Consumer Payments Usage Study Offers Broad Perspective on Current Payments Landscape
When it comes to paying for goods and services, consumers want and expect a choice of payment methods at the point-of-sale (POS), according to a recent survey released by First Data Corp. (NYSE: FDC). The STAR Consumer Payments Usage Study, conducted by an independent research firm, found that consumers reported using two to four payment types monthly, indicating that multiple payment types are favored based on individual preferences at the POS.
"This year's study makes it clear that offering a variety of electronic payment options can help retailers and financial institutions win new customers, increase revenue and enhance customer retention," said Debra Janssen, president of First Data Debit Services. "It's important for companies to support various types of secure electronic transaction - from PIN-secured debit to credit to check electronification - to provide comprehensive payment solutions for clients."
The 2004 survey data also points to the continued growth of electronic payments at the POS. Nearly half of consumers surveyed (47 percent) prefer the PIN-secured method, compared to 30 percent who prefer the signature-based method. Survey respondents largely cite increased security as the number one reason for choosing to use their PIN numbers to make purchases (46 percent).
More than five out of every six ATM/debit cardholders surveyed had used their ATM/debit card at an ATM or at the POS at least once in the 30 days prior to the survey. In addition to debit, whose popularity is especially strong among cardholders between the ages of 21 and 54, consumers continue to use other electronic payments options regularly as well. Twenty-nine percent of non-debit users surveyed say credit cards are their preferred means of payments, up 11 percent over 2003. Debit users are the least likely to pay with check, while non-users still report that they wrote an average of three checks per month at retail.
"The research shows that consumers prefer to make PIN-secured payments at the POS. STAR is addressing this preference by working with merchants to PIN-enable new types of retail outlets such as quick service restaurants, movie theaters, newspaper stands, laundries and parking facilities," added Janssen. "By offering a comprehensive electronic payments solution to our customers, financial institutions and retailers of all sizes can offer choice to their customers."
About the Survey
For twelve years, STAR has conducted its Consumer Payments Usage Study, the largest study of its kind, to better understand consumer electronic payments usage habits and attitudes. The survey, directed by Applied Management & Planning Group, was conducted in 35 states and includes data from nearly 13,000 respondents. The error rate for the survey was plus or minus one percent at the 95 percent confidence level.
About First Data
First Data Corp. (NYSE: FDC), with global headquarters in Denver, helps power the global economy. Serving approximately 4.1 million merchant locations, 1,400 card issuers and millions of consumers, First Data makes it easy, fast and secure for people and businesses around the world to buy goods and services, using virtually any form of payment: credit, debit, smart card, stored-value card or check at the point-of-sale, over the Internet, via mobile phones or by money transfer. For more information, please visit the company's Web site at www.firstdata.com.
2005 STAR Consumer Payments Usage Study
Key Findings: Fact Sheet
PIN-Secured Debit Preferred by Consumers, Good for Retailers
- Nearly half of consumers (47 percent) surveyed prefer the PIN-secured method, compared to 30 percent who prefer the signature-based method. Respondents largely cite increased security as the number one reason for choosing to use their PIN numbers to make purchases (46 percent).
- Those consumers who use both PIN-secured and signature debit, nearly 6 out of 10 consumers, reported that they use their cards more on average, 21.4 times per month. This is far more than those consumers who use only one type of debit. Those who use only signature debit say they use their cards 13.4 times per month and those who use PIN-secured debit only report using their cards 9.0 times per month.
- An increase in debit card use at the POS is good news for retailers. When consumers use their debit cards, they spend more. In fact, debit purchases are 32 percent higher compared to cash and 24 percent higher compared to checks. Grocery stores, gas stations and specialty retail locations are the most likely to benefit, as they are the most popular outlets for PIN-secured debit payments.
Loyalty and Technology are Key for Financial Institutions
- Identity theft and fraud continue to be a concern for consumers. One-quarter of consumers surveyed, regardless of ATM and card usage habits, say they are extremely concerned about their exposure to fraud and their personal safety when using an ATM. Overall, less than one-fifth of debit card users surveyed are aware of zero liability from any type of debit card losses. However, when asked about personal liability and exposure to fraudulent purchases, consumers were equally likely to expect zero liability from signature debit and PIN-secured debit purchases. Financial institutions have an opportunity to better educate their cardholders about the protective features of their cards.
- An opportunity also exists with loyalty programs. While the number of programs is growing, more can be done to make consumers aware of reward programs available. Just 17 percent of respondents knew of a POS-based rewards program offered by their financial institution. However, once aware, nearly half (46 percent) enroll, indicating that financial institutions may realize significant benefit by better educating their customers about their loyalty offerings. Customized communications are key to strengthening the issuer-cardholder relationship.
- New technology services can also be a customer retention tool, as consumers say they appreciate being able to do banking at home. Online bill payment continues to grow with 32 percent of consumers surveyed reported paying bills online, an increase from last year's 27 percent. And, survey respondents rank the ability to do banking transactions, transfer funds and review statements from a home computer (5.7) as the most appealing technology being offered by their financial institution. The opportunity also exists to transform traditional communications methods into interactive relationship-building tools.
Gift Card Usage on the Rise
- Consumer usage of store gift cards and pre-paid cash cards is on the rise. More than one-third of consumers surveyed indicated their use of a store-specific gift card to make a purchase in the past 12 months (40 percent) and nearly 20 percent of consumers have used a pre-paid cash card. Significantly more respondents have used a pre-paid cash card and a store gift card in 2004, both increasing by at least four-percentage points over 2003.
- Two-thirds of respondents reported they received the card as a gift (67 percent who used a pre-paid cash card and 80 percent who used a store gift card). Similar to stored value cards used, 39 percent of consumers surveyed have purchased a store-specific gift card in the past 12 months and 23 percent had bought a pre-paid cash card, significant increases from the previous year's 37 percent and 19 percent.
Contact: Mary Walker, First Data Corp., 770-857-7188, firstname.lastname@example.org