by Kevin Woodward, Digital Transactions
November 4, 2019
Digital wallets and other forms of digitized payments may be poised to take over the most-favored position for some consumers. Sixty-six percent of consumers, if offered rewards, discounts and cash-back incentives similar to those offered by credit cards, would switch to alternative ways to pay, finds the 2019 edition of the Deloitte Center for Financial Services payments survey.
That doesn’t mean credit cards are losing favor any time soon. A plurality of Deloitte’s respondents—47%—said they are more likely to use credit cards than other payment instruments in the next two years. Next were debit cards at 40%. Cash, at 7%, was a distant third, followed by bank transfers, 5%, and checks, 1%. The survey canvassed more than 2,500 consumers.
As digital-payment apps become more popular, credit card use could diminish, the Deloitte’s report says. Most respondents—82%—used such an app in the last year and 26% said they were likely to increase that use for in-store transactions in the next two years. Fifty-eight percent said they would sustain that level activity in the same time period.
For payments companies and banks that issue credit and debit cards, indications suggest 2020 may be a critical year, Zachary Aron, principal at Deloitte Consulting LLP, tells Digital Transactions News. As consumers think of more and more of digital ways to pay, their understanding of the credit card may change. That does not mean consumers won’t think of credit cards, but a top-of-the-wallet mindset may gain favor.
“As people move to more digital aspects, they don’t think of it as a credit card transaction,” Aron says.
And as they use more digital-payments methods, consumers may alter their definition of a transaction from one that entails dipping a card into a terminal. “We will see a growing digital presence,” Aron says. “I don’t think we will see declining plastic use.” Instead, the digital growth may come at the expense of cash, a long sought-after goal of payments companies.