Company Spotlight

What Consumers Pick For Payments – And Why

Now in its 4th year, TSYS Consumer Payments Survey had its share of surprises. Like consumers now prefer credit to debit when shopping online and rewards will get them to switch to a new card issuer. Sign of the times (people feeling better about credit and banks feeling better about extending it) or is there something else driving this change? PYMNTS caught up with Sarah Hartman, Senior Director at TSYS to find out.


TSYS recently released the results of its 4th annual payment choice study. What are the key findings from this year – was there anything that surprised you?

SH: We’re certainly finding that this year, as we have in previous years, consumers continue to have a heightened awareness of security. That has also increased when it comes to payment cards. This year, we found that almost half of the consumers we surveyed had heard of chip cards, and 14 percent had received one from their bank. We expect those numbers to continue to increase in coming months as the U.S. gets closer to the liability shift date.

Those that responded to the survey also expressed increased interest in using their mobile devices to manage risk with offerings like alerts, the ability to view transactions and do things like block and unblock their purchases. We also saw an increase in an interest in using mobile devices to make payments, which I think is good news given what’s going on in the industry right now.


Although debit cards are still the most popular payment form in the U.S., when it comes to online shopping, consumers prefer to use their credit cards. Why do you think that is?

SH: That’s been something we’ve seen consistently in our last several surveys that we’ve published. Consumers do tend to prefer to use their credit cards when they make online purchases, although we have seen an increase in the use of debit cards for those purchases.

I think there are a few reasons for that which has been validated through our questions over the last few years. Consumers tend to think that it’s easier to dispute a credit transaction even though the actual processes are about the same. They are also a little more willing to wait for a credit that’s going back to their credit card when they have a return – and not so willing to wait for a credit going back to their checking account. Lastly, consumers are a little more protective about their debit cards, and the underlying checking account, and they continue to have some security concerns about online purchases.


How has consumer payment choice evolved over time? If you were to compare this study with past studies, are there any trends or discrepancies?

SH: We have seen both similarities as well as changes over time. From a payment preference standpoint, we do continue to see some purchase categories where consumers’ payment preferences have remained pretty steady. For example, we’ve seen a consistent preference for debit cards at supermarkets, and we’ve seen a consistent preference for credit on online travel sites.

There’s also been a significant narrowing of preferences between credit and debit in some of the other categories, however. Rewards and discounts have consistently taken the top spot on what can best influence a consumer to change how they pay.

One of the biggest changes we’ve seen was in our question about payment influencers and how highly consumers rank being able to use their smartphone to make a purchase. The percentage of consumers who were highly interested in using their mobile phone to pay was 25 percent in our 2012 study, and 40 percent in this year’s study. We expect that to continue to increase with recent announcements and movements in the industry.


Based on your experience, what are the top 3 factors influencing consumer card choice?

SH: As I mentioned, our findings show rewards and purchase discounts as the most significant way to influence how a customer pays and which card they’ll use. We know consumers use both debit and credit cards to pay, and multiple credit cards in some cases. We found using analytics to analyze that behavior and tailor rewards can be a powerful way to influence consumers.

Number two on the list is some of those enhanced security offerings – chip cards, alerts, and features that provide consumers with increased control. Again, we’ve found consumers have increasingly heightened awareness of that now.

Third on the list I would classify as just overall flexibility. Consumers expect to be able to use their cards anywhere, see their transactions right away online, have flexibility in how they pay, and easy access to online, mobile or in-person customer service.


How do you expect consumer payment choice to evolve over time, and why?

SH: There’s certainly a lot of exciting things happening in the payments space right now – we expect to see a continued interest among consumers in using their mobile phones for financial information and management as well as expanding that to the payments space. We also expect to see continued interest in enhanced security offerings that increase their comfort level in making payments in a secure way. Finally, we expect consumers to use different payment vehicles depending on their own preferences and the type of purchase they’re making.

We think it’s important for issuers to understand how their particular customers are paying, and to be able to segment their base and target their offerings or rewards to those consumers who would benefit the most.



Sarah Hartman
Senior Director, Consumer Payment Solutions, TSYS

Sarah Hartman is senior director of consumer payment solutions at TSYS. Her responsibilities include product and strategy activities associated with the consumer credit and debit card issuing business. Hartman has more than 25 years of payments industry experience and is an elected member of the U.S. EMV Migration Forum (EMF) Steering Committee. She is active in other payment groups, including ACT Canada and the Smart Card Alliance’s Payments Council. Prior to joining TSYS, Sarah held a number of leadership roles at a large consumer bank, and she has extensive product management, sales and marketing experience in the financial services industry. Hartman holds a bachelors of science degree in accounting from Miami University and a masters in business administration from the University of Dayton.

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