Consumers Demand Choice and Variety
By Roy Urrico
Finopotamus aims to highlight white papers, research, surveys and reports that provide a glimpse as to what is taking place and/or impacting credit unions and other organizations in the financial services industry.
The 2022 Eye on Payments study from St. Petersburg, Fla.-based PSCU, which bills itself as “the nation’s premier payments credit union service organization (CUSO),” found choice and variety emerging as important factors driving consumer preferences and behavior amid economic uncertainty.
For the fifth year in a row, PSCU set out to measure payment favorites among credit union members and other financial institution customers. This year’s study also focused on the timeframe from 2018, the first year PSCU released the report, to its latest report in 2022.
“As we have seen since the inaugural study, consumer preferences are constantly shifting in response to economic and social events – whether that be the COVID-19 pandemic or an uncertain economic outlook, among other factors,” said Chuck Fagan, president and CEO of PSCU.
PSCU surveyed more than 1,750 credit union members and non-members from across the U.S. The online survey, conducted in June and July 2022, was taken by participants ages 18 to 65-plus. Of those surveyed, 44% were male and 56% were female, and demographic characteristics of those surveyed align with consumer data from CUNA.
Payment Preference Findings
“It should come as no surprise that the economy has been top of mind for consumers throughout 2022,” noted the report. “Nonetheless, when the survey was fielded, nearly nine out of 10 respondents (87%) agreed they were worried about the economic outlook, while three-quarters (74%) also reported they were concerned about their personal finances. Younger consumers are more concerned about their personal finances than those ages 58 and above.
PSCU’s study also revealed 61% of those surveyed intend to make payments in a variety of ways. When asked how likely they are to use a particular payment method in the next six months to pay for goods and services, more than 75% said they planned to use at least one of the methods most readily available – debit (88%), credit (76%) and cash (88%).
But consumers are not just reaching for their traditional wallets: over half plan to use a digital payment solution like Venmo in the next six months and approximately four in 10 expect to use their mobile wallet or store-specific mobile payment app to pay for goods and services.
Payments Their Way
“For many, having the option to choose the product, service or offering that fits their needs makes them feel more in control,” said Tom Pierce, chief marketing officer at PSCU. “At a time when unprecedented events are impacting the economy and, in turn, personal finances, it makes sense that choice and variety are also influencing how consumers are making purchases and transacting.”
The Eye on Payments study also pointed out that variety and choice also ring true when it comes to how consumers prefer to interact with their trusted financial partner.
At least half of credit union members reported they interact with their credit union by visiting a branch (53%), on the credit union’s website (52%) and/or calling on the phone (49%). Nearly four in 10 (37%) use the credit union’s mobile app, followed by 19% emailing or utilizing online chat functions.
In addition, 54% of all respondents say they make payments or conduct banking via their mobile phone, an increase of almost 15% since 2019. Nearly three out of four respondents (74%) report they also set up alerts on their mobile phones to better manage their credit or debit card.
Additional Takeaways
Other key findings from the study include:
· For the fourth consecutive year, debit remains the overall preferred way to pay, with credit union members favoring debit cards (46%) slightly more than non-members (42%). That said, there is a discrepancy emerging between what members are reporting as their preferred payment method compared to what they are actually using, as evidenced by data from the monthly PSCU Payments Index. When asked what payment method they are most likely to use in the next six months, nearly the same percentage reported they would turn to credit (76%) as debit (80%).
· Income level influences preference between credit and debit. Respondents with a below average annual household income have a strong preference toward debit, while credit is preferred by respondents with an average or above average household income.
· Use of digital payments solutions, including Venmo, Zelle and PayPal, among others, is on the rise: 59% of all respondents reported using digital payment methods at least periodically – a 40% increase from 2019 – with one in 10 citing it as their primary payment method.
· From 2019 to 2022, there was a 35% increase in respondents that reported using a mobile wallet in the past 60 days to pay for something in a physical store.
· Those reporting they use a contactless card a few times per week has increased by 53% since 2020, indicating that some behavioral shifts brought on by the pandemic are here to stay.
· Twenty percent of all respondents applied for a new credit card within the last 12 months. Of those who applied, 75% received approval or denial in real time and nearly 90% of respondents who received a real-time response were at least somewhat satisfied with the process.
· Respondents continued to report interest in cryptocurrency, but only 19% of all respondents have actually invested in or hold crypto.
· Seventy-eight percent have not engaged in a metaverse experience in the last year but, of those who have, 73% purchased, monetized, or sold real or virtual products or services.