“It is not a question of whether digital payments will alter the fortunes of payment providers in the future, but how soon.” New research published today shows that this shift is happening now as advances in digital payments and changes in consumer behavior shake up their traditional paths to success.
In particular, there’s a new consumer behavior dynamic that bears particular watching, one that the Deloitte Center for Financial Services calls “default payments.” These are payments made with credit card, debit card and bank account details that have been stored for ongoing and future transactions – and they now make up 82% of digital transactions.
For payment providers, this means that becoming the top default payment choice is just as important as maintaining it.
Why? Half of all respondents surveyed indicated they had removed a stored payment option within the past year, with card expiration cited as the top reason for changing a payment choice at 43%. The numbers speak for themselves: a high rate of default card turnover indicates that financial institutions, credit card providers, and payments processors have a tough challenge ahead if they want to retain default card status in consumers’ digital wallets.
Other key survey findings on consumer digital payments behavior include:
- Gen Xers use default payments the most: 39% of Gen X participants’ payment transactions were made up of default payments, the largest share among all age groups including Millennials.
- Default payments dominate digital apps, websites: 87% of digital app transactions and 74% of website transactions were made using default payment options.
- High use of ACH payments: 38% of default payments were performed via a direct link to a bank account, meaning reduced costs for merchants in the form of lower fees.
- Security concerns persist: 57% cited security as a factor for not using a default payment option, the biggest reason given among those surveyed.