North American PaymentsInsights

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U.S. Consumers and Debit: Signs of Displacement

January 05, 2017
Mercator Research
Survey finds more U.S. consumers using online payment services for more than just online purchases

Mercator Advisory Group survey finds 65% of consumers and 78% of young adults in the United States use online payment services

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The latest Insight Summary Report from Mercator Advisory Group’s CustomerMonitor Survey Series reveals that 65% of all respondents and 78% of young adults aged 18 to 34 use online payment services such as PayPal, Google Checkout, Pay by Amazon, and others accessible online and in app by mobile devices and more have been doing so since 2014. Rising use of alternative financial services, particularly online payment services and person-to-person payments may begin to disrupt debit card usage in the United States although current use remains steady overall. The report, U.S. Consumers and Debit: Signs of Displacement, presents the findings of an online survey of 3,009 U.S. adults conducted in June 2016.

Online payment services are used for more than just online purchases. In fact, the survey finds that 30% of consumers who use online payment services, use it to make purchases in a merchant’s physical location and 27% use it to transfer money to family or friends, both uses up steadily from 22% who did so in 2014. Another growing use is for paying household bills and for more convenient payment from mobile devices. As consumers make a greater share of purchases online and by mobile using a wider range of payment options, credit cards are often preferred to debit cards online. And with the rising use of online payment services, consumers may start to bypass traditional payment cards and keep funds in their payment service rather than transfer it back to their checking account.

“Consumers’ rising use of online payment services may signal some type of payment disruption. While experts agree that debit volumes are still rising, we see signs of displacement with growing use of alternative financial services and intermediaries from online payment services,” states the author of the report, Karen Augustine, senior manager of Primary Data Services at Mercator Advisory Group, which includes the CustomerMonitor Survey Series.

The report is 84 pages long and contains 36 exhibits.
 

Companies mentioned in the report include:Amazon, American Express, BillMeLater, Bitcoin, Discover, Dwolla, Google, Facebook, MasterCard, MoneyGram, PayPal, PeoplePay, PopMoney, Square, Venmo, Visa, Walmart, and Western Union.


Highlights of this report include:

  • Year-over-year trending of payment type used in households, including debit card use in the U.S. and the ways that consumers use debit cards

  • Ownership and interest in obtaining EMV-enabled debit cards

  • Comparison of debit card ownership to debit card use

  • Preferred payments for online purchases and reasons for not using debit cards at online retailers

  • Preferred payments in stores

  • Cash use and reasons for using cash

  • Checking account opening, methods used and checking account features including instant issuance

  • A shift in demographics of debit cardholders 

  • Use of person-to-person payments and online payment services by brand and primary reasons for using online payment services 

  • Awareness and use of Bitcoin

  • Comparison of use of financial institutions of specific payment services with use of alternative services initiated in supermarkets, discount stores, and other outlets

  • Types of fees paid for use of checking account

  • Cash spending and reasons for cash use

  • Debit card rewards, type of rewards and motivation to use card more often

  • Interest in mobile-based account controls for debit cards

  • Interest, use and willingness to pay for 8 value-added debit card services