Consistency and ease of use have made online bank transfers popular for paying recurring bills. However, one-quarter of consumers who tried online bank transfers, also known as pay by bank transfer, for the first time in the last year did so for a particular reason: They could earn reward points.
Furthermore, 26% of consumers expressed interest in using pay by bank transfers for retail transactions if offered the ability to earn rewards. Millennials were the most likely to say this. PYMNTS data also found that more than half of consumers who have used this method in the past would be very or extremely likely to use it again for retail purchases if the merchant offered rewards.
This news bodes well for the future of pay by bank transfer — if providers can kick rewards programs into gear. For banks promoting online bank transfers, offering rewards is a crucial aspect of the initial push to encourage consumer adoption.
These are a few key findings in “New Payment Options: The Lure of Payment Method Rewards,” a collaboration with Nuvei. The report examines consumers’ willingness to use online bank transfers for recurring bill payments and online purchases if the payees offer rewards. The findings are based upon a census-balanced survey of 2,056 United States consumers conducted from Jan. 10 to 13.
PYMNTS’ data found that 32% of consumers cited the ability to receive rewards as a reason to make a payment with their preferred method. Thirteen percent said this is the most important reason to use their preferred method.
Fourteen percent of consumers reported that being unable to earn rewards is an issue, regardless of the payment method. Twenty-two percent of Generation Z and 20% of millennials said this, and on the other end of the spectrum, just 7.5% of baby boomers and seniors agreed. Consumers did not seem to associate bills as heavily with rewards. Just 9.4% of consumers who only pay recurring bills identified the inability to earn rewards as an issue.
Data showed that 15% of all consumers cited the ability to get better rewards as a reason they started using a new payment method in the last 12 months. PYMNTS also found that 24% of consumers reduced their use of digital wallets because other payment methods offered better rewards.
The data paints a clear picture: Rewards programs strongly influence consumers’ interest in using or dropping payment methods. Payment providers must realize these trends to retain existing customers and expand their customer base.
Download the report to explore consumers’ interest in earning rewards when using online bank transfers.