Despite the rise of digital wallets, buy now, pay later, and other emerging payment methods, credit cards remain the preferred way for many Americans to pay. At the same time, merchants are increasingly trying to influence how customers pay through credit card minimums, cash discounts, and surcharges.
New consumer research from Mercator Advisory Group explores how shoppers respond to these tactics, why credit cards continue to dominate at the point of sale, and the role that rewards and fraud concerns play in consumers’ payment preferences.
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Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 U.S. PaymentsInsights – Credit Cards: Still the Card of Choice.
After a one year lull, Merchants are trying to influence customer card choice again:
- 2019 saw a 7% increase in “stores posting signs about minimum purchase to use credit”
- Last year, 40% of consumers reported seeing discounts for using cash vs. credit. In 2019, 46% reported.
- 8% more consumers witnessed stores charging a fee for credit card use this year vs. last year
- 7% more consumers saw signs requesting not to use credit this year than last
- 36% of consumers report ‘taking their business elsewhere’ after seeing a requent not to use credit
- Similar percentages of customers defect after seeing signs for an extra fee or not accepting a card brand
About this report
Mercator Advisory Group’s most recent consumer survey report from the bi-annual North American PaymentsInsights series, reveals that the credit card is U.S. consumers’ preferred method of payment both online and offline.
When shopping in stores, 43% of U.S. consumers prefer to use credit/charge cards, followed by 32% who prefer to use debit and 17% who opt for cash. Further, these findings are on par with last year’s results.
Compared to last year’s survey, more consumers report that merchants are trying to influence their method of paying. For example, this year 59% report that they have seen signs posted by merchants stating minimums, up from 52% in 2018. Also, 46% report stores offering discounts for cash, a result that is up from 40% in 2018.
Consumers are reporting more fraud this year compared to last. In 2019 about 3 in 10 (31%) reported some kind of fraud on their credit cards compared to 24% who did so last year.
With regard to credit card rewards, cash back is still the most common reward earned by U.S. cardholders. Currently, about two-thirds of cardholders (64%) are getting cash back from at least one issuer of the credit cards they hold. Non-travel related points are the second most common reward, which 4 in 10 cardholders report receiving. These findings are consistent with the findings Mercator reported last year.
Credit Cards: Still the Card of Choice, the latest report from Mercator Advisory Group’s Primary Data Service, is based on a sample of 3,002 U.S. adults surveyed in the annual online Payments survey of Mercator’s North American PaymentsInsights series, conducted in June 2019.
The study highlights consumers’ use of credit cards, relative to other payment types, the use of credit card controls, reward programs, new account opening, among other topics.
“The credit card space in the U.S. continues to be dynamic. We see no erosion in consumers’ preference to use their credit cards when shopping. It is still the top-of-wallet payment choice. This report explores some of the key aspects of the credit card business and brings the consumers’ view of the payments world to light,” stated the author of the report, Peter Reville, director of Primary Data Services at Mercator Advisory Group, which includes the North American PaymentsInsights series.
Companies mentioned in the survey results shown include: Acima Credit Affirm, Avant, Bread, Klarna, Lending Club, Prosper, SoFi, and Upstart.
