, , ,

4 Things You Need to Know About Cryptocurrency Today

(New York, NY) Bitcoin has been around for over a decade but continues to find its footing with consumers less familiar with it. Famously first used to purchase Papa John’s pizza in 2010, the cryptocurrency’s value has grown from $725 in 2015 to over $64,000 as of this writing, creating some investment winners and losers along the way. Auriemma Group’s latest issue of Mobile Pay Tracker investigated consumers’ relationship with Bitcoin and cryptocurrency in general, uncovering who knows about it, who has it, what they’re using it for, how they’d like to use it in the future, and more.

1. Lack of understanding prevents cryptocurrency ubiquity.

Cryptocurrency has captured mainstream attention since its launch, but few consumers truly understand how it works—74% say they are a cryptocurrency novice. While some may be able to speak about it generally, its unlikely your average cryptocurrency holder is explaining the blockchain to their friends. Overall, though, nearly everyone (96%) has at least heard of cryptocurrency, highlighting just how culturally significant it has become during its relatively short tenure.

“As a payments ecosystem, cryptocurrency will need to become more widely understood for it to truly flourish,” says Jaclyn Holmes, Director of Research at Auriemma Group. “But low levels of understanding may be enough for a casual investment, even if the currency is far from becoming the decentralized alternative to cash.”

2. About one-in-six consumers currently own a cryptocurrency.

Age plays a notable role in cryptocurrency ownership, with some Gen X and Baby Boomer consumers likely hesitant to use it as an investment vehicle due to its volatility. With more time to absorb the ebbs and flows of the market and more openness to emerging payment types, Gen Z and Millennial cardholders are more likely to hold cryptocurrency (25%-30%).

“Not only do younger cardholders have the advantage of time when it comes to cryptocurrency investing,” says Holmes. “The group is also generally more open to novel technologies and approaches in the payments space. We’ve seen it with mobile payments, P2P payments, contactless technology, and more.”

Still, without high levels of understanding, 57% of those who own cryptocurrency say it comprises less than one-quarter of their overall savings/investment portfolio. Though thousands of cryptocurrencies are in circulation, Bitcoin, Dogecoin, and Ethereum are the most owned among consumers (7-11%).

3. Those with cryptocurrency want more.

Looking ahead, one-quarter of consumers are interested in buying or receiving cryptocurrency in the next 12 months. This figure increases to 81% among those who currently hold cryptocurrency. Even those who used to hold cryptocurrency show increased interest (49%), which exemplifies the largely positive experience those who have ever held it have had with the product.

“While traditionally bought and sold proactively, we’ve noticed passive opportunities for cryptocurrency acquisition sprouting up across the payments space. Venmo, for example, now allows its users to redeem their funds for Bitcoin, Ethereum, Litecoin, or Bitcoin Cash,” says Holmes. “It wouldn’t be surprising if it became a common redemption option for credit card rewards programs.”

In fact, cryptocurrency as a cash back reward is of interest to one-third of consumers, while those who currently hold cryptocurrency are even more interested (75%). That isn’t to say cryptocurrency rewards will become table stakes, but they could certainly become a program sweetener, particularly for younger cardholders looking for a low-risk way to participate in the space.

4. It’s considered a long-term investment, not liquid funds.

Though cryptocurrency can sometimes appear to be a get-rich-quick scheme, the reality is that those who hold it broadly think of it as a long-term (38%), not a short-term (13%) investment. Still, knowledge remains key. Losing the errant dollar to a defunct cryptocurrency may not change one’s financial future, but an overzealous investor could lose a lot of money quickly, like this Shanghai investor who purchased Squid Game crypto.

“Some consumers simply play around with cryptocurrency to see what happens, but this could become a high-risk endeavor for those offering up their life savings,” says Holmes. “Issuers can play in this space by offering their cardholders the opportunity to buy into cryptocurrency without such a large price tag—using rewards points to purchase smaller portions of trusted cryptocurrency providers.”

Without the infrastructure to accept cryptocurrency as a form of payment at the point-of-sale, it will largely be seen as an investment product. Few (14%) see cryptocurrency as liquid funds for purchases, but if presented with the option to use theirs for a purchase at the point-of-sale, about half are likely.

Why should banks care about cryptocurrency?

While cryptocurrency is still relatively new and transaction volume remains low for the industry, it is undoubtedly a growing space. Those looking to play in the space will need to remain conscious of evolving regulation to ensure compliance needs are met. Still, banks and issuers can act as a refuge for consumers looking to dip their toe in without the exposure that comes with committing their hard-earned dollars to the investment. Providing cardholders the option to earn or redeem their account rewards as cryptocurrency allows them to passively participate in the space in a way that feels lower-risk, particularly for those new and just looking to play around.

Survey Methodology

Mobile Pay Tracker

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in July 2021 among 2,003 adult mobile pay eligible credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.

About Auriemma Group

For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (+1) 646-454-4200.

/by
, , ,

Buy Now, Pay Later Preferred Over Credit Cards by Gen Z and Millennials

(London, UK) More credit cardholders ages 18-34 would prefer to use a Buy Now, Pay Later (BNPL) service than their existing credit card if faced with a need to borrow, according to Auriemma Group’s latest issue of Cardbeat UK.

BNPL popularity and usage has grown exponentially in the UK since Klarna launched in September 2016, accelerated by the pandemic and the resulting shift to online shopping. In these 5 years, firms such as Laybuy, Clear Pay and PayPal have entered the BNPL space, capitalising on the rising demand from consumers.

Auriemma Group’s latest research revealed a significant shift in borrowing preferences. Among credit cardholders, 20% would prefer to use a BNPL provider (e.g., Klarna) if they did not have enough funds available on hand, representing a 43% increase since November 2020. Meanwhile, the proportion of cardholders electing to borrow on their current credit card fell to 38%, representing a 17% decrease. The growing preference in using a BNPL product to borrow is largely attributable to older Gen Z and Millennial cardholders. Nearly three in ten (29%) say they would prefer to use BNPL when they do not have the funds to hand, compared to 25% who prefer using their credit card.

UK Neobanks are picking up on this trend, with Monzo and Curve announcing the launch of BNPL products last week, and Revolut expecting to follow suit. High Street banks such as Barclays have also expressed an interest to pursue a BNPL venture. But for the larger players bringing a product to market quickly is not easy, and with regulation coming from FCA by the end of 2022, time is of the essence.

“This shift in preference is leading some cardholders away from traditional credit solutions,” says Jaclyn Holmes, Director of Research at Auriemma Group. “Credit providers should evaluate their product sets to understand how they may need to adapt and differentiate in order to meet their customers’ evolving needs.”

Auriemma has seen credit card cancellations increase as consumers look to other payment and borrowing methods. 14% of credit cardholders have cancelled a card in the past 18 months, up from 8% in November 2020. And this proportion increases to 24% among those who have used a BNPL plan.

While BNPL has experienced significant growth, credit and debit are still the preferred payment choices. BNPL only captures 7% of total transactions while credit and debit capture far more (44% and 41%).  Issuers looking to meet growing consumer demand could integrate BNPL into new or existing credit card products, where there is interest from 43% of cardholders.

“As BNPL continues to grow in popularity we expect interest in credit card instalments to rise further,” says Holmes. “As we’ve seen in the US, this type of offering gives issuers a way to compete directly with BNPL providers without cannibalising their credit card portfolio.”

Survey Methodology

Cardbeat UK

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma in June 2021, among 800 adult credit cardholders. The number of interviews completed is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 21 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, call Jaclyn Holmes at +44 (0) 207 629 0075.

/by
, ,

Buy Now, Pay Later Usage Increases as Provider Options Expand

(New York, NY) Buy Now, Pay Later plans have reinvigorated the centuries old installment payment concept, now allowing shoppers to split payments for small and large purchases alike, particularly online. Auriemma Group has been researching this space in their Payments Report study since 2018, as new providers entered the space, rolling out their own unique spin on the offering.

Buy Now, Pay Later has gained wide visibility in recent years thanks to celebrity and influencer led marketing campaigns. Providers such as American Express and Klarna enlisted everyone from Tina Fey and Snoop Dogg to more niche personalities like Celeste Barber and Trixie Mattel in expansive ad campaigns. Since this advertising push, other bank-branded solutions (like Citi Flex Plan and My Chase Plan), and offerings from FinTechs such as Affirm, PayPal, QuadPay, Afterpay, and Sezzle have entered and redefined the space.

The widening provider field has created increased awareness, opportunity, and exposure for these products. Between Q1-2019 and Q1-2021, Auriemma’s research shows a 10+ percentage point increase in debit cardholders offered a Buy Now, Pay Later plan in-store or online. And most of these consumers find the plans attractive.

“It has become common for shoppers to see a Buy Now, Pay Later option at checkout,” says Jaclyn Holmes, Director of Research at Auriemma Group. “Online, these buttons become subtle reminders for consumers, and reinforce them as a viable payment option, especially when offered at checkout for a brand they trust.”

Take rates on Buy Now, Pay Later also increased significantly over the last couple years. More than half of those offered Buy Now, Pay Later in a physical store (56%) or online (51%) say they enrolled in the option, again representing 10+ percentage point increases since Q1-2019. These increases parallel the expanding field of options available to shoppers at the point of sale.

While merchants have traditionally been the most common provider of installment plans at the point-of-sale, more recent data from Auriemma Group shows that the FinTech Buy Now, Pay Later providers offering these short-term solutions are closing the gap. However, merchants will continue to play an integral role in the adoption of these providers – over half of debit cardholders agree that being partnered with well-known or trusted retailers is paramount when it comes to feeling comfortable and secure in using the product.

“While merchant trust is playing an influential role in Buy Now, Pay Later adoption, these offerings are also impacting the merchant’s ticket size and shoppers’ likelihood to purchase with a merchant again,” says Holmes. “This shows that a positive Buy Now, Pay Later experience can create a halo effect for the brands offering them. And with Buy Now, Pay Later becoming increasingly common and recognizable, consumers may come to expect it as a payment option rather than a sweetener.”

Survey Methodology

The Payments Report

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in March 2021 among 800 adult debit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 19 minutes.

About Auriemma Group

For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (+1) 646-454-4200.

/by
, , ,

4 Payment Trends that Emerged in the Shadow of COVID-19

(London, UK) COVID-19 has brought about many changes in consumer behaviour and issuer offerings. Auriemma Group’s 2020 Cardbeat UK Trend Report identified four areas where shifts were most prominent, highlighting the impact that the pandemic has had on the payment’s ecosystem for both financial institutions and cardholders alike.

1. New card acquisition, spend amounts and card usage have declined.

Cardholders were less engaged with their existing products and fewer sought new products compared to prior years. According to Auriemma’s research, new card acquisition dropped nearly 50%, with only 10% of UK credit cardholders in Q4-20 saying they acquired a new credit card in the past 18 months, down from 18% the same time the year prior.

“Consumers and issuers kept focus on current offerings,” says Jaclyn Holmes, Director at Auriemma Group. “During this period, issuers recognized their efforts were best spent building meaningful and productive engagement with their existing customers. For cardholders, it was critical that they got the most out of their existing products and kept on top of the various solutions that were being presented to them.”

Cardholder spend across payment methods declined from Q4-19 to Q4-20, coinciding with a drop in usage among heavy top of wallet card users. By the end of 2020, UK cardholders reported £854 in average monthly spend, down from £988 the year prior. Meanwhile, the proportion of cardholders who use their most frequently used card 20+ times in a typical month decreased over the same period (30% vs. 22%).

2. Types of rewards cards held shifted away from T&E and towards day-to-day rewards.

The impact of travel restrictions and stay-at-home guidance was felt most prominently in the T&E space. Over 2020, the types of rewards cards held shifted to align with new consumer spend patterns due to COVID-19. Ownership of supermarket co-brand (from 21% in July 2020 to 28% by November) and cash back cards (23% to 27%) rose, as co-branded airline (19% to 9%) and hotel card (5% to 2%) ownership trended down.

“While rewards card ownership shifted towards the end of 2020, and travel naturally became a lesser focus given the obvious limitations, our research found that most T&E cardholders still enjoy earning travel rewards” says Holmes. “These cardholders currently prefer redeeming their rewards for non-travel benefits, but we anticipate travel-centric redemption will bounce back as travel becomes more routine.”

Auriemma recently covered COVID-19’s impact on travel and consumer loyalty in-depth here.

3. Payment holidays became a commonplace issuer-provided relief option.

COVID-19 impacted some cardholders earning potential, leading issuers to develop payment accommodations, including payment holidays, for those unable to make their payments. Despite being a new concept to many, credit card payment holidays had strong consumer awareness by Q4-20 (94% aware), and nearly one-quarter of those offered the option took it.

Future interest was rather low (17%), signalling that the accommodation–which was intended to be a temporary, short-term solution–likely will not be missed post-pandemic. In fact, 58% of cardholders were ambivalent or would not be disappointed if payment holidays were no longer an option in the future.

“We’ve passed the March 31st deadline for cardholders to enrol in payment holidays, so issuers are now preparing for a possible increase in delinquency volume. Most cardholders aren’t expecting to rely on a future payment holiday, but there will be a group who aren’t able to jump back into their payments and will seek alternative accommodations to help make ends meet,” says Holmes.

The government has already shared guidance for such a program. Breathing Space, enacted May 4th of this year, provides a 60-day freezes on interest, fees and enforcement for people in problem debt. The program is expected to bring in £400 million in extra repayments in the first year, ultimately extending upon the improvements made with persistent debt figures throughout 2020.

Auriemma covered payment holidays and Breathing Space in greater detail here.

4. Reduced spend and focus on paying down balances led to fewer in persistent debt.

While shifting finances were a hallmark of COVID-19, reductions in spend and access to payment accommodations led some to improve their financial positions. Auriemma found that the number of cardholders in persistent debt decreased from 7% in Q4-19 to 3% by Q4-20, likely because cardholders were able to focus on paying down their balances without compounding interest slowing them down.

“COVID-19 had the potential to worsen persistent debt, but a combination of cardholder thriftiness and payment accommodations created an environment where consumers could improve their financial standing instead,” says Holmes. “However, as payment holidays come to an end and spend levels return to pre-pandemic levels, we’ll see if this change, along with the others that emerged in the shadow of COVID-19, is long-lasting or temporary.”

Survey Methodology

Cardbeat UK

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma in November 2020, among 845 adult credit cardholders. The number of interviews completed is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 21 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, call Jaclyn Holmes at +44 (0) 207 629 0075.

/by
, , ,

Issuers and Cardholders Shift Focus to Digital During COVID-19

(London, UK) Issuers are building out digital offerings as COVID-19 continues to curtail opportunity for in-person servicing. Auriemma Group’s latest issue of Cardbeat UK found that 42% of those who interacted with a bank branch since November 2019 haven’t used the channel again since the pandemic began. While cardholders are leaning more heavily on digital solutions, many still expect a diversity of options. Are issuers meeting their cardholders’ needs, and what would improve the customer service experience today?

Auriemma’s research found that sustained channel usage through the pandemic is most prominent for digital options. Just under nine-in-ten cardholders who used mobile apps (87%) or online portals (86%) to interact with their issuers prior to COVID-19 say they continued to use that channel since the outbreak began, while phone (74%) and bank branches (58%) saw lesser continued use.

While many issuers have numerous communication options available to their cardholders, this shift in channel usage has propelled them to reassess operational needs. Auriemma’s roundtables discussed how digital servicing has become a top priority since the pandemic began, noting that the cost of delivery, training, and staffing considerations inform which measures are taken.

“Overall, issuers are doing what they can to reorient their strategies to meet the changing needs of their cardholders, and they’ve been largely successful” says Jaclyn Holmes, Director at Auriemma Group. “Three-quarters of cardholders who interacted with an issuer both before and since COVID-19 say the customer service experience is about the same, and those who feel it has improved most often point to the strength of the human element—problems are solved more easily, solutions are flexible, and agents appear more empathetic.”

Notably, 17% of this group do say that the customer experience has gotten worse, with longer wait times (71%) most often to blame. However, these cardholders also say there are fewer options for contacting their issuer (38%) and that getting answers or solutions to their questions has become more difficult (32%).

“Ensuring customers have a variety of communication channels to choose from is clearly important, however not at the cost of speed to resolution,” says Holmes. “Issuers deciding how to allocate their resources are tasked with providing diverse options, while staffing them with an eye towards contact patterns and traffic expectations.”

One way that firms are trying to meet customer need without overburdening their resources is through self-servicing options. Auriemma’s roundtables found that many issuers have promoted the use of digitised forms for disputes, complaints and payment holidays. These options yield high customer use and provide issuers with efficiency gains.

And cardholders broadly react positively to these types of options. Auriemma’s research found that the vast majority of cardholders are comfortable completing financial actions via digital channels. This is particularly true of more common tasks like checking account balances (90%), making a payment (89%), updating contact information (88%), transferring funds (86%) and requesting new cards (85%).

“Providing self-service options has a two-fold benefit—cardholders have quick access to solutions for common questions and issuer resources become more readily available for more complex customer needs,” says Holmes. “Looking forward, providing the right allocation of resources towards self-service, chat bots, and live representatives, either in chat or on the phone, will be key to cardholders continued satisfaction with issuers channel offerings.”

Survey Methodology

Cardbeat UK

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma in November 2020, among 845 adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 21 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, call Jaclyn Holmes at +44 (0) 207 629 0075.

/by
, , ,

Do Cardholders Want Second Look or Credit Help Program Options?

(New York, NY) Second look products provide credit card applicants the opportunity to acquire a card more aligned with their financial standing, often without having to undergo another full application process.  Auriemma Group’s latest issues of Cardbeat US® and The Payments Report uncovered how likely applicants are to take these secondary offers, and how interested they would be in programs that give them suggestions on how to improve their application before reapplying.

Less than one-fifth (16%) of credit cardholders report being offered a different card than they applied for after being declined. However, the take rate for these offers is very high, with 69% of those offered accepting the second look option.

“This high acceptance rate for secondary credit products highlights the need for credit by below prime customer segments,” says Carrie Luciano, Manager of Partnerships at Auriemma Group. “Many are willing to accept an alternative credit product if they were referred by the card they initially applied for.”

Auriemma’s research also found that while familiarity was an important factor when accepting second look card offers, those who have had an application rejected in the past year may be more open to a lesser-known provider. About half of credit cardholders (48%) believe a lesser-known issuer would offer a more attractive product than a known issuer—this figure increases to 72% when looking at those who have been rejected.

“For merchants, offering an alternative second look credit product provides a means to boost topline sales and improves the otherwise negative customer experience of being declined—by facilitating credit for those who need it,” says Luciano. “Second look programs also have an ancillary benefit of acting as a credit building tool for applicants who often get rejected.”

While second look programs provide applicants with alternative offers, there is appetite for programs that help consumers improve the approval odds and reapply. The Path to Apple Card program provides this opportunity to applicants Goldman Sachs believes could meet the application requirements if the program is completed. Once the program is successfully completed, applicants are invited to reapply for the Apple Card.

Auriemma’s research found that 48% of cardholders would be interested in enrolling in a program that would help them improve their application if it led to them being reconsidered for that card after a 6-month period. Interest in such a program was driven by those with FICO scores below 670 and revolvers.

“Credit help programs, like the Path to Apple Card program, offer a way to keep applicants engaged with their desired card product, even if their application initially falls below par,” says Luciano. “While second look offers solve for an immediate credit need, credit help programs could be attractive to those willing to wait.”

Second look and credit help program offerings are on the path to ubiquity—with elements that satisfy consumer need and create opportunities for issuer engagement. Providing them as a secondary option circumvents the potentially negative rejection experience and allows applicants another opportunity to access credit, either with a new provider or with their primary option following some application improvements.

With over 30 years of experience crafting profitable, long-lasting partnerships in the Cards and Payments industry, Auriemma and a history covering second look programs, Auriemma is well suited to assist with your partnership or research needs in this area. Contact Auriemma at (+1) 646-454-4200 to learn more.

Survey Methodology

Cardbeat US

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in September 2020 among 813 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 17 minutes.

The Payments Report

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma in September 2020, among 821 adult debit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 26 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes (Research) or Carrie Luciano (Partnerships) at (+1) 646-454-4200.

/by
, , , ,

Cardholders Are Missing Payments—Here’s How Payment Holidays and Accommodations Can Help

(New York, NY and London, UK) COVID-19 has put additional financial strain on cardholders globally, but some issuers are trying to lessen the immediate burden. Auriemma Group’s latest issues of Cardbeat US and UK uncover how the pandemic could be affecting on-time payments, which accommodations issuers are offering consumers to help ease the strain, and how card rotation is being impacted as a result.

While missing payments is not exclusive to COVID-19, wage cuts, job loss, and other unexpected financial stressors could make missed or late payments more common. According to Auriemma’s research, about one-sixth of cardholders in both markets say they have missed a payment over the last 6 months. During this time, unemployment figures in both regions increased, with many cardholders needing government aid. However, credit card issuers in both geographies are finding creative ways to assist cardholders through this unprecedented time.

Payment Holidays Provide Short-Term Relief

One of the many ways UK card issuers are helping relieve payment pressure for their cardholders is by offering payment holidays, which allows cardholders to miss monthly payments without penalty. Auriemma’s research found that 20% of UK credit cardholders were aware of the option to take a payment holiday from their issuer, and 33% of them accepted the offer.

The high take-rate is unsurprising given the circumstance. Pandemic-adjacent reasons are most often cited for their acceptance, including wanting to keep money in their bank account and that it would help with cash flow.

“Payment holidays offer a temporary solution for an immediate problem,” says Jaclyn Holmes, Director at Auriemma Group. “And while the accommodation has become a necessary offering for high street banks in this moment, issuers will need to determine and communicate its intended tenure before it becomes table stakes for their cardholders.”

Long-Term Accommodations Chart a Corrective Course

While payment holidays offer a short-term fix, impacted cardholders can be transitioned to other accommodations meant to improve their financial standing in the long-term. In the US, 40% of cardholders have been offered at least one of the accommodations tested in Auriemma’s study (e.g., a reduction in their monthly minimum payments or interest rate, waived interest charges, forbearance options, hardship programs)within the past 6 months.

According to Auriemma’s study, the top offers include increasing credit card limits (20%), offering hardship programs (17%), and providing forbearance options (16%). These accommodations are popular among those offered them, with over half accepting.

“Offering payment accommodations provides a halo effect for your brand,” says Holmes. “Those offered a payment accommodation say they felt more positively about their card issuer as a result, which, along with attractive rewards and benefits, could influence card selection when making a purchase.”

Accommodations and Attractive Rewards Could Impact Card Selection

Over six-in-ten cardholders in both regions report using multiple payment cards in the past 30 days. These individuals are also more likely than their counterparts who used a single payment card to have taken either a payment accommodation or a payment holiday. And while goodwill derived from payment accommodations has an ancillary influence on which card is chosen in the near-term, attractive rewards and benefits remain the main drivers of card choice, regardless of locale.

“When the dust settles, consumers struggling financially will look back on this time and remember which issuers had their back” says Holmes. “Rewards and benefits continue to be critical factors in card selection, but they’re not the only consideration at the moment. Issuers who give their cardholders both payment flexibility and relevant benefits during these uncertain times will be best suited to secure or maintain their top-of-wallet position.”

Survey Methodology

Cardbeat US

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in June 2020 among 811 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 22 minutes.

Cardbeat UK

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma in July 2020, among 800 adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 20 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (+1) 646-454-4200.

/by
, ,

Artificial Intelligence Could Speed Up Live Chat, But Many Want a Human Touch

Many cardholders expect to talk with a live agent when interacting via live chat. For the tool to be viewed as successful, however, cardholders expect it to seamlessly solve their issues and provide easy connection to a live agent when needed.

34% of debit cardholders say they have used live chat. Of them, 64% believe they communicated with a human throughout the full interaction and only slightly fewer say they expect to interact with a human from start-to-finish. Yet, the most common activities that have been attempted via live chat could be completed via an artificial intelligence tool:

  • Checking an account balance
  • Reviewing transactions
  • Activating new/reissued cards
  • Checking the status of a payment

 

/by
, ,

Auriemma Talks POS Installment Plans with NBC DFW

Auriemma’s Jaclyn Holmes discusses our recent point-of-sale installment plan data:

Full article available on nbcdfw.com.

/by
, , , ,

4 Ways COVID-19 is Creating a New Normal for Consumers

(New York, NY) COVID-19 changed consumer purchasing behavior in the short-term, but will changes be long-lasting or temporary? It is a question often asked within the payments industry, and one that Auriemma Group’s research has been asking consumers for months. Auriemma’s latest Mobile Pay Tracker study (fielded April-May 2020) uncovered that the answer may be a little bit of both—purchase frequency could level, but preferred methods, channels, and services may shift to create a new normal going forward.

1. Shopping habits will likely level out, but methods may change

In the early days of COVID-19 consumer spend was reoriented to household purchases (e.g., food, cleaning supplies). While specific categories of purchases saw notable spikes, spend overall declined. Auriemma’s research found that in April and May two-thirds (65%) of cardholders said they were spending less over the past 30 days than they would have before COVID-19. When asked about the next 30 days, however, this figure drops to 44%, and a similar proportion (42%) expect their spend to return to pre-COVID-19 levels by that point.

Although spend may return to normal, there may be a new normal for how consumers make payments. More consumers are trialing contactless and mobile payments than ever before, and some are shifting their purchase channel preferences. For example, consumers have historically preferred in-store shopping for groceries, and while most still do, a notable 31% now say they prefer using digital channels (i.e., websites, mobile apps) to make grocery purchases.

“COVID-19 has given consumers strong incentive to try new payment methods and purchase channels,” says Jaclyn Holmes, Director of Research at Auriemma Group. “The disruption it has caused may be the catalyst that propels more innovative shopping and payment experiences moving forward.”

2. COVID-19 has not only changed how consumers shop, but also where

Staple household items were in high-demand at the start of COVID-19, and the need for those items trumped merchant and brand loyalty. Many consumers said stores they regularly shop at were out of many items (76%), that they needed to switch from their preferred brand to purchase an item they needed (67%), and that they have visited stores they don’t normally shop at to find what they need (35%).

This sentiment extends to the online shopping experience, with 40% of those shoppers saying they have tried shopping with new merchants or websites since the COVID-19 outbreak. Overall, COVID-19 has motivated consumers to try different merchants, items, and experiences. Nearly two-thirds (64%) of consumers say they are willing to try new ways to shop, including using apps and curbside pick-up.

“Brand loyalty is often a strong purchase motivator, both when purchasing products and selecting a merchant,” says Holmes. “In recent months, many consumers have tried new merchants and products out of necessity. While some will understandably revert back to their preferred brands, some have expressed they’ve been pleasantly surprised by these alternatives and will continue to utilize or purchase from them looking ahead..”

3. Some industries and products will thrive, while others will struggle

With consumers staying and/or working from home, there were many services that gained popularity. Unsurprisingly, consumers reported increased usage of video chat platforms, online food delivery, and online workouts. At the same time, however, cardholders report a notable decrease in usage of deal/discount services or apps.

Groupon has been hit particularly hard—in February, the company announced they were shifting their focus away from products and back to experiences. The timing was unfortunate, given that just a month later consumer spend shifted away from in-person experiences because of COVID-19. By March, the company reported decreased demand for their offerings and significant increases in refund levels.

4. Consumers aiming to support local businesses may skip third-party apps

Third-party apps like Groupon and Seamless may also see decreases in usage among those aiming to support local businesses. 31% of consumers have donated money to local businesses and 24% have purchased gift cards to support their local businesses during this time.

Additionally, consumer awareness for hidden fees and commissions are driving some to purchase directly from the end merchant. Auriemma’s research identified that some consumers avoid using food ordering or delivery apps to better support local businesses. One 33-year-old male said:

“We’ve been bothered by the commission the food delivery apps are making so we are making a conscious effort to order directly from the restaurant. It had crossed my mind prior to the outbreak but now, it is more top of mind.”

COVID-19’s Overall Impact

COVID-19 will create some long-lasting impacts on consumer behavior, but some behaviors will return to normal. While overall spending is expected to lift as people get back to work and regain confidence in the economy, where they spend their money, what they spend money on, and the methods they use to make purchases may change. Issuers may see further increases in contactless payments and digital spend, as in-person purchasing (particularly via swiping or dipping)  remains low.

“Now more than ever consumer behaviors and attitudes are in a state of flux,” says Holmes. “Our continued research into the impact of COVID-19 will give us a forward look into these shifts and provide a roadmap for future expectations.”

 

Survey Methodology

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in April/May 2020 among 2,022 adult Apple, Google, or Samsung Pay eligible credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 27 minutes.

Additionally, ten in-depth interviews (IDIs) were conducted in May 2020 via telephone. All were recruited from the quantitative web survey from parts of the country that had seen at least some impact (either business closures or social distancing rules). The goal was to understand the impact of the COVID-19 epidemic on shopping behaviors and attitudes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (+1) 646-454-4200.

/by
© Copyright - Auriemma Group