The Power of Payment Choice
January 18, 2018
Consumers have come to value and expect choice when it comes to making payments. They want it to be convenient, secure and easy, and no payment method is universally preferred. Consumer payment preferences vary based in factors like habits, awareness, and access. Notwithstanding the speed and sophistication of new and evolving digital payment technologies, consumers continue to demand a range of payment options, including the ability to pay using more traditional ACH, credit, debit or cash.
Given the choice of payment methods, consumers are increasingly using credit cards as a sole method of payment. But with the introduction of alternative payment channels, digital wallets, peer-to-peer (P2P) mobile payments and wearables are becoming more mainstream. According to Bank of America’s 2017 Trends in Consumer Mobility Report, adoption of P2P is strong across all generations, with millennials at 62% and Gen Xers at 34%.
In addition to wanting options when it comes payment methods, consumers also want to choose their payment channels. They increasingly rely on their mobile devices for their payment needs. According to Accenture’s 2017 North America Consumer Payments Pulse Survey, 64% of consumers plan to use a mobile wallet in 2020, up from 46% today. Fueling the growth in mobile payments is the use of APIs and open banking. Mobile devices and payment options offer a number of advantages including the ability to have a centralized view and use of one’s payment information and actions. Continued innovations that deliver a “unified mobile payments experience” will arguably engage consumers and deliver holistic value together with a choice of payment methods. Traditional players in the payments ecosystem such as banks and payment service providers, need to modernize in order to keep and grow their market share.
Relatively new entrants such as Venmo, Apple Pay and Amazon Payy must continue to evolve their offerings and the heighten the consumer payments experience.
As the diversity and number of digital options in payment methods continues to proliferate at a fast pace, so too the use of mobile devices for payments and a holistic consumer experience will trend positive.