BROOKFIELD, Wis.— Consumer payment preferences have changed dramatically as a result of the pandemic, according to a recent Carat Insights Report from Fiserv, which among other things reveals how consumers prefer to use debit cards.
The report analyzed more than $3 trillion in payments data and a consumer survey of 2,200 Americans, with the analysis suggesting one of the most significant behavioral changes has been the shift to debit as the number-one payment option.
Who is driving this trend? Millennials and Gen-Zs shopping online, according to Fiserv.
Among the key trends highlighted in the analysis:
- The number-one online payment method is debit. Online sales volume for debit grew by 74%, whereas credit only increased by 33% when comparing the start of the pandemic to today.
- Millennials and Gen Z are driving the use of debit cards online, with 59% of the two generations saying they prefer the control debit provides, whereas 62% of seniors prefer credit cards because they prefer benefits.
- 30% of Americans have used Buy Now Pay Later (BNPL) installment payments in Q3 2021, up from 23% in Q2 2021. It is popular across all demographics, signaling a strong alternative to credit
Debit Specifics
Looking more specifically to debit, the Carat Insights Report from Fiserv found:
- Consumer preference for debit increased by three percentage points to 48%, credit decreased by three percentage points to 36%, and digital wallet stayed the same at 11% for online purchases
- Online consumer usage of debit continues to grow and outpace credit. Online sales volume for debit grew by 74%, whereas credit only increased by 33% when comparing the start of the pandemic to today, Fiserv said.
- Debit is the customer’s favorite within digital wallets and driving its rapid growth. Of the 658% increase usage of digital wallets in online sales volume since the start of the pandemic, 51% of customers used debit, 29% used credit, and 17% used stored value in their digital wallets, the study found.
Demographics and Payment Options
According to Fiserv, an analysis a large range of customers from Gen Z to Baby Boomers reveals “demographics are key to understanding why certain segments prefer debit or credit.”
Among the related takeaways:
- Consumers who are younger, unemployed and with lower incomes are driving the use of debit for online purchases. Customers who prefer debit name their main reason as the need to control and budget their finances closely
- Customers who are older with higher education and higher incomes prefer credit for online purchases. Customers who prefer credit cite their top reason as receiving benefits for making transactions
The Growth in BNPL
Looking forward, the report is forecasting:
- BNPL usage during the pandemic increased from 23% in Q2 2021 to 30% in Q3 2021
- BNPL is popular across all demographics for different reasons. The younger generation, who are driving the growth of BNPL, cite the need to control their finances closely, and they use installments as a substitute for credit; customers with higher income and access to credit are using BNPL because they prefer the flexibility of installment plans, Fiserv said.