Description

“The COVID-19 pandemic accelerated many of the shifts that were already occurring within the payment landscape, driving widespread adoption of mobile payment alternatives and broadening the number of payment types that consumers interact with in their daily lives. This sudden leap in digital payment usage has intensified competition to gain preference within consumers’ extensive array of payment options. With various payment types featuring distinct strengths between security, rewards and convenience, consumer attitudes portend a growing willingness to explore different payment options, depending on the distinct natures of their purchases, rather than relying on a one-size-fits-all preference. Competitors’ abilities to capitalize on these niches will determine their success and longevity moving forward.”
– Patrick Rahlfs, Senior Research Analyst

Key issues covered in this Report:

  • The impact of COVID-19 on consumer payment behavior
  • Marketing examples of payment brands’ evolving messaging to attract consumers that have an increasing amount of options from which to choose
  • Preferred payment methods, both for the majority of purchases and within specific purchase types
  • Attitudes toward digital payment options and financing services
  • Demographic perspectives on the shifting payment landscape

Table of Contents

  1. Overview

    • What you need to know
    • Key issues covered in this Report
    • Definition
    • Market context
    • Economic and other assumptions
    • COVID-19: US context
  2. Executive Summary

    • Top takeaways
    • Economic conditions have made credit cards even more desirable
      • Figure 1: Preferred payment method for majority of purchases, top three rank, 2021
    • Niches emerge as generations contemplate payment options differently
    • Digital payment acceptance opens a world of possibilities
    • Market overview
    • Impact of COVID-19 on payments
      • Figure 2: Short-, medium- and long-term impact of COVID-19 on payments, 2021
    • Opportunities and challenges
    • Short term
    • Recovery
  3. The Market – Key Takeaways

    • Cash payments hit new low in 2020
    • eCommerce spikes as online and mobile payments rise
    • Consumer sentiment reflects uncertainty
  4. Market Size

    • Usage of cash sharply declined in 2020
      • Figure 3: Share of payment instrument use by year, 2018-20
    • Number of credit card accounts slows in growth
      • Figure 4: Number of open credit card accounts, Q2 2011-Q2 2021
    • eCommerce spikes as share of retail sales
      • Figure 5: Total US retail sales and percentage of ecommerce, 2008-21
  5. Market Factors

    • Consumer sentiment ticked up in September, but remains low
      • Figure 6: Consumer sentiment index, 2010-21
    • Mobile and online payments reach new heights
      • Figure 7: Percentage of payments made not in-person, excluding bills, 2016-20
  6. Companies and Brands – Key Takeaways

    • Credit card ads pivot toward security
    • Buy now, pay later brands market their own success
    • PayPal and Venmo highlight contactless payments and crypto
    • Affirm seeks to give brands FOMO on BNPL
      • Figure 8: Affirm pay-over-time digital ad, 2021
    • Buy now, pay later brands encourage return to travel
      • Figure 9: Klarna travel now, pay in four paid Facebook ads, 2021
    • PayPal and CVS promote contactless payments
      • Figure 10: PayPal and Venmo shop safe online video ad, 2021
  7. Competitive Strategies

    • Credit cards pivot toward security
      • Figure 11: Visa zero liability online video ad, 2021
    • Credit card issuers make acquisition push
      • Figure 12: Share of acquisition mail, credit card vs banking industries, Q1 2019-Q2 2021
    • Banks offer Zelle bonuses to promote P2P services
      • Figure 13: Bank of America Zelle email, 2021
    • Venmo and PayPal enter the crypto space
      • Figure 14: Venmo crypto email, 2021
  8. Market Opportunities

    • Online payments are a key battleground to capture customer spend
    • BNPL competitors can capitalize on consumers’ affinity for flexibility
    • Digital payments are personal; can they expand?
  9. The Consumer – Key Takeaways

    • Credit card is the top payment preference, and its popularity is rising
    • Digital payment growth accelerated in 2021
    • Consumers prefer credit cards for large, online purchases
    • Financing options are varied, but growingly prevalent
    • Cryptocurrency and social media payments resonate with different groups
    • Despite reduced usage, cash still has a role
  10. Preferred Payment Methods

    • Credit card is the top payment preference
      • Figure 15: Payment preference for majority of purchases, top three ranked, 2021
    • Generations are polarized when it comes to credit cards
      • Figure 16: Credit card payment preference, by generation, 2021
    • Credit card preference varies by race
      • Figure 17: Credit card preference, by race and Hispanic origin, 2021
    • Digital payments are on the rise, while cash and debit cards have stagnated
      • Figure 18: Payment preference, by year, 2019-21
  11. Digital Payment Method Usage

    • More than 60% of consumers used PayPal in the past year
      • Figure 19: Digital payment usage, 2021
    • Digital payment usage accelerated in 2021
      • Figure 20: Digital payment usage by year, 2019-21
    • Digital competitors find niches based on age
      • Figure 21: Digital payment usage, by generation, 2021
  12. Payment Preferences by Purchase Type

    • Credit cards are used for large, online purchases, while debit cards are preferred in-store
      • Figure 22: Payment preference by purchase type, 2021
    • Younger consumers are turning toward P2P options for personal payments
      • Figure 23: Personal payment preference, by generation, 2021
    • Gen Zers are hesitant to use credit cards for large purchases
      • Figure 24: Large purchase payment preference, by generation, 2021
  13. Attitudes toward Financing Options

    • Over half of consumers have interest in financing options
      • Figure 25: Attitudes toward financing options, 2021
    • Young males are open to financing, while older generations are not
      • Figure 26: Attitudes toward financing options, by age and gender, 2021
  14. Mobile Payment Behaviors

    • Young males are more likely to store card information on devices…
      • Figure 27: Payment method storage, by age and gender, 2021
    • …and have interest in cryptocurrency
      • Figure 28: Cryptocurrency attitudes and behaviors, by age and gender, 2021
    • Social media payments are no longer just for young adults
      • Figure 29: Social media payments, by age and year, 2021
  15. Attitudes toward Payment Behaviors

    • There is no end in sight for cash, although its role is changing
      • Figure 30: Attitudes toward cash, by generation, 2021
    • COVID has accelerated changes in payment behaviors
      • Figure 31: Changes in payment behaviors, by generation, 2021
  16. Appendix – Data Sources and Abbreviations

    • Data sources
    • Consumer survey data
    • Marketing creative
    • Abbreviations and terms
    • Abbreviations

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our tables of data are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

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