Visa Study Shows 83 Percent Of Consumers Want New, IoT Ways To Pay

Picture a car that’s smart enough to know it’s running low on gas and prompts the driver to stop at the nearest gas station. There, a pump is activated as the car approaches. After the fill-up, the driver simply pulls away.

Or a device that’s affixed to the side of a trash can that can read the barcode of the item that’s being thrown away. Once deposited in the bin, that item is automatically added to the consumer’s shopping list for purchase.

How about a consumer who walks into a store to buy a few items that she puts into her bag as she cruises the aisles? When finished, she leaves the store without stopping first to check out.

These are three of the many connected payments experiences that 66 percent of consumers would welcome in exchange for eliminating the many frictions they say make shopping anywhere — online and in a physical store — unproductive, time-consuming and inefficient.

These are just a few of the insights uncovered in a first-of-its-kind research study to understand the U.S. consumer’s appetite to use connected devices to change the way they buy and pay for things.

This research study, a collaborative effort between Visa and PYMNTS.com, surveyed 2,584 consumers, all of whom live in the U.S. and all of whom owned at least a smartphone in May 2017. Consumers were asked a series of questions about how they use connected devices to pay today and how they might like to use them in the future. Connected devices, for the purposes of this study, included smartphones, computers and tablets, video game consoles, smart TVs, activity trackers and smart/sports watches, voice-activated devices, smart cars, wearables, and smart appliances.

Consumers were also asked to keep a diary of the things they purchased over a seven-day period and what connected devices, if any, they used to make them. They also kept a one-day diary so that we could better understand their interest in using connected devices to buy things while also going about their day-to-day activities — cleaning the house, commuting and taking care of the kids, for example.

What we discovered after sifting through the 6 million data points that we collected was nothing short of fascinating.

The average consumer today is pretty well connected.

The typical consumer owns four connected devices, and 75 percent of all consumers own something other than a smartphone, computer or laptop. Nearly as many connected consumers own a voice-activated device, an Amazon Echo speaker or a Google Home Assistant (14 percent) as own a smart watch (15 percent), even though smart watches have been in the market nearly twice as long.

Connected consumers aren’t defined by the typical demographics — age, income or even education — but by their lifestyle and a variety of other socioeconomic factors.

After looking at the profiles of all these consumers and the devices they own, we were very surprised to learn that connected consumers are far more alike than different. The differences in the devices they own and use aren’t a matter of how much they make, how old they are or how big their households are. When looking at demographics alone, connected consumers earn roughly the same annual income, are roughly the same age, and live in households that are essentially the same size.

What makes them different is how they live their lives.

Connected Home consumers (24 percent of our sample) own devices used mostly at home, such as video consoles, voice-activated speakers and smart thermostats.

Connected Me consumers (28 percent of our sample) own devices that are more person-centric and follow the person wherever she goes, such as activity trackers and smart/sports watches.

The Super Connected consumers (23 percent of our sample) appear to be the early adopters of most any connected device and own six or more of them, including many of the things that their Connected Home and Connected Me counterparts own, plus an array of smart appliances, cars and wearables.

Mainstream Mobile consumers (21 percent of our sample) haven’t yet moved beyond a smartphone, computer or tablet.

Only 4 percent of our sample owned only a Smartphone.

Connected consumers find the current shopping experience tedious and describe it as inefficient, time-consuming and unproductive — and want it to be better.

What also unites these connected consumers is their disdain for the shopping experience. Today’s time-starved consumers told us that shopping is anything but relaxing, fun and productive. More than 60 percent, in fact, describe it as unproductive, inefficient, time-consuming and even boring. And that’s irrespective of where they shop — online or at a physical store.

And connected consumers do both.

Over a seven-day period, nearly 80 percent made a purchase in a physical store — and for the things that you’d most logically expect: food, clothing, gasoline. But that’s changing — and quickly.

Roughly 50 percent of our connected consumers also purchased something online over that seven-day period. Additionally, consumers made at least one purchase in 11 of the 19 merchant categories we surveyed, including many segments traditionally dominated by in-store purchases: household furnishings, home supplies, electronics — and yes, even groceries and gasoline.

What consumers also told us is that they want a shopping experience that is different, maybe not necessarily more fun, but more efficient and less time-consuming — one that offers a fluid, seamless buying and paying experience.

So much so that 83 percent of consumers told us that they’d use a connected device to enable such an experience. For them, payments nirvana is something that I’ve often referred to as “the Grandma experience,” where they can leave a store and pay for something without having to physically stop and pay for it.

In other words, no wasting time twiddling their thumbs standing in checkout lines.

A full 44 percent said that they’d welcome the chance, specifically, to experience that seamless “autopay” moment for the things that they still tend to mostly buy in a physical store — that is, food, clothing and gasoline. But as appealing as these seamless experiences are to consumers, the experience shouldn’t interfere with the consumer’s ability to control when it happens. All but the Super Connected said they’re not ready to have appliances, including their car, auto order and auto pay for maintenance, supplies, or refills.

What we also found fascinating was the interest level consumers have in using connected devices to buy and pay for things while going about their day-to-day tasks — buying things while eating breakfast, cooking dinner, cleaning or taking care of the kids. More than 66 percent see the potential for connected devices to help them multitask — the connected commerce way.

Consumers want control over how their data are used and secured when using connected devices to pay for things.

It’s no surprise that when we asked consumers what would stop them from embracing new ways to pay using connected devices, data privacy and security topped the list. A full 76 percent of consumers expressed concerns over the privacy of their data, and nearly as many, 71 percent, expressed concerns over data security.

What we found fascinating is the degree to which concerns over data transparency, the third priority for consumers, rounded out the top three list.

The “auto” part of seamless is viewed as a huge efficiency and productivity boost, but not at the expense of not knowing or being able to verify that what consumers have been charged is correct. Some 70 percent expressed concerns over not being able to validate charges incurred over the course of those connected buying experiences.

Equally fascinating was how little concern consumers have over the learning curve associated with these new ways to pay. Devices and the software that powers them have made using most of these devices intuitive and easy. As a result, only 36 percent of consumers expressed concerns over having to climb a steep learning curve to understand how to use these devices to pay for things.

Consumers want their bank or bankcard network to power their connected device payments experience.

Trust is obviously a critical element of getting consumers on board with these new ways to pay. So, we asked consumers who they’d trust to enable them on their behalf. We gave them nearly 20 choices to select from — including their bank, telco provider, card network, to the tech giants that power their programs, apps and social networks.

Seventy-seven percent said that they want their financial institution/bankcard network to enable these new ways to pay (and the numbers were even higher —80 percent — for the Super Connected). Fewer than 30 percent of connected consumers trust the large technology enablers to provide them (Google at 26 percent, Apple at 23 percent and Microsoft at 10 percent).

Only 15 percent said they would trust their favorite retailer when it comes to payments, unless that favorite retailer is Amazon — nearly half of consumers (48 percent) said they’d trust the eCommerce giant, in part because so many of them shop there today.

Interestingly, only 8 percent of connected consumers say they would trust Facebook, which most consumers spend more time on than any other online venue, to enable such a solution.

Consumers don’t yet see how the devices they use today can help them achieve the seamless payments nirvana that they want.

What was clear to us as we examined the data is that there’s a strong appetite — across all connected consumer groups — to make the process of paying for the things that consumers want to buy better.

Sixty-six percent of consumers feel strongly that connected devices can help in areas where they feel the most friction: buying the basics. New ways to pay for food, clothing and the things they use to furnish their homes — home furnishings and supplies — and maintain it — household repairs — pop to the top of their new-ways-to-pay wish list.

What’s not as obvious for them right now is which connected devices can deliver that experience.

Only 38 percent of connected consumers think that the smartphone can, and fewer still view existing voice-activated devices, activity trackers and cars as capable of making a seamless payment experience their reality.

What’s implicit, though, in their responses is their belief that there’s something else out there that can —– and when it arrives, they seem willing to give it a try.

Maybe those are the devices that exist today that need to be further refined and enabled for the use cases that consumers would find most valuable. Then again, maybe they’re new devices yet to be developed. Let’s face it, the idea of using a voice-activated speaker to order pizza was unheard of just three years ago.

What seems clear is that consumers have the appetite for changing the way they buy and pay for things. They want a world in which paying for something is devoid of friction — and seamless. But not just seamless in the sense of how the payment experience happens, but in how a payment experience seamlessly becomes part of their everyday lives.

Now, it’s up to the innovators to seize the opportunity and show them how.