution. We asked questions regarding their preferred payment type and the reasons for that preference. We also inquired about how they pay in a variety of situations; how they prefer to interact with their fnancial institutions and related actions they have taken in the past year. We then focused on specifc topics like digital engagement, loyalty and rewards, chip, and marketing and communication. Demographic and other background questions allowed for response segmentation and additional insight.

Some questions required consumers to rank-order their responses according to their relative value. In these instances, response choices were presented at random to prevent undue infuence on response data.

The report provides the fndings from our research, and is organized as follows:

TABLE OF CONTENTS

I. SUMMARY OF STUDY’S KEY FINDINGS .....................................................................................................3

II. DETAILED FINDINGS

A. Payment Preferences ..........................................................................................................................................4

B. Consumer Actions...............................................................................................................................................8

C. Loyalty and Rewards...........................................................................................................................................9

D. Digital Engagement ...........................................................................................................................................9

E. Marketing and Communication..........................................................................................................................11

III. ISSUER IMPLICATIONS ................................................................................................................... 12

IV. ABOUT THE ONLINE SURVEY RESPONDENTS ........................................................................... 14

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I. SUMMARY OF STUDY’S KEY FINDINGS

a. Debit cards were again this year the most preferred payment type, although we continued to see a downward trend in those who prefer debit. We observed a narrowing in the number of respondents who prefer to use their debit card over their credit card. This year, 41 percent of survey respondents preferred debit when given a choice versus 35 percent who preferred credit. The debit preference has fallen from 49 percent in 2013 and 43 percent in 2014 to 41 percent in 2015. During this same period credit preference has remained relatively constant at around 35 percent. The reduction in debit appears to be due to respondents preferring cash and PayPal or other alternative payments at a higher rate than that of last year’s study. We look forward to comparing these numbers in future studies to see any changes in these trends.

Every year, consumers take many actions when it comes to managing their fnances and making payments.

b. To get an idea of the type of actions consumers are taking, we presented them with a list of actions and asked them to choose all that applied. The top action consumers said they took over the past year was making a purchase using a credit card on fle at a retailer. Included in our list was whether they began saving more, paid down debt or borrowed to make a large purchase. Thirty-three percent of survey respondents said they paid down debt over the last year, 28 percent said they began saving more and 5 percent said they borrowed to make a large purchase. To best serve consumers’ needs it is crucial to understand the actions consumers are taking.

Loyalty and rewards are very important in driving consumer behavior and affecting their payment choices.

c. Consumers typically look for an incentive when choosing one payment option over another. Fifty-eight percent of our survey respondents said that they have a rewards program attached to their most preferred payment type. When looking only at the respondents who said their most preferred payment type was a credit card, 86 percent said there was a rewards program included with their card. This indicates that loyalty and rewards programs are even more important when consumers are choosing between multiple credit cards and not just one payment form over another. The responses to our survey also indicated that programs that provide cash back or cash equivalents are the most sought-after reward programs.

As traditional fnancial institutions (and their suppliers) increase their emphasis on innovation and non-

d. traditional companies begin offering fnancial services, the use of mobile devices to manage fnancial-related services remains a point of focus. Consumers are still more interested in using digital services that help them manage and protect their fnances than they are in using a mobile device to actually make a payment. As mobile payment offerings increase, there remains an opportunity to accelerate the adoption of the payment services. According to our survey responses, mobile applications provided by fnancial institutions are highly adopted and frequently used. The respondents to our survey most often used the fnancial institution mobile app to verify balances and view recent transactions. In order to increase mobile adoption in fnancial services and payments, it is important that industry participants understand how consumers are using their devices today and how they are interested in using the devices in the future.

e. Financial Institutions are constantly interacting with their customers through communication and marketing activities. New this year, we included questions in our survey such as “How would you like to receive communications?” and “How frequently would you like to receive communications?” The intent was to provide fnancial institutions and industry participants an understanding of how their consumers would prefer to interact with their fnancial services provider. The responses to our survey indicated that the most preferred frequency of marketing/special offer communications is once a month. Also, the most preferred communication channel of our survey respondents — across multiple communication types — was email. Although our respondents prefer email, the majority have not asked their fnancial institution to stop sending paper statements. Results indicate that it is important that fnancial institutions understand consumer communication preferences so they are able to effectively engage current and potential future customers.

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When given a choice, what payment form do you prefer?

. . . . . . . . . . .

. . . . . . . . . . .

2 0 1 3

2 0 1 4

2 0 1 5

Debit Credit 34%

Debit Credit 35%

Debit Credit 35%

49%

43%

41%

Q.

II. DETAILED FINDINGS A. Payment Preferences Eighty-two percent of respondents to the 2015 Consumer Payment Choice Study said that for the debit card they use most, the account is held at a bank. That was followed by 16 percent who said that the account is held with a credit union. Fifty-one percent answered that they also had a credit card from the same fnancial institution as the one that provides their debit card and 48 percent said that they did not. This indicates that there remains a large market of existing customers that fnancial institutions can target to increase credit card penetration. Thirty-fve percent of our respondents indicated they had at least one prepaid card, and 78 percent answered that they had a PayPal account or other online payment form.

In order to draw comparisons with previous studies, we again asked our respondents, “When given a choice what payment form do you most prefer?” Thirty-fve percent said that they preferred credit, while 41 percent said they preferred debit. In our 2014 survey thirty-fve percent preferred credit and 43 percent preferred debit. Since our survey in 2013, the percentage of people who prefer to pay using a credit card has remained about the same, while there has been a steady decline in the respondents that prefer to pay using a debit card. We have seen the use of PayPal and other online forms of payment being used by a growing number of respondents since 2013, likely due to the expansion of e-commerce. When asked “what payment form do you feel is safest to use for online purchases?” 34 percent of respondents answered credit cards and 28 percent answered PayPal, followed by debit cards at 17 percent. When we asked the same question for in-store purchases, 38 percent of respondents answered that they felt cash was safest, followed by 27 percent who answered credit and 24 percent who said debit.

Q. What payment form do you feel is safest to use for:

34%

O N L I N E P U R C H A S E S

38%

I N - S T O R E P U R C H A S E S

Credit Cash Paypal 28% Credit 27% Debit 17% Debit 24%

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Income and Age Effects on Payment Preferences Income and age have a defnite impact when it comes to consumers and their fnancial choices. People with higher income have more buying power and usually have access to more options in making payments and managing their fnances. Younger consumers may not have had a chance to build much credit or establish the earnings that give them a high level of buying power. When looking at payment preferences by income, we see that those respondents with a household income of less than $75,000 prefer debit, while households with an income of more than $75,000 prefer credit. The group that included the highest percentage of respondents who preferred credit was those with a household income of $75,000 to $100,000, followed closely by those with a household income of $150,000 or more. The credit preference in higher incomes could be attributable to the fact that these income levels allow more discretionary spending. This is consistent with responses from those who prefer to use credit, and could also be attributable to cardholders taking advantage of robust loyalty offerings from their credit card issuers.

In terms of the number of credit cards per income bracket, individuals with higher incomes typically have more credit cards than those in lower income brackets. This obviously signals stronger competition to be top-of-wallet at the higher income levels.

We also looked at payment preferences segmented by age. The only two groups preferring credit over debit were those respondents 35-44 and 65 and older. It is also interesting that those two groups were the highest in their preference for cash as well. Debit cards were the most preferred payment form among every other age group. We noticed that the group that most preferred PayPal or other alternative payment methods was the 18-24 age group. It is important that fnancial institutions understand the demographics of its cardholders to tailor products and offerings to meet customer needs and preferences.

B Y I N C O M E

Number of Credit Cards

What payment form do you prefer?

<$25,000

$25,000 – $50,000

$50,000 – $75,000

$75,000 – $100,000

$100,000 – $150,000

>$150,000 32%

59%

37%

52%

21%

60%

42%

38%

45%

28%

42%

21%

Debit Card Credit Card

B Y I N C O M E

What payment form do you prefer?

18 – 24

25 – 34

35 – 44

45 – 54

55 – 64

65 or older 32%

38%

39%

37%

43%

32%

35%

38%

49%

32%

47%

30%

Debit Card Credit Card

B Y A G E

30% 70%

64% 36%

46% 54%

54% 46%

39% 61%

34% 66%

0-2 credit cards More than two

<$25,000

$25,000 – $50,000

$50,000 – $75,000

$75,000 – $100,000

$100,000 – $150,000

>$150,000

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Payment Preference Differences by Merchant Type To get a better idea of how consumers prefer to pay in everyday situations, we again asked respondents to choose their preferred payment type based on a variety of merchant types and locations. In our 2015 survey, debit was again the most preferred payment type in locations that represent everyday spend — such as gas stations, supermarkets, discount stores and bill payment. The percentage of respondents who preferred debit either stayed the same or increased in these daily spend categories.

Credit remains the preferred payment type in locations that represent discretionary spending such as department stores, online shopping and online travel sites. This is likely attributable not only to discretionary spending categories, but also to the fexible payment opportunities that are available to consumers when they use their credit cards. Consumers indicated that there is a perceived safety to using a credit card online.

The respondents who preferred PayPal increased in our 2015 survey to 14 percent, up from 12 percent in 2014.

These numbers are still down from our 2013 survey, in which 22 percent of respondents preferred to use PayPal when shopping online. Cash continued to be the preferred payment type in categories that represent small-dollar transactions — such as fast food restaurants and coffee shops.

Although cash was still the most preferred, we did see a decrease in the percentage of respondents who prefer to use cash when paying at a fast food restaurant, so there was a resultant increase in those who prefer to use a debit card or credit card at those locations. This is likely due to a combination of factors, including the decrease of PIN or signature verifcation needed for smaller dollar transactions, and the advertising and marketing of apps and payment options for fast food and coffee locations. While this year’s results refected some changes in payment preference percentages, overall we continued to see that consumers prefer to use debit when making everyday purchases, credit when shopping online or making discretionary purchases, and cash when making small dollar payments.

Which form of payment do you use most often in each of the following locations?

Credit/Charge card Debit card Cash Pay-Pal

51%

Supermarket Gas station at Online Discount store Online Coffee shop Fast-food Dine-in Department

27%

43%

30%

14%

3%

22%

14%

25%

43%

22%

36%

28%

35% 36%

17%

34%

37%

32%

18%

3% 1% 2%

0%

39%

34%

17%

0%

17%

0% 2%

1%

12%

39%

33%

1%

the pump shopping travel sites restaurant restaurant store

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Payment Choice Infuencers There are quite a few variables that consumers have to consider when making payment choices and what may make a certain payment choice more attractive than others. We asked our respondents to choose what features they fnd most attractive in their preferred credit card. Fifty-fve percent of respondents answered that the rewards type was most attractive. That was followed by 33 percent who answered card brand, 32 percent who chose payment options/ fexibility and 30 percent who answered fnance charge/ interest rate. The ability to select card design was rated as the least infuential — only 11% chose that feature as the most attractive on their preferred credit card.

We asked survey respondents to rank features that could make any payment program more valuable. Features rated very highly were those that provided discounts or cash back, as well as fraud-related features. Fifty-four percent of respondents rated cash back discounts on purchases at specifc merchants that are “credited back to the account immediately” as very valuable. Discounts at participating

name-brand merchants were rated very valuable by 45 percent of respondents, while discounts from local merchants were rated very valuable by 42 percent of respondents. Discounts on purchases from the merchant who issued the card were rated very valuable by 43 percent of respondents. The conclusion from these responses is that rewards are the biggest infuencer of consumer payment choice.

As stated earlier, respondents also indicated that fraud-related features made payment programs more valuable. Forty-fve percent of respondents rated a card that contains a chip that allows it to be used worldwide and reduces counterfeit fraud as very valuable. This is very good news for those involved in the U.S. migration effort to move from magnetic stripe to chip cards.

Consumers have many choices in how they pay, and they are generally looking for options that are safe, convenient and fast. Those payment options that will provide them with added incentives — like rewards — infuence behavior.

52%

33%

30%

24%

22%

N/A

15%

14%

14%

55%

33%

32%

30%

24%

16%

16%

13%

11%

2015 2014 What feature(s) do you fnd most attractive on your preferred credit card?

Types of rewards

Card brand (Visa®, MasterCard®, AMEX®, Discover®)

Payment options / Flexibility

Finance charge / Interest rate

Customer service provided by the issuer of my card

Balance transfer options

Alerts / Mobile options

I only have one credit card

Ability to select my card design

54%

45%

45%

43%

42%

41%

40%

38%

29%

28%

26%

Response What feature(s) could make any payment program more valuable?

Cash back discounts on purchases at specifc merchants that are credited back to your account immediately.

Discounts on purchases with participating name-brand merchants

Card contains a computer chip which allows it to be used in payment terminals worldwide, as well as to reduce counterfeit card fraud risk

Discount on purchases from the merchant who issued the card (e.g., store branded credit card)

Discounts on purchases with local merchants

Alerts sent to your computer or mobile phone each time a purchase is made with the card

The ability to make online transactions using a special “one time-use” card number that can be used for only one purchase and protects your card number from being exposed to hackers.

The ability to converse with customer service representatives via online chat.

The ability to transfer money to another cardholder using an online or mobile phone app

The ability to use your smartphone to make a purchase using a specifc credit, debit or prepaid card account

A mobile phone app that can help you classify your purchases for budgeting or business/personal use

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Have you received a new card from your bank which has a chip?

Have you made a purchase inserting your card with a chip into a POS terminal, as opposed to swiping it?

Does your new chip card require you to use a pin?

No

Yes

No Yes 27%

Unsure13%

No 45% Unsure5%

Yes 40% Unsure17%

43%

50%

60%

Q.

Q.

Q.


2015 2014 2013 What actions did you take in the last year?

47%

N/A

28%

31%

N/A

29%

21%

21%

7%

21%

9%

10%

9%

N/A

47%

33%

32%

30%

28%

24%

22%

18%

13%

13%

11%

10%

7%

5%

48%

N/A

34%

32%

N/A

28%

21%

20%

7%

N/A

9%

13%

6%

N/A

I made a purchase(s) using a credit card I have on fle with the online retailer I shop with most often (Amazon, Google Play, iTunes, Etc.)

I paid down debt

I opened an account with PayPal to make online or in-store purchases

I made a purchase(s) using a debit card I have on fle with the online retailer I shop with most often (Amazon, Google Play, iTunes, Etc.)

I began saving more

I registered my credit card with the online retailer I shop with most often (Amazon, Google Play, iTunes, Etc.)

I registered my debit card with the online retailer I shop with most often (Amazon, Google Play, iTunes, Etc.)

I sent money to another person utilizing a “person to person” money transfer service separate from my online bill pay service

I began using a reloadable prepaid card (BlueBird, GreenDot, etc.)

I took none of these actions in the last year

I responded to a credit card solicitation I received in the mail

I took advantage of a discount I saw on my online statement

I made a payment at a retail location with my mobile device

I borrowed to make a large purchase

B. Consumer Actions We included questions in our survey that asked respondents what payment actions they took in the past year. This gave us the opportunity to compare these actions against responses received in previous years’ surveys. The top three actions taken in the past year by survey respondents: 47 percent made a purchase using a credit card that was on fle with an online retailer they shop with most often; 33 percent paid down debt; and 32 percent opened an account with PayPal to make online or in-store purchases. The chart below compares respondents’ actions over a three year period, where previous data exists. There were a couple of actions new to this year’s study.

We were interested in gauging the progress of chip card distribution in the United States. With the liability shift in October, we wanted to understand which consumers have received a chip card, whether they have made a chip transaction and if they were required to use a PIN during the transaction.

Twenty-seven percent of respondents said they have received a chip card from their bank, while 60 percent said they have not. Thirteen percent answered that they were unsure. Of those who stated they have received a chip card, 50 percent said they have made a purchase by inserting their card into a point-of-sale terminal as opposed to swiping it. Forty-fve percent answered that they have not made a purchase by inserting their card instead of swiping and fve percent were unsure. Forty percent of respondents said that a PIN was required when using their chip card, 43 percent said that a PIN was not required, and 17 percent answered that they were unsure.

The uncertainty in the answers from our respondents concerning chip cards supports other industry fndings concerning the importance of consumer education around chip cards and their use. This need for education will continue as chip cards are more widely distributed and more chip point-of-sale terminals are enabled.

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60%

Are you open to receiving coupons and special offers based on the information your fnancial institution collects about your purchase behavior?

For what do you most often redeem your reward points?

Yes

55% Cash

. . . . . . . . . . .

Q.

Q.


54%

43%

34%

34%

33%

32%

31%

29%

26%

26%

24%

18%

Response Mobile Interest

Use your phone to immediately stop a transaction that was not made by you

Instantly view transactions made with your debit or credit cards

The ability to use your phone to turn your payment card on or off to prevent unauthorized use based on the location where it is being used

Keep all your loyalty/rewards cards on your phone so you can present the right one when checking out

The ability to use your phone to turn your payment card on or off to prevent unauthorized use based on the type of store where it is being used

The ability to use your phone to turn your payment card on or off to prevent unauthorized use based on time day

Transfer money to another person, such as a family member or friend

Receive instant offers and promotions for the store you are visiting

Use a mobile app to change the PIN on your debit or credit card

Use your phone instead of a payment card to make purchases when checking out of a store

Store your government issued identifcation, such as a drive's license, on your phone

Use a wearable device, such as a smart watch, to make a payment

C. Loyalty and Rewards Loyalty and reward offerings remain the biggest infuencers in driving consumer payment behavior. Consumers are looking to receive something in return for choosing to use one payment type over another. This is especially true when deciding between multiple credit cards.

Consumers are not only interested in receiving discounts or special offers, but also may be willing to allow a fnancial institution to collect information about their purchase behavior in order to receive those offers. Sixty percent of our survey respondents answered yes when asked if they were open to “receiving coupons and special offers based on the information your fnancial institution collects about your purchase behavior.” We observed that respondents 55 and older were less likely to be open to the collection data relating to payment behavior.

Cash and cash equivalents were the most preferred types of rewards. Fifty-fve percent of respondents said that they most often redeemed reward points for cash and 26 percent answered that they most often redeemed for gift cards. That was followed by 9 percent who answered that they redeemed for travel, 8 percent for merchandise and 2 percent for dining.

D. Digital Engagement As the payments industry continues to evolve, consumers’ use of mobile-enabled fnancial and payment services is becoming more common. Products that allow consumers to integrate multiple forms of technology into their payment and fnancial management activities are offered by both traditional and non-traditional payment companies. The use of mobile phones during and around the payment process continues to be a hot topic in the industry.

New offers by mobile phone providers make this technology more widely accessible to consumers. Similar to what we

found last year, consumers remain, for now, more interested in fnancial management services available on mobile phones than the use of the phone in order to make an actual purchase. Fifty-four percent of respondents answered that they are interested in the ability to use their phone to immediately stop a transaction they did not make.

Forty-three percent of respondents answered that they are interested in being able to instantly view on their mobile device transactions that were made with their

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28% 27%

19% 18%

21% 19%

8% 10% 10% 9%

15% 16%

How likely are you to load your card information into a mobile device or application (mobile wallet) for purposes of making purchases?

Never Not likely Neutral Likely

Defnitely I have already loaded Card information onto the phone

Debit card information Credit card information

debit or credit card. Respondents to our survey were also interested in features that allow consumers to control their card by turning it on or off based on location, merchant type, time of day and the ability to store loyalty/rewards cards on their mobile device.

In order to get a better understanding of mobile phone adoption for purchases we asked survey participants how likely they are to load card information onto a mobile device or application to make purchases with debit cards and credit cards. We did not observe a signifcant difference in the respondents’ answers between debit cards and credit cards.

Twenty-fve percent of respondents answered that they would likely or defnitely load card information onto a mobile device in order to make purchases for both debit and credit cards. Ten percent of respondents said they have already loaded debit card information, and 8 percent said they have loaded credit card information.

Mobile apps provided by fnancial institutions have been widely adopted by consumers. We provided respondents with a list of mobile apps that were related to fnance or e-commerce and asked if they have the app installed on the phone and also the frequency of app usage. The number of respondents that have an app from their fnancial institution trailed only those who said they have installed the Amazon app or PayPal app on their mobile device. Fifty percent of survey respondents said that they have installed a mobile app from their fnancial institution, while 60 percent said that they have installed the Amazon app and 52 percent have installed the PayPal app on their device. Of the respondents who have a mobile app from their fnancial institution, 70 percent answered that they use the app a few times a month or more.

App Ownership and Usage

Amazon

PayPal

A banking app from your fnancial institution

eBay

Retailer apps (e.g. Best Buy, Target, Walmart, Kohl’s, etc)

Daily Deal apps (e.g.Groupon, Living Social, Retailmenot, etc)

National pharmacy (e.g. Walgreens, CVS, etc)

Grocery Store apps (e.g. Kroger, Safeway, Publix, Food Lion, etc)

Restaurant apps (e.g. Domino’s, McDonald’s, Burger King, etc)

Google Wallet

Membership based retailer (e.g. Sam’s Club, Costco, BJ’s, etc)

Starbucks

Etsy

Trip Advisor

Apple Passbook

Shopkick

Overstock

Uber

GrubHub

OpenTable

ShopSavvy

Redlaser

Urbanspoon/Zomato

LevelUp

59% 38%

52% 32%

50% 35%

46% 22%

40% 25%

37% 19%

36% 21%

35% 21%

30% 16%

27% 13%

26% 14%

25% 15%

25% 12%

15% 7%

15% 7%

14% 8%

22% 10%

22% 9%

20% 10%

19% 9%

17% 9%

16% 9%

16% 8%

20% 11%

Have the app Use at least a few times per month

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For what banking uses do you use your Mobile Banking App?

Other

Verify investments

Contact customer service

Make deposits

Make bill payments

Transfer funds

Verify recent transactions

Verify balance

70%

44%

43%

39%

14%

11%

3%

86%

Q.


We provided survey respondents with a list of eight uses and asked them how they use their mobile banking app. The top four reasons were to verify balance, verify recent transactions, transfer funds and make bill payments. Thirty-nine percent of respondents answered that they use their mobile app to make deposits, indicating adoption of a feature that fnancial institutions have incorporated into their mobile app to make remote banking easier for their customers.

E. Marketing and Communication In this year’s survey, we included some questions concerning marketing and communication. These questions covered things such as how often consumers would like to receive communication, through which channels they would prefer their fnancial institution to communicate and also if they are open to their fnancial institution collecting information about their purchase behavior in order to provide coupons and special offers. The answers gave us insight into how consumers generally would most like to engage with their fnancial institution.

We provided six types of communications and asked the respondents to choose which communication channel they would most prefer from their fnancial institution. The options were: do not send; mail; email; text; phone; and social media. The communication types were: marketing/special offers; availability of new products; change in terms of your account (interest rate, fees, etc.); potential unauthorized use of your account; signifcant change to your account (address change, new card request, etc.); and purchase transactions.

E-mail was the most preferred channel of communication across all of the communication types. This was especially true when respondents were asked about purchase transactions, where 46 percent preferred to receive such communication by email. When answering specifcally regarding changes in

Please select the preferred channel when receiving the following types of communications from your fnancial institution.

Do not send Mail Email Text Phone Social media

46% 43%

39% 38% 36%

35% 34% 30%

27% 26% 23% 22%

20% 19% 19% 18%

15% 13% 13% 12% 11% 10% 9%

6% 5% 7% 4% 2% 3% 3% 2% 3% 2% 2% 2% 2%

Marketing/ Availability of Change in Terms Potential Unauthorized Signifcant Change to Purchase Transactions Special Offers New Products of your Account Use of your Account your Account (Address Change,

(Interest Rate, Fees, etc.) New Card Request, etc.)

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How frequently would you like to receive marketing/special offer communications from your bank?

Have you asked your bank to stop sending you paper statements?

43% Once a month

55% No

. . . . . . . . . . .

Once a year

Never

Once a week

I want the ability to decide how often

20%

20%

12%

5%

Q.

Q.

terms, mail was a close second to email. Phone followed email closely when respondents answered specifcally about potential unauthorized use of their account. We also asked respondents if they have asked their fnancial institutions to stop sending paper statements — 55 percent of them answered no. It seems that although mail is not the preferred communication type, and most respondents prefer e-mail, many consumers are still receiving their monthly statements via U.S. mail.

When asked about the frequency of marketing/special offer communications, 43 percent of respondents answered that they would prefer to receive these communications once a month. That was followed by once a week and the ability to decide frequency at 20 percent each. Twelve percent of respondents answered that they prefer to never receive marketing/special-offer communication, and 5 percent

answered that they preferred once a year. Sixty percent of survey respondents answered that they are open to receiving coupons and special offers based on information their fnancial institution collects about their purchase behavior. It is important for a fnancial institution to understand their customers’ preferences around marketing and communication to ensure that they are most effective when engaging the customer.

III. Issuer Implications Chip Cards and Digital Engagement With the U.S. roll-out of chip cards and the emphasis on increasing the availability and adoption of mobile-enabled services, it is important that fnancial institutions understand consumers’ knowledge, interest level and preferences regarding these offerings. The majority of our survey respondents have yet to receive a chip card and some respondents were unsure if they have received one. Half of survey participants who have received a chip card said that they have used the card by inserting it into a POS terminal as opposed to swiping the card — and again some respondents were unsure if they have made a purchase by inserting their card.

Forty-three percent of respondents said that their chip card required them to use a PIN and 17 percent were once again unsure. Due to the uncertainty of our respondents concerning chip cards and the variances in answers obtained between different industry surveys asking similar questions, we believe that there needs to be a strong and continued focus on consumer and merchant education. The chip card is designed to provide a safer payment option for the consumer by reducing counterfeit fraud. It is important that consumers understand how to use their chip card and the added protection provided by the introduction of this technology in the United States.

The availability of mobile-enabled fnancial services continues to grow as new products are offered and more companies begin to compete in the payments’ space. Consumers are still more interested in using their mobile phones for account servicing and monitoring than for using their mobile devices to make purchases. There is ample opportunity to increase the use of mobile phones for purchases and the introduction of Apple Pay in 2014 and Android Pay and Samsung Pay in 2015 are likely to contribute to a continued rise in use.

We found in our survey that the adoption of mobile apps provided by fnancial institutions is relatively high. These apps are also used very frequently by consumers who have loaded them onto their mobile devices. Respondents to our survey said that they most commonly use these mobile apps for activities like checking balances, viewing recent transactions,

12 www.tsys.com


paying bills and transferring money. We also had a signifcant number of respondents say that they use their mobile app to make deposits. As the industry continues to increase offerings which utilize digital technology, participants must provide options that give consumers the products and services they desire most.

Marketing and Communication Financial institutions are constantly communicating with their consumers and inviting them to take advantage of new products and offers. In order for that communication to be most effective, it is imperative that fnancial institutions understand the communication preferences of consumers — which in turn could increase customer engagement, adoption and satisfaction. Customers want their fnancial institutions to communicate in a way that is convenient to them and is accessible at any time — and they do not want to be overwhelmed with marketing offers.

Our survey respondents indicated that the preferred frequency of marketing offers is once a month delivered by email. We consistently observed the preferred communication channel as email across multiple communication types. Interestingly, even with e-mail being the preferred type of communication (and our respondents indicating that they are checking balances and activity on their mobile devices and PCs), 55 percent of them said that they have not asked their fnancial institutions to stop sending paper statements.

As we move into an environment where people are accessing their information in new ways, they are still continuing to receive information through traditional methods. When industry participants structure communication strategies, they must understand consumer preferences.

Rewards and Special Offers As in previous studies, we continued to see rewards — particularly cash — as the biggest driver of consumer payment choice. This is especially true for consumers who prefer to pay using their credit cards and are choosing between multiple credit cards. The majority of survey respondents said that the type of reward is what they fnd most attractive about their preferred credit card. Reward programs that provide cash or cash equivalents are defnitely the most sought after by consumers. When asked for what they most often redeemed their reward points, 55 percent of respondents answered cash rebates. When trying to infuence consumers to add a particular card to their wallet or use a particular card over other cards in their wallets, it is important that they are offered a loyalty program that incentivizes and rewards them for choosing that card over any other.

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IV. ABOUT THE ONLINE SURVEY RESPONDENTS We surveyed more than 1,000 consumers who owned a debit card and a credit card. Fifty percent of respondents were men and 50 percent were women. Survey demographics were geographically proportionate by region. Primary debit card relationships were mainly with banks (82 percent) followed by credit unions (16 percent). Fifty-one percent of respondents have a credit card provided by the same institution that provides their debit card. Additional information regarding our survey respondents follows:

Age

18%

17%

17%

17%

14%

17%

18-24 25-34 35-44 45-54 55-64 65 or older

Education

30%

26%

9%

2%

33%

Some high school Graduated high school Some college - no degree Graduated college (2 or 4 year) Post graduate degree

Employment

8%

43% 8%

6%

22%

13%

Employed full- or Self-employed or part-time small business owner Homemaker Student Unemployed Retired

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Income

4% 2%

7% 20%

10%

24% 33%

< $25,000 $25,000 — $50,000 $50,000 — $75,000 $75,000 — $100,000 $100,000 — $150,000 > $150,000 Prefer not to answer

Region

21%

South Midwest

Mobile Device Type

An Android-based smartphone

A tablet

A basic voice and text messaging cell phone

An Apple iPhone

Do not own a mobile phone of any type

A Microsoft-based smartphone

Another type of smartphone

A wearable (watch type)

A BlackBerry smartphone

6%

4%

3%

2%

2%

0%

26%

24%

40%

48%

50%

22%

35%

Northeast West

22%

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www.tsys.com


to learn more

contact 1.706.649.2307 or email [email protected].

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About TSYS At TSYS® (NYSE: TSS), we believe payments should revolve around people, not the other way aroundSM . We call this belief “People-Centered Payments®.” By putting people at the center of every decision we make, TSYS supports fnancial institutions, businesses and governments in more than 80 countries. Through NetSpend®, a TSYS company, we empower consumers with the convenience, security, and freedom to be self-banked. TSYS offers issuer services and merchant payment acceptance for credit, debit, prepaid, healthcare and business solutions.

TSYS’ headquarters are located in Columbus, Ga., U.S.A., with local offces spread across the Americas, EMEA and Asia-Pacifc. TSYS is a member of The Civic 50 and was named one of the 2013 World’s Most Ethical Companies by Ethisphere magazine. TSYS routinely posts all important information on its website. For more, please visit us at www.tsys.com.

© 2015 Total System Services, Inc.®. All rights reserved worldwide. Total System Services, Inc., and TSYS® are federally registered service marks of Total System Services, Inc., in the United States. Total System Services, Inc., and its affliates own a number of service marks that are registered in the United States and in other countries. All other products and company names are trademarks of their respective companies. (08/2015)

tsys 2015 u.s. consumer payment study · 2020-02-24 · 2015 u.s. consumer payment choice study...

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