Younger consumers (under 35 years old) favour debit cards and cash as their main method of payment over credit, according to research from the Auriemma Consulting Groups (ACG). Debit card usage has become an engrained habit in younger consumers, as the recession and tightening of lending standards left them unable to obtain credit that fully meets their needs.
44% of younger consumers said they had no interest in using credit cards as their main method of payment. This poses a significant threat to the business models of many lenders. To change payment behaviour to credit, younger consumers must have the ability to earn rewards and tools to allow them to better control their spending. Surprisingly cash also remains important to all segments, and consumers prefer it because they perceive it to be more convenient than alternatives. Moving this spending to card or mobile based products will be a challenge, as consumers expect these products to be quicker and more convenient than what exists today, which is not yet the case.
Consumers Preferred Method of Payment by Age:
Primarily Use Other Form
|Under 35 years old||27%||49%||20%||4%|
|35-54 years old||24%||45%||29%||2%|
|55+ years old||19%||45%||34%||2%|
Matt Simester, Managing Director at ACG, said, “The younger segment has been trained to think about debit, but not to think about the value of credit. When you compound this with the difficulty younger consumers have had in getting credit, there is a clear need to develop products specifically for the younger segment of the population. To align with consumer needs, these products need to allow younger consumers to build an understanding of the value of credit cards, offer interest free periods, rich rewards programmes and fraud guarantees. Traditional credit card lenders currently appear to be getting outflanked by debit providers and alternative lending sources like payday loans.”
Cardbeat is a syndicated market research service that tracks key metrics and consumer attitudes towards topics that affect the payments industry. For additional information contact Matt Simester at +44 (0) 207 629 0075 or firstname.lastname@example.org.
About Auriemma Consulting Group
Since 1984, ACG has offered comprehensive management consulting, research, industry roundtable and benchmarking services to the financial services industry. ACG clients include credit card issuers and networks, commercial banks, mortgage lenders, merchants, and industry vendors. With offices in New York and London, ACG offers actionable solutions to help clients make important business decisions to maximise their efficiencies and revenues.
Matt Simester, +44 (0) 207 629 0075