Budget-conscious consumers reach for debit cards to maintain financial discipline, while the allure of rewards continues to fuel credit card use.
The PYMNTS Intelligence report “How People Pay: Budgeting Anxiety Drives Debit Card Usage” shed light on the nuanced decision making behind payment method selection in brick-and-mortar stores and across digital channels.
The report, a comprehensive survey of 2,552 U.S. consumers conducted in August, uncovered a fundamental tension between consumers seeking to manage their spending and those prioritizing financial incentives. This dichotomy played out differently depending on the shopping environment.
For in-store purchases, debit cards and cash were favored by those focused on budgeting and convenience, with 14% of debit card users and 20% of cash users citing budget management as a key reason for their choice.
Conversely, credit card use in-store was predominantly driven by the desire for rewards or cash back, cited by 40% of users. Security concerns also factored into in-store choices, with cash being the preferred method for consumers prioritizing payment security.
The online landscape presented a slightly different picture, although the underlying themes of budgeting and incentives persisted. Budget-minded online shoppers gravitated toward debit cards, with roughly a quarter highlighting the ease of tracking payments and 14% emphasizing budget control.
Security became a more prominent factor in online transactions, with 8.3% of credit card users citing better security compared to 4.8% of debit card users.
Despite this, the primary driver for online credit card use remained rewards, attracting one-third of users.
Digital wallets emerged as a strong contender for online convenience, with 55% of users citing them as their main reason, higher than debit or credit cards.
Trust in the provider played a larger role for PayPal users compared to those using Google Pay or Apple Pay.
Other key findings from the report:
Beyond these key takeaways, the report delved into other compelling aspects of consumer payment behavior. For instance, it explored the motivations behind digital wallet use in physical stores, where convenience was also the leading factor, albeit by a smaller margin compared to online transactions. The report also differentiated between various digital wallet providers, noting the importance of brand trust for PayPal users.
