By: Primax
Payment preferences continue to evolve as consumers’ expectations change. The demand for convenience, flexibility and security continues to increase — all of which influences which payment methods are top of mind and wallet.
Primax has released its fourth annual Primax Payments Pulse study, which gauges the current state of payment preferences among 1,850 bank customers and credit union members from across the U.S., while exploring the factors that influence these trends. This research explores various factors that influence consumers when it comes to choice and usage of different payment methods, as well as how different life stages and economic events affect those factors. Along with these insights, the study also suggests ways financial institutions can optimize offerings to adapt to evolving preferences and needs to better serve their members — both now and in the future.
Here are some key findings from this year’s study:
Credit emerges as the leading payment method, closely followed by debit. Findings reveal a shift in preferences from debit to credit, with 39% of bank customers saying credit is their preferred payment method, with a shift toward credit for certain types of purchases — such as at full-service restaurants, big-box retailers, fuel providers, tangible goods and monthly subscriptions.
- Takeaways: With the increased popularity of credit cards, financial institutions should focus on card product development, innovation and customization. Emphasize cashback options, flexible credit lines and rewards programs, making sure to regularly review and adjust rewards structures to maintain relevance and attractiveness. Prioritize features like digital issuance and mobile wallet integration — especially for younger, tech-savvy generations.
Consumers continue turning to digital payment options like mobile wallets and peer-to-peer (P2P) payments accounts. Forty percent of bank customers report using a mobile wallet at least a few times per month and 48% claim they are likely to use a mobile wallet in the next sixth months. Fifty-five percent of bank customers are likely to use a P2P payment option in the next six months.
- Takeaways: Digital payment options and mobile wallets are here to stay — financial institutions that do not yet offer these types of technologies and easy integrations need to quickly add them to their arsenals. As consumer behaviors and P2P payment accounts continue to evolve, financial institutions must stay agile and respond to emerging trends.
Safety and security drive preferences. Seventy-seven percent of bank customers make a decision about how to pay for something based on which option is the most secure. Despite stable or even decreasing rates of identity theft and card fraud among bank customers, 78% agree they are very concerned about it. This emphasis on security could be a factor in the growing preference for paying with credit cards and mobile wallets due to the additional layers of security and tokenization.
- Takeaways: Educate customers on current and trending fraud scams to arm them with knowledge needed to detect and avoid fraud. Half of bank customers (50%) said they would be likely to utilize educational resources offered by their financial institution. Target customers with the same information but delivered in the channel they frequent — perhaps printed mailers for older generations and social media videos for younger generations.
Consumers continue to explore newer payment offerings like Buy Now, Pay Later (BNPL), while expressing interest in trending options like cryptocurrency.
Six in 10 of bank customers (58%), who know their financial institution offers a BNPL product, have utilized it, up from 54% in 2023. Interest in using a BNPL product has remained steady, with one-third (34%) of bank customers reporting they would utilize one if offered by their financial institution. Twenty-seven percent (27%) of bank customers have used a BNPL program through an entity like Affirm or Afterpay. When looking at investment options, cryptocurrency has seen a slight decline, with only 19% of bank customers investing in cryptocurrency in 2024, down from 22% in 2023.
- Takeaways: There is interest and demand for BNPL programs and consumers will seek them from another provider if your bank does not offer them. Financial institutions should continue to develop and expand their BNPL offerings, as well as implement targeted campaigns to ensure awareness. As consumers’ financial data is disaggregated when making transactions and investments across more and more channels, such as credit and debit cards, mobile apps, P2P payment accounts, BNPL programs and cryptocurrency, among others, consider how your financial institution could become an aggregator and provide customers the tools to see a 360-degree view of their financial portfolio and provide education and resources about making smart financial decisions. This will position your bank as a one-stop solution for legacy and trending payment options.
Younger generations show distinct shifts in payment preferences, further distinguishing them from older consumers. Gen Z, Younger Millennials and Older Millennials shifted to favoring credit in 2024, when they preferred debit in 2023. These younger generations’ credit card usage increased year over year from 64% to 81%. Debit is preferred among Gen X and Boomers+. Younger consumers are influenced by card design, with 82% of Gen Z and 83% of Millennials somewhat agreeing that card design influenced which card they use. One in 10 consumers in the Gen Z (12%) and Younger Millennials (10%) generations report mobile wallets are their most preferred method. Millennials turn to contactless card technology the most, with 56% of Younger Millennials and 54% of Older Millennials tapping their contactless card at least a few times per week. Younger Millennials (87%), Gen Z (83%) and Older Millennials (76%) are also the most active users of text, QR code and social media app payment methods, while only 9% of Boomers+ report using one of those payment methods.
- Takeaways: As time goes on, the preferences and behavior of younger generations will become increasingly more impactful to financial institutions and the payments industry. Review your offerings — are you meeting these audiences with the tools they want in the channels they frequent? It’s also critical to provide these younger generations — especially Gen Z — access to financial education and financial wellness tools. Help the younger generations avoid the potential pitfalls of debt and earn loyalty and status as their trusted financial partner, securing a customer for life.
The financial landscape is constantly changing, due to shifting consumer preferences and growing digital adoption. Financial institutions must evolve to meet demands for greater convenience, flexibility and security. While credit and debit continue to remain relevant, innovations like BNPL and P2P payment apps are gaining traction, with younger consumers embracing new technologies. Banks that prioritize enhancing customer experiences, investing in mobile and digital solutions and maintaining competitive offerings will be well-positioned for success and growth. And your financial institution does not have to do it alone — consider partnering with a fintech partner, like Primax, that can help expand and elevate your offerings.
Discover more key findings and delve deeper into crucial takeaways that your financial institution can leverage to effectively market to customers and achieve continual growth and success. Download the full 2024 Primax Payments Pulse study now.
