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Payments - US - October 2014

“The payments world is rapidly changing as technology designed to make paying for merchandise easier is introduced every day. However, the challenge to the industry remains the same as it has always been: are consumers really looking to buy what the payments industry is trying to sell?”
- Robyn Kaiserman, Financial Services Analyst

This report answers the following questions:

  • Can banks compete in the mobile payment space?
  • What is holding mobile payments back?
The Consumer:
 
  • Prepaid cards most prevalent among Blacks and Hispanics.
  • Convenience is key.
  • Interest in mobile apps is limited.
  • Credit cards still have a place.
 
The challenge for the industry, however, has not changed. How do you change a behavior that few people find onerous to begin with? The answer is twofold: aim at those with the least experience with the old behavior – young people – and provide added value to everyone by expanding the payment experience beyond merely paying for merchandise.
There is plenty of opportunity for companies that can do this, but time is running out as consumers will begin to migrate toward the solution that suits them best. Once they choose, as in much of financial services, it might be hard to get them to switch.

 

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Direct marketing creative
            • Abbreviations and terms
              • Abbreviations
                • Terms
                  • Generations
                  • Executive Summary

                      • The market
                        • Figure 1: Distribution of non-cash payments, 2003, 2006, 2009, 2012
                      • Market drivers
                        • Figure 2: US total debt, Q2 2012-Q2 2014
                      • Leading companies
                        • Figure 3: Total US credit and debit card transaction volume, 2012-13
                      • The consumer
                        • Prepaid cards most prevalent among Blacks and Hispanics
                          • Figure 4: Type of cards owned, by race/Hispanic ethnicity, July 2014
                        • Convenience is key
                          • Figure 5: Convenience of payment method, by age, July 2014
                        • Interest in mobile apps is limited
                          • Figure 6: Interest in mobile payment apps, July 2014
                        • Credit cards still have a place
                          • Figure 7: Any agreement with attitudes toward payment activity, July 2014
                        • What we think
                        • Issues and Insights

                            • Can banks compete in the mobile payment space?
                              • Issues:
                                • Implications:
                                  • What is holding mobile payments back?
                                    • Issues:
                                      • Implications:
                                      • Trend Applications

                                          • Trend: Totophobia
                                            • Trend: Access All Areas
                                              • Trend: Life Hacking
                                              • Market Drivers

                                                • Key points
                                                  • The economy is strengthening, maybe
                                                    • Figure 8: US total debt, Q2 2012-Q2 2014
                                                  • Smartphone growth is slow but steady
                                                    • Figure 9: US mobile phone sales and forecast, 2008-18
                                                  • Tablet growth is strong, but slowing
                                                    • Figure 10: US tablet unit sales, 2010-13
                                                  • Prepaid card regulation is on the table
                                                    • EMV is coming
                                                    • Market Size

                                                      • Key points
                                                        • Credit card and debit card volume
                                                          • Figure 11: Total US credit and debit card transaction volume, 2012-13
                                                        • Credit card balances are trending up
                                                          • Figure 12: Total US credit card debt, 2009-July 2014
                                                        • Distribution of noncash payments
                                                          • Figure 13: Distribution of noncash payments, 2003, 2006, 2009, 2012
                                                        • Growth of prepaid cards
                                                          • Figure 14: Increase in use of prepaid cards, by size of transaction, 2013 vs. 2014
                                                      • Competitive Context

                                                        • Key points
                                                          • Field is highly competitive
                                                            • Figure 15: Familiarity with payment brands, July 2014
                                                            • Figure 16: Growth in brand familiarity among top six payment brands, 2013 vs 2014
                                                          • The number of nonbank entrants is growing
                                                            • Visa
                                                              • Figure 17: Visa’s global cash, payments, and total volume, 12 months ending September 30, 2011, 2012, 2013
                                                            • MasterCard
                                                              • Figure 18: Global Gross Dollar Volume as of December 31, 2011, 2012, 2013
                                                            • American Express
                                                              • Figure 19: Global total billed business, as of December 31, 2011, 2012, 2013
                                                            • Discover
                                                              • Figure 20: Discover card volume* and Discover Card sales volume**, year ended Nov. 30 for 2011 and 2012, year ended Dec. 31, 2013
                                                          • Innovations and Innovators

                                                            • Key points
                                                              • Apple Pay
                                                                • DipJar – a digital way to give
                                                                  • PayPal teams up with Samsung
                                                                    • AmEx and Uber
                                                                      • A remote control for credit cards
                                                                      • Marketing Strategies

                                                                        • Key points
                                                                          • PayPal
                                                                            • Figure 21: PayPal mobile app feature online ad, 2014
                                                                            • Figure 22: PayPal payment brand security online ad, 2014
                                                                          • American Express Bluebird
                                                                            • Figure 23: American Express Serve acquisition direct mail ad, 2014
                                                                            • Figure 24: American Express Bluebird online ad, 2013
                                                                        • Type of Cards Owned

                                                                          • Key points
                                                                            • Type of cards owned
                                                                              • Credit card ownership highest among aged 65+
                                                                                • Figure 25: Type of cards owned, by age, July 2014
                                                                              • Income changes payment preference
                                                                                • Figure 26: Type of cards owned, by household income, July 2014
                                                                              • Prepaid cards most prevalent among Blacks and Hispanics
                                                                                • Figure 27: Type of cards owned, by race and Hispanic origin, July 2014
                                                                            • Most Convenient Payment Method

                                                                              • Key points
                                                                                • Debit is king among young people
                                                                                  • Figure 28: Convenience of payment method, by age, July 2014
                                                                                • More than half of high-income households believe credit cards are most convenient
                                                                                  • Figure 29: Convenience of payment method, by household income, July 2014
                                                                                • Card ownership influences perception of convenience
                                                                                  • Figure 30: Convenience of payment method, by race/Hispanic origin, July 2014
                                                                              • Payment Behavior

                                                                                • Key points
                                                                                  • Credit cards
                                                                                    • More than half of all consumers pay off balances each month
                                                                                      • Figure 31: Credit card payment behavior, by age, July 2014
                                                                                    • Millennial women might benefit from prepaid cards
                                                                                      • Figure 32: Credit card payment behavior, by gender and age, July 2014
                                                                                    • Rewards programs influence behavior among high earners
                                                                                      • Figure 33: Credit card payment behavior, by household income, July 2014
                                                                                    • Debit cards
                                                                                      • Debit cards are often for debt management
                                                                                        • Figure 34: Debit card behavior, by age, July 2014
                                                                                        • Figure 35: Debit card behavior, by household income, July 2014
                                                                                    • Paying with Mobile Devices

                                                                                      • Key points
                                                                                        • Bigger screens make tablets easier to use for those aged 45+
                                                                                          • Figure 36: Payment with mobile devices, by age, July 2014
                                                                                        • Point-of-sale payment function is most popular among high-earning households
                                                                                          • Figure 37: Payment behavior, by household income, July 2014
                                                                                      • Preferred Payment Methods

                                                                                        • Key points
                                                                                          • Cash is not dead
                                                                                            • Figure 38: Preferred payment method, July 2014
                                                                                          • Small everyday items
                                                                                            • Debit cards are more popular among women
                                                                                              • Figure 39: Primary payment methods for small everyday items, by gender, July 2014
                                                                                            • For those aged 65+, credit cards are more popular than cash
                                                                                              • Figure 40: Primary payment methods for small everyday items, by age, July 2014
                                                                                            • Credit cards popular among higher-income households
                                                                                              • Figure 41: Primary payment methods for small everyday items, by household income, July 2014
                                                                                            • Race is a factor
                                                                                              • Figure 42: Primary payment methods for small everyday items, by race/Hispanic origin, July 2014
                                                                                            • Medium-priced items
                                                                                              • Credit cards are more popular among men
                                                                                                • Figure 43: Primary payment methods for medium-priced items, by gender, July 2014
                                                                                              • Use of prepaid cards is growing among young people
                                                                                                • Figure 44: Primary payment methods for medium-priced items, by age, July 2014
                                                                                              • Higher earning households don’t use cash
                                                                                                • Figure 45: Primary payment methods for medium-priced items, by household income, July 2014
                                                                                              • Large-ticket items
                                                                                                • Millennials save for what they want
                                                                                                  • Figure 46: Primary payment methods for large-ticket items, by age, July 2014
                                                                                                • Fewer Blacks and Hispanics use credit cards
                                                                                                  • Figure 47: Primary payment methods for large-ticket items, by race/Hispanic origin, July 2014
                                                                                                • Online purchases
                                                                                                  • Use of online payments is increasing
                                                                                                    • Figure 48: Primary payment methods for online purchases, by age, July 2014
                                                                                                  • Bills
                                                                                                    • Checks still have their place
                                                                                                      • Figure 49: Primary method of paying bills, by gender, July 2014
                                                                                                    • Incentives may move young people online
                                                                                                      • Figure 50: Primary method of paying bills, by age, July 2014
                                                                                                    • Lower-income households are most likely to pay cash
                                                                                                      • Figure 51: Primary method of paying bills, by household income, July 2014
                                                                                                  • Familiarity with Payments Brands

                                                                                                    • Key points
                                                                                                      • Men are more familiar with brands
                                                                                                        • Figure 52: Familiarity with payment brands, by gender, July 2014
                                                                                                      • Recognition highest among ages 18-44
                                                                                                        • Figure 53: Familiarity with payment brands, by age, July 2014
                                                                                                        • Figure 54: Familiarity with payment brands, by household income, July 2014
                                                                                                    • Interest in Mobile Payment Apps

                                                                                                      • Key points
                                                                                                          • Figure 55: Interest in mobile payment apps, by age, July 2014
                                                                                                        • Male Millennials most likely to want to use phones to pay at the register
                                                                                                          • Figure 56: Interest in mobile payment apps, by gender and age, July 2014
                                                                                                      • Attitudes toward Payment Activities

                                                                                                        • Key points
                                                                                                          • Men are less concerned than women about security
                                                                                                            • Figure 57: Agreement with attitudes toward payment activity, by gender, July 2014
                                                                                                          • Credit cards are seen as useful to all age groups
                                                                                                            • Figure 58: Agreement with attitudes toward payment activity, by age, July 2014
                                                                                                          • Men aged 18-34 have least security concerns
                                                                                                            • Figure 59: Agreement with attitudes toward payment activity, by gender and age, July 2014
                                                                                                          • Income affects card usage and security concerns
                                                                                                            • Figure 60: Agreement with attitudes toward payment activity, by household income, July 2014
                                                                                                        • Appendix – Other Useful Consumer Tables

                                                                                                          • Type of cards owned
                                                                                                            • Figure 61: Type of cards owned, by gender, July 2014
                                                                                                            • Figure 62: Type of cards owned, by gender and age, July 2014
                                                                                                            • Figure 63: Type of cards owned, by generations, July 2014
                                                                                                          • Most convenient payment method
                                                                                                            • Figure 64: Convenience of payment method, by gender, July 2014
                                                                                                            • Figure 65: Convenience of payment method, by generations, July 2014
                                                                                                          • Payment behavior
                                                                                                            • Credit cards
                                                                                                              • Figure 66: Credit card payment behavior, by gender, July 2014
                                                                                                              • Figure 67: Credit card payment behavior, by generations, July 2014
                                                                                                            • Debit cards
                                                                                                              • Figure 68: Debit card behavior, by gender, July 2014
                                                                                                              • Figure 69: Debit card behavior, by household income, July 2014
                                                                                                            • Prepaid cards
                                                                                                              • Figure 70: Prepaid card behavior, July 2014
                                                                                                            • Paying with mobile devices
                                                                                                              • Figure 71: Paying with mobile device, by gender, July 2014
                                                                                                              • Figure 72: Payment behavior, by generations, July 2014
                                                                                                            • Preferred payment method
                                                                                                              • Small everyday items
                                                                                                                • Figure 73: Primary payment methods for small everyday items, by gender and age, July 2014
                                                                                                                • Figure 74: Primary payment methods for small everyday items, by generations, July 2014
                                                                                                              • Medium-priced items
                                                                                                                • Figure 75: Primary methods for medium-priced items, by race/Hispanic origin, July 2014
                                                                                                                • Figure 76: Primary payment methods of medium-priced items, by generations, July 2014
                                                                                                              • Large-ticket items
                                                                                                                • Figure 77: Primary payment methods for large-ticket items, by gender, July 2014
                                                                                                                • Figure 78: Primary payment methods for large-ticket items, by household income, July 2014
                                                                                                                • Figure 79: Primary payment methods for large-ticket items, by generations, July 2014
                                                                                                              • Online purchases
                                                                                                                • Figure 80: Primary payment methods for online purchases, by gender, July 2014
                                                                                                                • Figure 81: Primary payment methods for online purchases, by household income, July 2014
                                                                                                                • Figure 82: Primary payment methods for online purchases, by generations, July 2014
                                                                                                              • Bills
                                                                                                                • Figure 83: Primary payment methods for paying ills, by race/Hispanic origin, July 2014
                                                                                                                • Figure 84: Primary payment methods for paying bills, by generations, July 2014
                                                                                                              • Familiarity with payment brands
                                                                                                                • Figure 85: Familiarity with payment brands, by gender and age, July 2014
                                                                                                                • Figure 86: Familiarity with payment brands, by race/Hispanic origin, July 2014
                                                                                                                • Figure 87: Familiarity with payment brands, by generations, July 2014
                                                                                                              • Interest in mobile payment apps
                                                                                                                • Figure 88: Interest in mobile payment apps, by gender, July 2014
                                                                                                                • Figure 89: Interest in mobile payment apps, by household income, July 2014
                                                                                                                • Figure 90: Interest in mobile payment apps, by generations, July 2014
                                                                                                              • Attitudes toward payment activity
                                                                                                                • Figure 91: Agreement with attitudes toward payment activity, by race/Hispanic origin, July 2014
                                                                                                                • Figure 92: Agreement with attitudes toward payment activity, by generations, July 2014
                                                                                                            • Appendix – Trade Associations

                                                                                                              Payments - US - October 2014

                                                                                                              US $3,995.00 (Excl.Tax)