Key Takeaways from the 2017 TSYS U.S. Consumer Payment Study

There are a few things in this year's U.S. Consumer Payment Study that may surprise you  – People are buying groceries using their Amazon Alexa. Other trends may not – Who wouldn't have guessed that people are shopping online like never before?

Key Takeaways from the 2017 TSYS U.S. Consumer Payment Study

Key Takeaways from the 2017 TSYS U.S. Consumer Payment Study

John Carroll

John Carroll

John Carroll is a writer and editor at TSYS who follows and writes about the payments industry. He has more than 20 years of experience writing and editing content for various news, marketing and technical channels.

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There are a few things in this year's U.S. Consumer Payment Study that may surprise you – People are buying groceries using their Amazon Alexa. Other trends may not – Who wouldn't have guessed that people are shopping online like never before?

From banking apps to customer loyalty programs, consumers expect to engage with financial institutions and retailers through digital experiences and mobile devices. And while mobile and emerging payment technologies provide people with more choices, the use of traditional payments remains steady.

Surprise or no surprise, our seventh annual study identifies attitudes, behaviors and trends around payments by surveying roughly 1,200 consumers with at least one debit and one credit card.

Here are six key takeaways.

The future of shopping is AI-driven

In the last few years, the use of intelligent personal assistants has grown with the emergence of voice-activated speakers such as Amazon's Alexa, Google Home and Microsoft's Cortana.

According to the survey results, of the 26 percent of people who own these artificial intelligent (AI)-powered devices, they primarily use them for music, news and informational purposes. But consumers are also using them for placing orders and purchasing items, the study shows. In fact, nearly half (47 percent) of consumers who own intelligent personal assistants are already using them to shop and buy goods and services.

About 26% of consumers use AI-powered devices such as Google Home, Amazon's Echo/Dot (Alexa) and Microsoft's Cortana.

Mobile adoption gains ground

Paying for goods using a digital wallet on a mobile phone is growing every year, according to the study. And the appetite for using digital wallets remains strong. The study shows the percentage of people using digital wallets to pay for goods and services through their smart phones will likely continue to grow over time. In 2017, 51 percent of consumers expressed an interest in using a digital wallet instead of a traditional plastic card when checking out at a store, up from 39 percent in 2015.

Among consumers who have already loaded their debit or credit card to a mobile wallet or are definitely or likely to do so, 68 percent of consumers plan to make 50 percent or more of their in-store purchases using their digital wallet within the next two years. This suggests the tipping point for mobile wallet usage may be just around the corner.

When it comes to other mobile features, 72 percent of consumers are interested in being able to instantly view transactions made with their debit or credit cards, up from 60 percent in 2015. The other most desired mobile features were focused on security and fraud prevention. The study shows consumers have significant interest in using their phones to manage their accounts and perform activities such as stopping unauthorized transactions or turning off a card to prevent unauthorized use.

Mobile Wallets Gain on Physical Card Payments

Millennials love P2P payments

Mostly younger consumers use peer-to-peer (P2P) payments, such as PayPal, Venmo and Square Cash, according to the study. But overall adoption is likely to grow higher as some of the nation's top banks launch P2P services like Zelle.

Of the 71 percent of respondents who have not used P2P, a significant portion, 42 percent, said they would be "very likely" or "somewhat likely" to use it in the next year. Among those 25-34 years old, 64 percent said they would likely use a P2P service in the coming year.

One reason consumers refrain from using P2P is the perceived security concern. The over 55 age group had the greatest concern about security, at 45 percent, compared to 29 percent of the 18-24 age group. But having a P2P solution provided by a bank is expected to help alleviate security concerns and drive increased adoption.

Consumers (especially affluent ones) want rewards programs

In 2017, 75 percent of consumers had a credit card with a rewards program, up from 69 percent in 2016 and 58 percent in 2015. Cash rebates continue to be the most popular reward, followed by travel and gift cards.

The study shows that 68 percent of consumers rated rewards as one of most attractive features on their preferred credit cards, an increase from 59 percent in 2016.

More affluent consumers, those with incomes of $75,000 or more, used cards with these programs more than others, although this may be attributed to rewards programs already attached to their preferred card. Lower income consumers did not respond highly for loyalty programs.

Rewards Poised to Gain Traction

Use of mobile banking apps rising

Consumers continue to turn to mobile banking apps to do their banking. Consumers' use of banking apps increased from 46 percent in 2015 to 63 percent in 2017.

Most people use mobile banking apps to verify balances and transactions, and transfer funds. The study also found that consumers increasingly use banking apps to verify investments and contact customer service.

Use of Mobile Banking Apps Increases 63% of consumers are using banking apps from their financial institutions (FIs) to access their information on their mobile device.

Debit, credit and cash are still king

Despite the rise of newer payment methods, such as mobile wallets and Bitcoin, consumers still prefer to pay for things the old-fashioned way with debit, credit or cash, according to the study.

In 2017, debit (44 percent) was the most preferred method of payment by consumers, followed by credit (33 percent), and then cash (12 percent). This trend has been consistent over the last five years, with the exception of credit overtaking debit in 2016.

Consumers continue to prefer debit for routine purchases at the gas station, supermarket and discount store. Credit continues to be the most popular way to pay at department stores and online.

To read more from our annual U.S. Consumer Payment Study, click here.

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by John

John Carroll

John Carroll is a writer and editor at TSYS who follows and writes about the payments industry. He has more than 20 years of experience writing and editing content for various news, marketing and technical channels. His articles have published in the Atlanta Journal-Constitution, the Columbus Ledger-Enquirer, the Daily Report and Georgia Trend.

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