New PULSE Survey Reveals Strong Payment Preferences of Debit Card Users

Tuesday 11 May 2004 14:01 CET | News

In a new study commissioned by PULSE EFT Association and conducted by Analytica, consumers demonstrated unexpected levels of loyalty to and satisfaction with their preferred payment method and provided feedback about possible changes in the payments system such as reduced acceptance of debit cards and the possible assessment of new debit fees.

Participants were asked which of six payment methods they use most in three retail settings: grocery stores, gas stations and large retailers. The payment methods identified were PIN debit, signature debit, cash, major credit card, check and store charge card. Respondents answers revealed that they are more likely to choose one payment method over the others and are inclined to use it across these retail settings, rather than varying their payment method with the type of store. Survey Results The survey findings regarding payment method loyalties enabled Analytica to segment the responses by respondents preferred payment vehicles. When the results were analyzed separately by these segments, new insights emerged. The study defines the six payment loyalty segments as follows: - Respondents who say they pay most often with PIN debit (23.5 percent of participants). - Those who pay most often with signature debit (17.0 percent). - Those who use a debit card most but place less emphasis on the verification method employed (13.8 percent). - Those who pay with credit cards most (17.8 percent). - Those who pay most often with cash (15.4 percent). - Those who pay with checks most (12.6 percent). When asked to rate their satisfaction level with each of the payment methods, PIN debit purchasers reported being the most satisfied with their chosen payment method (9.6 on a scale of 1 to 10), followed closely by credit card users (9.5) and signature debit users (9.3). In comparison, check users satisfaction with checks rated only 8.1. According to the survey, when consumers choose debit over other payment methods, it is chiefly because they believe it is faster and easier. The second most frequently cited reason for choosing debit is avoiding credit balances and interest. The option to receive cash back was rated much lower, and sweepstakes and promotions have little impact on the choice of payment among debit users. The study found that check users express some concerns with checks, suggesting that individuals in this group may be converted to paying with debit. Among people who pay predominately with cash, given a choice between check, credit card and the two types of debit, these individuals indicated a preference for PIN debit. As a result, they also would appear susceptible to transitioning to the use of PIN debit. In addition, the survey revealed some relevant findings for merchants that accept debit cards: regardless of their preferred payment method, consumers are almost universally opposed to actions that would inhibit the use of their debit cards. When asked how they would respond if a merchant stopped accepting their debit card, 81.4 percent of participants said they would be very unhappy, and 29.7 percent said they would stop using the merchant. If merchants began charging to accept debit cards, 79.2 percent of respondents would be unhappy, and of those, 37.4 percent said they would switch to a different payment method and 21.2 percent said they would stop using the merchant. Similarly, if financial institutions began charging a fee for debit card payments, 85.3 percent of respondents reported they would be extremely dissatisfied, and 43.7 percent said they would change institutions.

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Categories: Payments & Commerce | Payments General
Countries: World
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Payments & Commerce