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Four Things That Will Make UK Consumers Want Your Credit Card

(London):  UK cardholders have 1.77 credit cards in their wallet on average, and while some may assume consumers aren’t in the market for a new card, the majority are actually open to new card offers. But consumers aren’t settling for just any card, and to earn their business, issuers need to be smart about their products’ value propositions and how they’re marketed. In the densely populated field of credit card options, how can issuers stand apart from the pack? Offering the best rewards is a good start, according to new data from Auriemma Group. But consumers want more. Here are some of the more compelling ways issuers can increase their chances of getting into consumers’ wallets.

  1. Offer attractive rewards.

No matter the category, rewards continue to push consumers over the tipping point when making acquisition decisions. When faced with the long list of elite options, the 66% of respondents interested in acquiring another rewards card most frequently cited the richness of rewards as the chief factor for their selection. But just offering rewards isn’t enough.

  1. Highlight your card’s exclusivity and prestige.

When some consumers select a card, they do so because the card embodies a particular lifestyle. Aspirational or otherwise, cards perceived as prestigious (28%) and those with the best benefits (21%) (e.g., exclusive events, lounge access) are highly coveted by those looking for a new card. This group seeks cards that tout platinum or titanium status, viewing them as having the most enticing benefits.

  1. Maintain a well-known and respected public image.

Card selection is also heavily impacted by the familiarity with and reputation of your brand. Among those surveyed, approximately three-quarters (73%) indicated they would be unlikely to take a card from a brand they are unfamiliar with. Consumers over 55 years old were even more likely to say this (83% vs. 67% under 55). Likewise, 74% reported a brand’s reputation (positive or negative) would impact their decision, a factor even more important for cardholders under 55 (79% vs. 65% of 55+). And 21% of current cardholders in the market for a new card say they would base their decision on their personal affinity for the brand associated with it.

  1. If you’re UK-based, tell people!

Consumers see real value in products from issuers who have a distinct presence in the UK: 73% of cardholders said it was important for their card issuer to be headquartered in the UK. In fact, if rewards and rates were equal, 77% of cardholders with a preference would prefer their issuer have a national presence (vs. 23% global). UK-based issuers that are not calling attention to their geographical connection to cardholders are missing an opportunity to increase their wallet share and acquire new customers.

“Issuers who can effectively communicate these four attributes stand the best chance of acquiring new customers,” says Jaclyn Holmes, Director of Payment Insights at Auriemma. “The challenge will be in striking the proper balance and ensuring your message is targeting the correct consumers.”

Survey Methodology

This study was conducted online within the UK by an independent field service provider on behalf of Auriemma in June 2017, among 500 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.

About Auriemma Consulting Group

Auriemma is a boutique management consulting firm with specialised focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  Founded in 1984, Auriemma has grown from a one-man shop to a nearly 50-person firm with offices in London and New York.  For more information, contact Jaclyn Holmes at 020 7629 0075.

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Don’t Blame Payments for Abandoned Shopping Carts Online

(New York, NY): Online shoppers browse for items differently than their in-store counterparts. They peruse products without salespeople, lines, or the pressure that comes with hours of operation. In this environment, shopping carts can sit idle for days while shoppers mull over a potential purchase. A whopping 79% of consumers have left an online cart unattended, according to new data from Auriemma Group, developed specifically for the Merchant Advisory Group’s (MAG) 2017 Annual Conference. The study of 800 debit cardholders revealed why consumers abandon an online purchase, how often these abandoned carts make it to checkout, and shed light on how retailers can use online checkout services and mobile payments to improve conversion rates.

When asked why they abandon their carts, online shoppers typically cite merchant-controlled reasons, such as finding a better price elsewhere (33%), waiting for a sale (29%), or trying to reach a free shipping or discount minimum (29%). The good news? Abandoned carts don’t necessarily stay abandoned forever. In fact, 80% of cardholders say the majority of their online purchases are completed at a later date.

“Online shoppers don’t feel the same sense of urgency consumers may experience in-store,” says Jeff Tennenbaum, Director at Auriemma. “For some, adding items to their cart could simply be a way to keep track of them. Will they go on sale? Are they cheaper somewhere else? And while payment options may not push consumers to begin the purchasing process online, they certainly encourage completion once a purchase decision has been made.”

Online checkout services and mobile payments increase the likelihood of online order completion for those that use them. This is true for those who have ever used Apple Pay (63% are more likely to complete), PayPal (61%), Visa Checkout (59%), and/or Android Pay (57%). Although it is not instrumental in getting them to checkout, the smooth, secure payment experience online checkout and mobile payments provides does help online shoppers complete their purchase.

“We’re excited to share more data that illustrates how retailers can use the online checkout experience to improve their online conversion rates,” said Tennenbaum. “Retailers who attend the MAG Conference this month will gain a new understanding of how their customers interact with them online, what that means for brick and mortar, and how that translates to the overall shopping experience.”

Tennenbaum will be speaking at MAG’s 2017 Annual Conference on Wednesday, September 27th from 4:15-4:35 p.m. in a TED-style presentation titled, “New Customer Experiences and Expectations in Omnichannel Commerce.” He will also be a panelist for “Top of Wallet in Digital Commerce: The Critical Role of Default Payments” on September 28th at 10:15 a.m.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma in June and July 2017, among 800 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.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. For more information, contact Jeff Tennenbaum at (212) 323-7000.

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Prepaid Card Issuers Can Benefit from Integrating Offerings with P2P

(New York, NY):  Older millennials are increasingly eschewing cold hard currency for budget-friendly alternatives, considered to be even more secure than credit, debit, and store cards. This older millennial population, and other desirable demographic groups, are increasingly turning to P2P payments and reloadable prepaid cards when transferring funds. In fact, over one-third of cardholders have used P2P payments (42%) or a reloadable prepaid card (36%), according to a new study from Auriemma Group, which was conducted in partnership with the Network Branded Prepaid Card Association (NBPCA). The study highlighted use cases for P2P payments and prepaid among the banked population, shedding new light on who uses them and why they are an attractive payment alternative.

The results point to an opportunity for prepaid card issuers to integrate their offerings with P2P to better capture market share. The commonalities between these user groups make a compelling case. Most current P2P payment users and prepaid cardholders are male (57% and 53%, respectively), college-educated (62% and 53%), parents of minors (56% and 50%), and report a household income over $50,000 (67% vs. 55%). While these attributes register most strongly with the P2P payment users, their similarities highlight the connection between both groups.

“Our previous research tells us that those who use P2P payments are about twice as likely to currently hold a prepaid card than their non-using counterparts,” said Jaclyn Holmes, Director of ACG’s Payment Insights. “This cross-section of users could create increased engagement with prepaid cards should they be accepted by P2P payments.”

Users of both prepaid cards and P2P payments are more than just demographically similar. When looking at the perceived benefits of both methods, users of each report comparable advantages, namely security, budgeting, and convenience.

Reloadable prepaid cards are a particularly attractive payment alternative for consumers for whom security and budgeting are top of mind. Despite having a banking account, those who have used prepaid cards believe the most beneficial aspects are that they don’t link to a bank account (44%), offer a secure payment method (33%), and help with budgeting (33%). Prepaid cardholders aren’t the only ones who think the method is secure—most consumers believe prepaid cards are more secure than credit (59%), debit (60%), and store cards (58%). And unlike cash, prepaid cards bring these benefits to the digital shopping experience.

“The payment method allows cardholders to purchase online worry-free, as doing so will not compromise their checking account,” said Holmes. “And prepaid cardholders can set limits for category or everyday spend, allowing them to more easily maintain a budget.”

The perception of security is also high with P2P payments. Although users have a more positive impression of the method’s security than non-users, both believe the method is secure (88% and 65%). And this isn’t the method’s only similarity to prepaid cards.

“A small group of consumers utilizes P2P as a budgeting tool,” Holmes said. “About half of those who leave money in their P2P account do so because it helps them save money.”

Convenience and speed also earn top marks with P2P, with about nine in ten users reporting P2P payments make it easier to pay people far away (92%), that payments clear faster than checks (90%), and that splitting checks or bills is easier (87%).

“It’s safe to say we aren’t moving towards a cashless society, but we are certainly using less cash than before,” Holmes said. “By themselves, P2P payments and prepaid cards provide more flexibility, convenience, and a greater sense of security.”

The collaboration with the NBPCA marks the first time ACG has partnered with an industry association to conduct custom consumer research and signals ACG’s ongoing commitment to work with industry associations to illuminate solutions in an evolving environment.

“The findings of this study affirm what we in the industry have long known, that consumers turn to prepaid for the security and convenience the products provide,” said Brian Tate, president and CEO of the NBPCA. “From budgeting to safety to digital access to funds, it is clear that prepaid products are meeting the needs of our consumers, and prepaid providers will continue to build on the long tradition of evolving our products to continue to do so in the future.”

While this study focused on the banked population, a potential future study may focus on the unbanked population.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group in March 2017, among 800 debit cardholders. The purpose of this research was not disclosed nor the criteria for qualifying. The average interview length was 20 minutes.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  For more information, contact Jaclyn Holmes at (212) 323-7000.

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Auriemma Consulting Group and NBPCA Collaborate on Prepaid Consumer Research for Power of Prepaid Conference

(New York, NY):  Auriemma Group will present consumer research conducted in partnership with the Network Branded Prepaid Card Association (NBPCA) at the Power of Prepaid conference, scheduled for June 21 – 23 in Washington, D.C.

The keynote session, scheduled for 8:00 – 8:30 a.m. on Friday, June 23, focuses on consumers’ shifting attitudes and usage patterns of prepaid products, and will provide attendees with a first look at ACG consumer research developed in partnership with the NBPCA. Jaclyn Holmes, Director in ACG’s Payments Insights practice, will discuss the data in a fireside chat with Loraine DeBonis, Editor-in-Chief of Paybefore.

Designed to better understand the prepaid landscape in the current regulatory environment, this consumer-focused study explores a wide range of timely topics, from fee structure to the perceived value of prepaid in comparison to a checking account.

“While prepaid cards can be used as an alternative for traditional banking products, the data suggests the product’s utility has a far reach,” Holmes said. “Prepaid cardholders are an especially unique group of consumers, and the findings help to understand their motivations for usage.”

Attendees will get insight into the best ways to drive prepaid usage, as well as how to best position prepaid’s value to customers. Findings within the data include:

  • The surprising ways in which consumers are using prepaid cards
  • Untapped opportunities to better communicate and position prepaid’s strengths to consumers
  • How to combat barriers to initial usage

“Understanding how consumers view and understand prepaid products allows issuers to determine how to best navigate through the new regulatory landscape,” Holmes said. “This research will provide attendees insights from the consumer’s perspective that they draw upon as they make critical product and marketing decisions moving forward.”

This collaboration marks the first time ACG has partnered with an industry association to conduct custom consumer research and signals ACG’s ongoing commitment to work with industry associations to illuminate solutions in an evolving environment.

Prepaid providers attending the Power of Prepaid conference can book a one-on-one meeting with ACG to discuss how the consultancy’s research and advisory work can help acquire more customers, and operate more effectively.

About Auriemma Group

Auriemma is one of the most recognized and respected boutique providers of advisory consulting services to the Payments, Lending, and Retail industries.  Our rich history of engaging with Retailers started 30 years ago, with the introduction of the first co-brand credit card program.  The work we do with Retailers in the context of Payments has helped them tangibly improve customer acquisition, retention, service, and loyalty.  Our range of services includes Industry Roundtables (best practices and benchmarking), Partnerships (co-brand and private label), Corporate Finance (transaction advisory), and Payment Insights (consumer research).

About the NBPCA

The Network Branded Prepaid Card Association (NBPCA) is a non-profit, inter-industry trade association that supports the growth and success of network branded prepaid cards and represents the common interests of the many players in this new and rapidly growing payments category. For additional information, visit www.NBPCA.org, or follow on Twitter @NBPCA.

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Auriemma Launches CAMBER, a Searchable Research Portal

(New York, NY):  Auriemma Group’s consumer studies will now be more widely and immediately accessible to its subscriber base, thanks to CAMBER, a newly developed searchable research portal.  This new self-serve option gives subscribers greater accessibility to Auriemma’s research—Cardbeat®, Cardbeat UK, The Payments Report, and Mobile Pay Tracker.

Subscribers can search through research published since 2015 and download abstracts as well as full issues within the company’s subscription. As a new offering, CAMBER brings the subscriber experience into the digital age without replacing the high-touch, personalized service subscribers have come to expect from Auriemma.

Self-serve: Subscribers now have a library at their fingertips, shortening the lag time between request and receiving relevant data.

Digital access: Finding relevant payments data is more convenient than ever, with more visibility into the subscribing company’s publications. In addition, subscribers will be able to view abstracts of all research publications, including topics their company may not currently subscribe to.

New search capabilities: Users can now search with more granularity across hundreds of data sets and reports, with topics spanning rewards cards, mobile payments, top-of-wallet selection and more.

This is the first stage in a multi-year digital roadmap for Auriemma publications. Future iterations will include enhanced search functionality, a topic request wizard, and webinar downloads.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. For more information, contact Jonathan O’Connor at 212-323-7000.

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Incentives Push Mobile Pay Users Over Tipping Point, Increasing Method Frequency and Spend at Checkout

(New York, NY):  Mobile pay users are an enthusiastic bunch, but admit they sometimes forget to choose mobile payments at checkout. New data from Auriemma Group’s Mobile Pay Tracker suggests that transaction-based incentives may provide the nudge needed to get higher frequency and spend through mobile pay. The study of 1,505 mobile pay eligible cardholders didn’t just reveal incentive’s benefits to Pay providers, but to issuers and merchants as well. Those who leverage incentives are positioning themselves for greater success as mobile payments become more commonplace.

Regardless of who funds the incentives, issuers, merchants, and Pay-app providers all have something to gain. Increases in mobile pay spend and frequency of use will have a marked impact on the most frequently used (MFU) card in the mobile wallet, while also encouraging use of mobile pay instead of a physical wallet. As the mobile pay user population grows, it will become increasingly important to be the top of mobile wallet card. Interestingly, two-thirds of mobile pay users already say that the MFU card in mobile pay is also their most used card overall.

“While cards used in the mobile wallet benefit from merchant- and Pay-funded incentives in the short term, those not already being used could miss out, especially as mobile pay grows,” said Jaclyn Holmes, Director of Auriemma’s Payment Insights. “Pay apps very well may be the future of payments. Incentives provide an opportunity for issuers and merchants to have consumers associate their brand with the payment method, which could turn out to be a valuable long-term investment.”

Currently, 25% of consumers with an eligible smartphone use mobile pay, mostly composed of a highly covetable demographic of employed, affluent, and college-educated consumers. Of these consumers, 32% recall being offered a mobile pay incentive (compared to 19% earlier in the year), and when the incentive is offered, the take rate is high: 86% of incentive recipients report claiming the incentive at the point of sale in-store or in-app.

In the past, these incentives were primarily offered by banks, but in Auriemma’s most recent study the proportion of banks offering incentives to their customers compared to last quarter dropped from 58% to 40%. Merchant-funded offers are now most prevalent (46%), and regardless of who offered the incentive, nearly eight in ten respondents (78%) report their offer was linked to a specific merchant. Many consumers, however, are not seeking these incentives out—most hear about them from friends, or through emails or letters.

Consumers who are offered incentives, unsurprisingly, use mobile payments more frequently than those not offered—demonstrating a clear influence on choice of payment method at checkout. Over a one-week period, for example, those who received an incentive to use mobile pay in-store did so 4.6 times, compared to 3.1 times for those not offered an incentive. The same is true of in-app purchases, with incentivized shoppers purchasing four times in a week, compared to 2.4 for those not offered an incentive.

“Incentives can give consumers the push they need to use mobile pay,” said Holmes. “Their greatest impact will be on consumers on the cusp of using the method, but who need an additional nudge.”

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group in November 2016, among 1,505 mobile pay eligible consumers. Respondents were screened to own an iPhone 7/7+/6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S7, S7 Edge, S7 Active, a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5, Note 7 – and/or other Android phone with KitKat (4.4) OS or newer. All respondents also have a general purpose credit card in their own name. In addition to the quantitative web survey, ten in-depth interviews (IDIs) were conducted during December 2016.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. For more information, call Jaclyn Holmes at 212-323-7000.

 

 

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EU Pullbacks Haven’t Axed Rewards Payment Cards—They Still Rule

(London, UK):  One year after the implementation of Interchange Fee Regulation (IFR), the majority of British consumers continue to favor payment cards that reward them with points or miles for their spending, according to recent research by Auriemma Group.  The EU-mandated cap on credit and debit card interchange fees reduced the revenues earned by card issuers, prompting many to scale back their rewards schemes in 2016. Despite these cutbacks, over half of UK credit cardholders in the Auriemma study say they earn rewards for payment card usage, and they respond enthusiastically by concentrating their spending on those cards.

As part of its ongoing UK Cardbeat research, Auriemma surveyed 400 UK adults who own rewards payment cards.  Almost a quarter (23%) reported a change to their rewards programme in the past year—78% of them saying the change decreased the overall value of the card. Still, more than half of that same group say their usage was not affected by these changes, and 82% say a payment card that earns rewards is their most frequently used card.

The most widely held type of rewards payment card is cashback (37%), followed by supermarket (33%), and airline (21%). Despite their smaller market share, airline miles seem to be the most powerful reward, as these cardholders spend more in total and report higher satisfaction overall.

“Airline and hotel rewards are big-ticket and aspirational” noted Marianne Berry, Managing Director of Auriemma’s Payment Insights practice, which conducted the study. “Most consumers who have an airline co-branded card are consciously banking their miles earned toward a free ticket for a vacation or personal travel, so they’re very motivated to use that card to pay for everything.”  On average, cardholders say they need to spend £8,325 to redeem points for a flight, compared to £3,386 for a hotel room.

This perception of rewards’ intrinsic value translates into much more spending. On average airline rewards cardholders spend more per month (£1,182) on their airline rewards cards than retailer/grocery (£606) and cashback (£564) cardholders do on those cards combined. And 62% of their spend is outside the card’s partner brand (vs. 52% retailer/supermarket cards), suggesting a purposeful effort to earn miles with a range of purchase types. They also ascribe a higher value to their airline miles earned. About half (46%) of airline rewards cardholders believe a mile is worth £0.05 or more, while only one-quarter (24%) of their retailer/grocery counterparts believe a point earned is worth the same.

“Ultimately, industries vary in how they structure their rewards payment card programmes,” says Berry. “Those with airline cards spend more and have to wait longer to redeem, while those with retail or grocery cards get more frequent, but lower-value rewards. These rewards schemes appeal to different types of cardholders.”

On February 22, these findings (and more insights on UK rewards payment cards) will be presented by Berry at the 2nd Co-Brand EMEA conference in London, entitled, “Is Your Marketing Bold Enough?” Auriemma’s Director of International Partnerships, David Edwards, will act as Chairman for the event. Those interested can visit www.airlineinformation.org to learn more.

Survey Methodology

This study was conducted online within the UK by an independent field service provider on behalf of Auriemma Consulting Group in September 2016, among 400 adult rewards 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.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialised focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

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Consumers Prefer PayPal to Banks for Online Checkout and P2P Payments

(New York, NY) PayPal’s clout with consumers is dominating its competition in the alternative payments space, according to recent consumer research by Auriemma Group. The study of 800 US adult credit cardholders took an in-depth look at alternative payment providers, comparing PayPal’s online checkout and P2P offerings to other notable platforms. Consumers responded with a clear preference for PayPal, citing greater familiarity, usage, popularity, and more secure technology than other providers.

“PayPal is doing a lot of things right,” said Jaclyn Holmes, the Auriemma Senior Manager who directed the study. “They are the clear favorite in the online checkout space and have earned a positive reputation with consumers. The PayPal brand is valuable, so much so that just knowing Venmo was a PayPal product increases the likelihood of cardholders using the service.”

When compared with its peers, PayPal is the most recognized and used online checkout service, with 77% of cardholders familiar with the service and 62% of those familiar currently using the service. And PayPal customers are loyal, with 81% preferring it for online transactions, and 79% using it whenever they can. This type of praise is also common for PayPal Me, PayPal’s P2P offering, which is highly favored among consumers who have tried more than one P2P app (42% prefer PayPal Me compared to 19% who prefer their bank’s P2P payment service). Banks, however, do have some strengths when compared to PayPal—notably in direct deposit, ease of accepting payments, card selection and ease of use.

Despite its overall high marks, PayPal fell short of its competition on overall trust with financial information (80% of consumers trust their primary bank; only 55% said the same about PayPal). And the majority of consumers (56%) are generally unwilling to direct deposit money into their PayPal account. There is a nuance, however: While banks win for overall trust, 69% of consumers say they believe PayPal’s technology is better at protecting their financial information.

“Although cardholders’ relationships are deeper with their primary bank than with PayPal, the fact that consumers believe PayPal’s technology is more secure may be problematic for issuers. Consumers expect financial providers to be as savvy as the players in Silicon Valley,” says Holmes. “Until financial institutions are seen as technological equals with PayPal, the brand has a clear advantage in this arena.”

Survey Methodology

The studies were conducted online within the United States by an independent field service provider on behalf of Auriemma Consulting Group in August 2016, among 800 credit card users each (“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.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

 

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Worries About Payment Card Fraud Mounting Among US Consumers

(New York, NY):  US consumers worry about payment card fraud, with over half saying it’s increased in the past year.  And it’s not an idle fear—42% have personally experienced card fraud, half of them multiple times.  But almost all report a satisfactory resolution by their bank, according to recent research from Auriemma Group. The recent survey of 500 debit cardholders found that many consumers are fatalist about the chances of it happening again: 46% think it’s likely that they’ll experience card fraud in the next five years.

Consumers are skeptical about the efficacy of security solutions in the market.  While most consider chip cards to be more secure than the traditional mag stripe, only 32% think that the introduction of chip cards has decreased the level of card fraud, while the majority (58%), say that EMV has had no impact.

Despite these doubts, cardholders express willingness to use stronger authentication methods.  Only 38% say they’ve encountered two-step authentication, but the great majority agree that there are some sites where they’d prefer this safety measure. 70% say they’d enable two-step authentication for their online account if it were offered by their primary bank.

Their willingness to go through a more time-consuming process varies by the size of the transaction, however.  When asked about a hypothetical $100 purchase, 85% agreed that security is more important than speed.  In the case of a $5 purchase, however, that drops to 70%, with 30% who want that transaction to be fast, ‘even if it means fewer security steps’. “The importance of security seems to fluctuate according to purchase amount,” said Jaclyn Holmes, the senior manager who directed the study. “In reality, the amount of the purchase has nothing to do with a fraudster’s ability to steal a consumer’s information, but consumers tend to care more about speed than security for smaller transactions.”

And despite their concern with security, Americans confess to taking time-saving shortcuts.  More than two-thirds save passwords on their devices for at least some of their accounts, most commonly email and social media.  Not surprisingly, the lure of convenience increases with the amount of online activity: 30% of those who shop online weekly say they save the password for nearly all their accounts, double the proportion of less frequent shoppers.

One of the most popular ways to save time online is by using one-click checkouts, and Amazon’s 1-Click and PayPal’s One Touch, the two most popular, both have high levels of satisfaction.  But non-users fear that this convenience comes at a price.  While almost two-thirds of all respondents thinks one-click makes the payment process more enjoyable, virtually the same percentage say it will make online shopping more vulnerable to fraud. “Many cardholders are uneasy with the idea of being permanently logged on,” Holmes notes. “Consumers appreciate the convenience of being able to breeze through online check-out with a single click, but it may be leading some to wonder whether that same convenience could make them a tempting target for fraud.”

The idea that extra security takes extra time makes sense to these consumers:  their new, more secure chip card transactions take longer, and they want two-step sign-ins on their most sensitive accounts.  “This mind-set may make it harder for mobile payments to gain mass acceptance”, says Marianne Berry, Auriemma’s Managing Director of Payment Insights. When asked to choose the most secure payment method, 42% of survey respondents chose chip cards, three times the number that chose mobile.  “Most early adopters of mobile payments have some understanding of the concept of tokenization and view it as a very secure way to pay,” Berry noted.  “But in the general population, mobile’s speed and convenience can equate to being less safe.  To convert non-users, marketing messages should highlight how mobile pay transactions mask the payment card information.  Consumers need to hear that it’s just as safe as a chip card transaction, but faster—and a lot more fun.”

Survey Methodology

The study was conducted online among 500 debit card users in May 2016. Respondents were recruited from Instantly’s web panel, and fieldwork was conducted by Issues and Answers. The purpose of the research was not disclosed nor did respondents know the criteria for qualifying. The average interview length was 20 minutes.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

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How Samsung Pay is Challenging Apple Pay User Dominance

(New York, NY): For over a year after its introduction, Apple Pay was the only real option for consumers who wanted to pay with their smartphone. That changed towards the end of 2015, when Android Pay and Samsung Pay were rolled out. Among the three payment options, Apple Pay captures the greatest proportion of eligible users, with 33% of iPhone 6 owners* reporting that they’ve used it, but the fledgling Samsung Pay isn’t far behind at 23%, according to recent research by Auriemma Group. The firm’s latest Mobile Pay Tracker found that Samsung Pay users report higher satisfaction levels and fewer issues at the point of sale compared to Apple Pay, with near equal proportions recommending both mobile payment brands.

Since its inception, Apple Pay has attracted educated, affluent, and young users, and Samsung Pay users look similar. “Only the newest, and most expensive, models of phone support mobile payment, so owners tend to be affluent,” says Marianne Berry, Managing Director of Auriemma’s Payment Insights practice. “Owners of the Samsung Galaxy and Note look demographically similar to owners of the iPhone 6 series, although iPhone owners are almost evenly divided between men and women, whereas Android phones, Samsung included, tend to skew male.”  Within the pool of eligible phone owners, mobile pay users are even more affluent and well-educated than non-users.

Users of both mobile pays rate their experience positively, but Samsung Pay users report higher levels of satisfaction than their Apple Pay counterparts (92% vs. 84%) and are near equally likely to recommend the application (49% vs. 53%). “The impact of satisfaction becomes more telling when we examine how these users pay for their monthly purchases,” says Berry. “The majority of Samsung Pay users utilize other payment methods less since beginning with Samsung Pay. No other mobile payment application can say that.” In fact, Samsung Pay eligible consumers report the highest proportion of discretionary spend going to the payment app (22%), while Apple Pay eligible consumers cite a lesser proportion (15%), behind both credit card and cash spend.

Samsung Pay users also spend more using the service ($82 vs. $75) within an average week. They report fewer difficulties at point of sale (19% vs. 31% for Apple Pay), presumably due to the technology that mimics the magnetic stripe and allows it to be used at a much wider range of merchants. “Samsung Pay advertising highlights this benefit, and 37% of those who are aware of this have used the method where other mobile pays aren’t accepted,” says Berry.

Where signage isn’t easily viewable, Samsung Pay users show greater enthusiasm to use the method in-store, with 56% always asking store personnel about acceptance compared to 42% of Apple Pay users. “Some of this may be due to its newness, with most Samsung users reporting three months of experience compared to a year for Apple Pay,” says Berry. “Even so, Samsung Pay outscores Apple Pay on a number of metrics. Right now the pool of eligible Samsung users is much smaller than Apple’s, but as more Samsung phones are upgraded, the application’s broader merchant acceptance has the potential to more quickly convert its smartphone owners to Pay users.”

Survey Methodology

The study was conducted online among 2004 consumers in the US with Apple Pay eligible (n=1,000), Android Pay eligible (n=838), and/or Samsung Pay eligible (n=327) smartphones between March 3 – April 7, 2016. Respondents were screened to own an iPhone 6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S)* – a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5 – and/or other Android phone with KitKat (4.4) OS or newer.  All respondents also have a general purpose credit card in their own name. In addition to the quantitative web survey, twenty in-depth interviews (IDIs) were conducted March 21, 2016 – March 25, 2016 via telephone with Android Pay and Samsung Pay users recruited from the quantitative web survey. For this round of IDIs, the focus is or was on the Android and Samsung Pay users, and their usage and experience thus far.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

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