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26 Feb

FINTECH TRENDS & RESEARCH: Consumer Preferences for Digital Payments

The rising popularity of digital payment networks has paved the way for massive improvements in disbursements from businesses to consumers. In fact, because speed, convenience, and choice are such empowering forces for consumers, many companies find themselves playing “catch up” to bring payments in line with the expectations of today’s highly-demanding customers.

To stress-test some of the common assumptions about consumer payment preferences, DigitalPay conducted a survey of more than 12,000 people across the US in 2018. Our questions focused on payment scenarios at three levels — $10, $100, and $1,000 between a business and the consumer. Payment options included a traditional check as well as digital networks that are popular with consumers, including direct to bank, Amazon (balance or eGift card), PayPal, Starbucks, Venmo, and more.

Key Learnings and Highlights:

  • Digital payments are clearly the most popular method to receive funds amongst consumers between the ages of 18-54. With the three payment levels we featured in our survey, digital payments were preferred by as much as 70%, a dramatic shift in attitude from traditional payments towards faster, more efficient, and direct payment methods.
  • PayPal and Amazon are hugely popular amongst all ages. Amazon – either adding to an existing balance or an egift card – is especially desirable for lower-value payments.
  • Venmo is popular, but not yet preferred. While Venmo is often requested by a younger demographic, it still lags behind established networks like direct-to-bank, PayPal and Amazon.
  • Younger audiences prefer digital payment options, with more than 75% of 18-34-year-olds wanting immediate receipt of monies.
  • Trust for cash and checks is dwindling. In 1:1 follow-up interviews with select responders, belief in traditional payments is on the decline. Some participants named security and fraud as concerns, others reflected on time and speed of delivery as problematic for checks in particular.



Digital Payments: The Future of Payouts

Clearly, there is consumer demand for digital payments. In support of the results fielded by DigitalPay, Aite Research also reports almost 70% of consumers received disbursements via digital means in 2018. In addition, the 2018 Federal Reserve Annual Payment study suggests physical checks are on their way to obsolescence by 2023, or sooner. Moving forward, we expect digital payments to be the de facto choice for consumers to receive money from any business or enterprise.