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Consumer Payment Preferences and Behavior - US - March 2013

“Mobile payments have been ‘the next great thing’ for several years now, but with very low adoption rates for even the best-known products, the reality has yet to meet the promise. However, it seems that change is coming, as innovations in the mobile payment space are being announced and piloted at breakneck speed. The expanded features of the new services being offered together with the increased penetration of smartphones mean that the speed and convenience of mobile payments are on their way.”

–  Robyn Kaiserman, Financial Services Industry Analyst


 

The consumer payment landscape is changing rapidly as innovations in mobile technology are creating new opportunities for both companies and consumers virtually every day.

The options consumers have for how they pay their bills, make their purchases, and pay each other have changed radically. From simple cash to complex mobile wallets, consumers now have a plethora of payment methods from which to choose, although some of the newest entrants into the field are not easily accessible to everyone. While there is no doubt that mobile payments are the payment method of the future, it still remains to be seen how long it will take for consumers to get comfortable with them and integrate them into their everyday lives.

This report looks at the following:

  • What is the state of the payments industry and how is payment behavior changing?
  • What challenges remain for consumers to overcome their hesitance at using mobile payments?
  • What consumer segments offer the greatest potential for using mobile payment solutions?
Mintel selects survey respondents so that they are proportionally balanced to the entire U.S. adult population based on the key demographics of gender, age, household income, and region.
 
Companies mentioned in this report:
  • American Express
  • Bank of America
  • Chase
  • Citigroup
  •  Discover
  • Google
  • MasterCard
  • PayPal

 

 

Liqueurs - UK - January 2012

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Comperemedia
            • Abbreviations and terms
              • Abbreviations
                • Terms
                  • Companies mentioned in this report
                  • Executive Summary

                      • The market
                        • Credit card and debit card transaction volume
                          • Figure 1: Total payments volume for the four largest payments networks, 2011-12
                        • The consumer
                          • Unbanked and underbanked as potential markets
                            • Credit card income down as consumers cut back
                              • Figure 2: Net income from credit cards at large credit card issuers, 2011-12
                            • Most like to pay with credit or debit cards, but preferences vary by age
                              • Figure 3: Preferred payment method by type of purchase, net across all transactions, November 2012
                              • Figure 4: Usage of payment method for any type of transaction, net across all transactions, by age, November 2012
                            • Prepaid cards offer an opportunity
                              • Figure 5: Belief that prepaid cards help control spending, by generation, November 2012
                            • More interest in prepaid than in online payment methods
                              • Figure 6: Interest in payment method alternatives, November 2012
                            • The industry
                              • Visa is the leader in card payment volume
                                • Figure 7: US. annual credit and charge card payment volumes, 2006-12
                              • Visa is also the leader in debit cards
                                • Figure 8: Visa and MasterCard annual debit card purchase volume, 2005-12
                              • PayPal is the most familiar payments brand
                                • Figure 9: Five most familiar payment brands, November 2012
                              • Mobile phone payments have a security challenge
                                • Figure 10: Perceived security of payment methods, November 2012
                              • Market drivers
                                • Sales of smartphones continue to rise, albeit more slowly
                                  • Figure 11: Historical U.S. smartphone sales and Mintel 2013 forecast, 2007-13
                                • Tablet sales are growing, too
                                  • Figure 12: Growth of tablet unit sales, 2009-12
                                • Demographics of mobile device ownership will help mobile payments
                                  • Figure 13: Smartphone and tablet ownership, by age, February 2012
                                • What we think
                                • Issues in the Market

                                    • Why aren’t consumers using mobile payments?
                                      • Figure 14: Reasons for not using mobile phone as a payment device, November 2011
                                    • What needs to change to encourage usage?
                                    • Insights and Opportunities

                                      • Key points
                                        • Move check writers to prepaid cards or online banking
                                          • Figure 15: Interest in payment alternatives, by generation, November 2012
                                        • Prepaid cards
                                          • Figure 16: Usage of prepaid cards for any type of transaction, by age, November 2012
                                          • Figure 17: Attitudes about prepaid cards as a means to control spending, by age, November 2012
                                          • Figure 18: Attitudes about prepaid cards as a means to control spending, by household income, November 2012
                                        • Unbanked and underbanked represent potential
                                          • Prepaid cards
                                            • Mobile payments
                                              • What are those concerns?
                                                • Mobile wallets
                                                  • Additional uses for NFC technology will increase use of mobile wallets
                                                  • Trend Applications

                                                      • Trend: Help Me Help Myself
                                                        • Industry application
                                                          • Trend: Prepare for the Worst
                                                            • Trend application
                                                              • Mintel Futures: Access Anything, Anywhere
                                                                • Industry applications
                                                                • Market Size

                                                                  • Key points
                                                                    • Noncash payments continue to grow
                                                                      • Figure 19: Number of noncash payment transactions, by payment method, 2006, 2009 and 2010
                                                                    • Credit card and debit card transaction volume
                                                                      • Figure 20: Total U.S. credit card and debit card transaction volume, 2011-12
                                                                    • Credit card vs. debit card growth
                                                                      • Figure 21: U.S. Visa and Mastercard credit vs. debit volume, 2011-12
                                                                    • Consumer debt staying stable
                                                                      • Figure 22: Amount of revolving consumer debt in U.S., 2008-12
                                                                    • Average credit card balance inching up
                                                                      • Figure 23: Average credit card balance per borrower, Q1 2009-Q4 2012
                                                                  • Competitive Context

                                                                    • Key points
                                                                      • Payment brands still largely unknown
                                                                        • Figure 24: Consumer familiarity with payment method brands, November 2012
                                                                        • Figure 25: Consumer familiarity with payment method brands, November 2012
                                                                      • SWOT analysis of leading mobile wallet companies
                                                                        • Google Wallet
                                                                          • PayPal
                                                                            • V.me by Visa
                                                                              • MasterCard PayPass
                                                                              • Segment Performance

                                                                                • Key points
                                                                                  • Credit card income down as consumers cut back
                                                                                    • Figure 26: Net credit card income for largest credit card issuers/networks, 2011-12
                                                                                    • Figure 27: Credit card delinquency and charge-off rates at all commercial banks, not seasonally adjusted, 2008-12
                                                                                  • Check usage continues to decline
                                                                                    • Figure 28: Preference for writing checks for any transaction, by age, November 2011
                                                                                    • Figure 29: Number of checks processed by the Federal Reserve, 2001-12
                                                                                    • Figure 30: Average value of commercial checks collected by the Federal Reserve, 2011-12
                                                                                  • Prepaid cards
                                                                                    • Figure 31: Dollars loaded onto closed loop and open loop prepaid cards, 2003-11
                                                                                    • Figure 32: Usage of prepaid cards at point-of-sale, by age, November 2012
                                                                                • Market Drivers

                                                                                  • Key points
                                                                                    • The economy is in limbo
                                                                                      • Figure 33: Changes in personal income, consumer expenditures, and personal savings, Jan 2012-Jan 2013
                                                                                    • Increased availability of NFC-enabled devices
                                                                                      • Sales of smartphones continue to rise, albeit more slowly
                                                                                        • Figure 34: U.S. sales of smartphones, 2007-13
                                                                                        • Figure 35: Smartphone vs. feature phone sales, number of units, 2006-12
                                                                                      • Tablet sales are growing, too
                                                                                        • Figure 36: Total sales revenue for tablet computers, 2009-12
                                                                                        • Figure 37: Tablet computers – total units sold, 2009-12
                                                                                      • Demographics of mobile device ownership will help mobile payments
                                                                                        • Figure 38: Smartphone and tablet computer ownership, by age, February 2012
                                                                                      • Consumers are focused on reducing their debt
                                                                                        • Figure 39: Financial goals for the next 12 months, August 2012
                                                                                    • Leading Companies

                                                                                      • Key points
                                                                                        • Visa is the leader in card payment volume
                                                                                          • Figure 40: US. annual credit and charge card payment volumes for major networks, 2006-12
                                                                                        • MasterCard’s loss is American Express’ gain
                                                                                          • Figure 41: Annual credit and charge card payment volume market share for major networks, 2006-12
                                                                                        • Visa dominates debit cards
                                                                                          • Figure 42: Number of debit cards in circulation, as of Dec. 31, 2012
                                                                                          • Figure 43: Visa and MasterCard annual debit card purchase volume, 2005-12
                                                                                          • Figure 44: Visa and MasterCard transaction volume, 2005-12
                                                                                      • Innovations and Innovators

                                                                                        • Key points
                                                                                          • Visa and Samsung team up
                                                                                            • Citibank’s Price Rewind
                                                                                              • U.S. Bank is introducing mobile photo bill pay
                                                                                                • AmEx and Twitter team up
                                                                                                  • Facebook gift cards
                                                                                                    • PayPal continues its expansion
                                                                                                      • Chicago Transit Authority now uses contactless payments
                                                                                                        • MasterCard MasterPass
                                                                                                          • Paydragon simplifies online shopping and paying even more
                                                                                                            • Moven’s move into mobile banking
                                                                                                              • Justin Bieber’s new prepaid card
                                                                                                              • Marketing Strategies

                                                                                                                • Key points
                                                                                                                  • Direct mail advertising – segmentation data
                                                                                                                    • Credit card mailings targeting affluents
                                                                                                                      • Figure 45: P$YCLE segment as a proportion of the population, indexed to proportion of mailings, April 2012-January 2013
                                                                                                                      • Figure 46: Top five direct mailers – Nielsen P$YCLE segmentation segments targeted, April 2012-January 2013
                                                                                                                    • Top mailers are targeting many of the same segments
                                                                                                                      • Figure 47: Wealth Achievers segment – percent of segment targeted by DM mailers, April 2012-January 2013
                                                                                                                      • Figure 48: Targeting by household net worth – top mailers, April 2012-January 2013
                                                                                                                    • Direct mail advertising creatives
                                                                                                                      • Figure 49: Target direct mail advertisement, 2012
                                                                                                                      • Figure 50: Chase direct mail advertisement, 2013
                                                                                                                      • Figure 51: Sam’s Club direct mail advertisement, 2013
                                                                                                                    • Print advertising
                                                                                                                      • Figure 52: Fifth Third print advertisement, 2012
                                                                                                                      • Figure 53: Arizona Bank & Trust print advertisement, 2012
                                                                                                                      • Figure 54: TD Bank print advertisement, 2013
                                                                                                                    • Email advertising creatives
                                                                                                                      • Figure 55: American Express email advertisement, 2013
                                                                                                                      • Figure 56: Discover email advertisement, 2013
                                                                                                                      • Figure 57: Wells Fargo email advertisement, 2013
                                                                                                                    • Online advertising
                                                                                                                      • Figure 58: PayPal online advertisement, 2011
                                                                                                                      • Figure 59: Visa online advertisement, 2013
                                                                                                                      • Figure 60: Sovereign-Santander bank online advertisement, 2012
                                                                                                                    • Television advertising
                                                                                                                      • Figure 61: MasterCard/Google Wallet television ad, 2011
                                                                                                                      • Figure 62: Square Wallet television ad, 2012
                                                                                                                      • Figure 63: V.me television ad, 2012
                                                                                                                  • Consumer Payment Preferences by Type of Purchase

                                                                                                                    • Key points
                                                                                                                      • Credit and debit cards are favored
                                                                                                                          • Figure 64: Preferred payment method by type of purchase, November 2012
                                                                                                                          • Figure 65: Overall preferred payment method, by age, November 2012
                                                                                                                          • Figure 66: Overall preferred payment method, by household income, November 2012
                                                                                                                          • Figure 67: Overall preferred payment method, by race/Hispanic origin, November 2012
                                                                                                                        • Payment method used for small purchases
                                                                                                                            • Figure 68: Preferred payment method for everyday items such as gasoline & food, by age, November 2012
                                                                                                                            • Figure 69: Preferred payment method for everyday items such as gasoline & food, by household income, November 2012
                                                                                                                          • Purchasing medium-ticket items
                                                                                                                            • Figure 70: Preferred payment method for medium-priced ticket items such as clothing, by gender and age, November 2012
                                                                                                                          • Purchasing large-ticket items
                                                                                                                              • Figure 71: Preferred payment method for large-ticket items such as a television or furniture, by gender and age, November 2012
                                                                                                                              • Figure 72: Preferred payment method for large-ticket items such as television or furniture, by household income, November 2012
                                                                                                                            • Online purchases
                                                                                                                                • Figure 73: Preferred payment method for online purchases, by gender and age, November 2012
                                                                                                                                • Figure 74: Preferred payment for online purchases, by race/Hispanic origin, November 2012
                                                                                                                              • Paying bills
                                                                                                                                • Figure 75: Preferred payment method for paying bills such as mortgage payments or utilities, by household income, November 2012
                                                                                                                                • Figure 76: Preferred payment method for paying bills such as mortgage payments or utilities, by generation, November 2012
                                                                                                                              • Paying friends and family
                                                                                                                                • Figure 77: Preferred payment method for paying money owed to family, friends, baby sitters, etc, by age, November 2012
                                                                                                                            • Brand Familiarity

                                                                                                                              • Key points
                                                                                                                                • Brand recognition highest for PayPal
                                                                                                                                  • Figure 78: Familiarity with payments brands, by household income, November 2012
                                                                                                                                  • Figure 79: Familiarity with payments brands, by region, November 2012
                                                                                                                                  • Figure 80: Familiarity with payments brands, by generation, November 2012
                                                                                                                              • Credit Card Ownership

                                                                                                                                • Key points
                                                                                                                                  • Credit card ownership depends on age, gender, race
                                                                                                                                    • Figure 81: Ownership of credit cards, by gender and age, November 2012
                                                                                                                                    • Figure 82: Ownership of credit cards, by race/Hispanic origin, November 2012
                                                                                                                                • Card Ownership and Payment Behavior

                                                                                                                                  • Key points
                                                                                                                                    • Most people pay off monthly credit card balances
                                                                                                                                      • Figure 83: Type of credit card owned and payment behavior, by gender and age, November 2012
                                                                                                                                      • Figure 84: Type of credit card owned and payment behavior, by household income, November 2012
                                                                                                                                      • Figure 85: Type of credit card owned and payment behavior, by region, November 2012
                                                                                                                                  • Shopping for Credit Cards

                                                                                                                                    • Key points
                                                                                                                                      • Reasons for applying for cards
                                                                                                                                        • Figure 86: Reasons for applying for credit card, by age, November 2012
                                                                                                                                        • Figure 87: Reason for applying for credit card, by gender and age, November 2012
                                                                                                                                    • Attitudes toward Credit and Debit Card Usage

                                                                                                                                      • Key points
                                                                                                                                        • Credit and debit card usage preferences
                                                                                                                                          • Figure 88: Attitudes toward credit and usage of credit and debit cards, by household income, November 2012
                                                                                                                                          • Figure 89: Attitudes toward credit and usage of credit and debit cards, by household income, by generation, November 2012
                                                                                                                                          • Figure 90: Attitudes toward credit and usage of credit and debit cards, revolvers and transactors, November 2012
                                                                                                                                          • Figure 91: Attitudes toward credit and usage of credit and debit cards, revolvers and transactors, November 2012
                                                                                                                                      • Perceptions of Security of Various Payment Methods

                                                                                                                                        • Key points
                                                                                                                                          • Mobile payments seen as far less secure than all other methods
                                                                                                                                            • Figure 92: Attitudes about payment method security, by type of payment, November 2012
                                                                                                                                            • Figure 93: Attitudes about payment method security, by generation, November 2012
                                                                                                                                        • Interest in Payment Method Alternatives

                                                                                                                                          • Key points
                                                                                                                                            • Interest in low fee prepaid card higher than new mobile services
                                                                                                                                              • Figure 94: Interest in payment method alternatives, by gender, November 2012
                                                                                                                                              • Figure 95: Interest in payment method alternatives, by household income, November 2012
                                                                                                                                              • Figure 96: Interest in payment method alternatives, by generation, November 2012
                                                                                                                                          • Cluster Analysis

                                                                                                                                                • Figure 97: Target clusters, November 2012
                                                                                                                                                • Figure 98: Preferred payment method by type of purchase, November 2012
                                                                                                                                                • Figure 99: Preferred payment method for purchasing small everyday items such as gasoline & food, by target clusters, November 2012
                                                                                                                                                • Figure 100: Preferred payment method for purchasing medium-priced ticket items such as clothing, by target clusters, November 2012
                                                                                                                                                • Figure 101: Preferred payment method for purchasing large-ticket items such as a television or furniture, by target clusters, November 2012
                                                                                                                                                • Figure 102: Preferred payment method for online purchases, by target clusters, November 2012
                                                                                                                                                • Figure 103: Preferred payment method for paying bills such as mortgage payments or utilities, by target clusters, November 2012
                                                                                                                                                • Figure 104: Preferred payment method for paying money owed to family, friends, baby sitters, etc, by target clusters, November 2012
                                                                                                                                                • Figure 105: Familiarity with payments brands, by target clusters, November 2012
                                                                                                                                                • Figure 106: Ownership of credit cards, by target clusters, November 2012
                                                                                                                                                • Figure 107: Cards owned and payment behavior, by target clusters, November 2012
                                                                                                                                                • Figure 108: Reasons for applying for credit card, by target clusters, November 2012
                                                                                                                                                • Figure 109: Attitudes toward credit and usage of credit and debit cards, by target cluster, November 2012
                                                                                                                                                • Figure 110: Attitudes about payment method security, by target clusters, November 2012
                                                                                                                                                • Figure 111: Interest in payment method alternatives, by target clusters, November 2012
                                                                                                                                                • Figure 112: Target clusters, by demographic groups, November 2012
                                                                                                                                            • Appendix – Nielsen P$YCLE Lifestage Group Definitions

                                                                                                                                              • Younger Years
                                                                                                                                                • Upwardly Mobile
                                                                                                                                                  • Metro Mainstream
                                                                                                                                                    • Fiscal Fledglings
                                                                                                                                                      • Family Life
                                                                                                                                                        • Flourishing Families
                                                                                                                                                          • Upscale Earners
                                                                                                                                                            • Mass Middle Class
                                                                                                                                                              • Working Class USA
                                                                                                                                                                • Mature Years
                                                                                                                                                                  • Financial Elite
                                                                                                                                                                    • Wealthy Achievers
                                                                                                                                                                      • Upscale Empty Nests
                                                                                                                                                                        • Midscale Matures
                                                                                                                                                                          • Retirement Blues
                                                                                                                                                                          • Appendix – Trade Associations

                                                                                                                                                                              • American Bankers Association (ABA)
                                                                                                                                                                                • American Financial Services Association (AFSA)
                                                                                                                                                                                  • Consumer Bankers Association
                                                                                                                                                                                    • Credit Union National Association (CUNA)
                                                                                                                                                                                      • The Electronics Payment Association (NACHA)
                                                                                                                                                                                        • National Credit Union Administration (NCUA)
                                                                                                                                                                                          • NFC Forum

                                                                                                                                                                                          Companies Covered

                                                                                                                                                                                          • American Express Company (The)
                                                                                                                                                                                          • Bank of America Corporation
                                                                                                                                                                                          • Capital One Financial Corporation
                                                                                                                                                                                          • Chase Home Finance
                                                                                                                                                                                          • Citibank
                                                                                                                                                                                          • Consumer Bankers Association
                                                                                                                                                                                          • Discover Financial Services Inc.
                                                                                                                                                                                          • Facebook, Inc.
                                                                                                                                                                                          • Fifth Third Bancorp
                                                                                                                                                                                          • Google, Inc.
                                                                                                                                                                                          • MasterCard Incorporated
                                                                                                                                                                                          • National Automated Clearing House Association
                                                                                                                                                                                          • SAM's Club
                                                                                                                                                                                          • Samsung Electronics (USA)
                                                                                                                                                                                          • Starbucks Corporation
                                                                                                                                                                                          • Target Corporation
                                                                                                                                                                                          • The American Bankers Association
                                                                                                                                                                                          • Toronto-Dominion Bank
                                                                                                                                                                                          • Twitter, Inc.
                                                                                                                                                                                          • Visa U.S.A. Inc.
                                                                                                                                                                                          • Wells Fargo & Company
                                                                                                                                                                                          • YouTube, Inc.

                                                                                                                                                                                          Consumer Payment Preferences and Behavior - US - March 2013

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