Consumer Payment Preferences for In-Store
Purchases
Key Insights
1. Electronic Payments Growing and Account for Majority of In-Store Payments
Electronic payments account for 63% of all in-store payments. Debit now has the highest share
of in-store payments at 37% compared to 22% of payments made by credit card.
2. Card-based Payments are Replacing Checks and Cash in Stores
Debit’s share of payments at the point of sale exceeds both cash as well as credit cards.
3. Debit Reigns as Consumers Favorite Payment Method for In-Store Purchases
37% of consumers prefer using debit cards to make purchases in stores followed closely by cash
at 32%.
4. Payment Type Varies by Retail Location
Payment use varies depending on where a consumer is and what they are purchasing. For
example, debit remains most popular in its tradition venues of grocery stores, drug stores and
discount stores.
5. Debit Usage Expected to Increase while Checks Decrease
Over the next two years, consumers expect to increase their use of debit and decrease their use
of checks.
About this study
First Data was one of the sponsors for the 2008 Study of Consumer Payment Preferences conducted
by Hitachi Consulting. 3,308 U.S. consumers completed an online survey in June 2008 which was
administered by the Harris Poll Online. The survey was designed to collect primary consumer data
profiling the current payments environment and future outlook. The survey instrument included five
parts: 1) In-Store Payment Preferences; 2) Internet Payment Preferences; 3) Bill Payment
Preferences; 4) Cards (including credit, debit and prepaid); and 5) Emerging Payments. This Market
brief provides key findings for In-Store Payment Preferences.
Prepared by: Sharon Brant – Director
Media Contact : [email protected] (303-967-6323)
Investor and Analyst Relations Contact: [email protected] (303-967-8276)
© 2008 First Data Corporation. All rights reserved. Proprietary.
Key Insight #1: Electronic Payments Growing and Account for Majority of
In-store Payments
Consumers’ migration from paper to electronic payments at the point of sale has continued its steady
march. Electronic payments now account for 63% of in-store payments, up from 43% in 1999. Paper
payments’ share has fallen from 57% to 37% in the same time period.
Debit now has the highest share of in-store purchases and checks have nearly disappeared. Signature
and PIN debit represent a combined 37% of in-store transactions. Cash is now second with 29% of
transactions, followed by credit cards with 22%.
In-Store Transaction Mix, 1999 - 2008
% of Transactions
100%
80%
43%
49%
54%
56%
47%
44%
2003
2005
63%
60%
40%
57%
51%
20%
37%
0%
1999
2001
Paper
Date: June, 2008
N = see page 8
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Page | 2
Electronic
2008
2008 In-Store Payment Mix
Gift/Prepaid, 4%
Signature Debit,
17%
Debit 37%
Cash, 29%
PIN Debit, 20%
Check, 8%
Credit Card, 22%
Date: June, 2008
N = see page 8
© 2008 First Data Corporation. All rights reserved. Proprietary.
Page | 3
Key Insight #2: Card-based Payments Replacing Checks and Cash
Debit’s share of the in-store payment mix has increased from 21% in 1999 to 37% in 2008. Credit card
use has remained relatively constant with an uptick in 2008 potentially due to the current economic
circumstances. Use of cash has declined to 29% from 39% in 1999. Checks have seen a dramatic
decrease from 18% to only 8%.
% of Transactions
In-Store Transaction Mix, 1999 - 2008
100%
80%
60%
40%
20%
0%
39%
18%
33%
32%
33%
29%
18%
15%
21%
8%
22%
21%
11%
19%
22%
11%
10%
15%
11%
1999
2001
2%
Signature Debit
Credit Card
Date: June, 2008
N = see page 8
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16%
15%
2%
2003
PIN Debit
Paper Checks
19%
14%
2005
4%
20%
4%
17%
2008
Gift/Prepaid
Cash
Key Insight #3: Debit Reigns as Consumers’ Favorite Payment Method
37% of consumers indicated they prefer to use a debit card at point-of-sale followed by cash at 32%.
PIN debit is slightly more preferred than signature debit (22% vs. 15%). Consumers mentioned that by
using debit cards, they don’t spend beyond their means, interest isn’t charged, and they can get cash
back at most retailers.
Most Preferred Payment Method
Signature Debit
15%
Debit, 37%
PIN Debit
22%
Cash
32%
Credit Card
25%
Paper Check
4%
Gift/Prepaid
1%
0%
20%
% of Consumers
Date: June, 2008
N = see page 8
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40%
Key Insight #4: Payment Type Varies by Retail Location
Cash continues to dominate in venues with small ticket sizes and where other forms of payment are
not accepted. Debit remains most popular in its traditional venues: grocery stores, drug stores, and
discount stores. Credit is frequently used for discretionary purchases such as department stores and
restaurants, as well as at gas stations. Checks continue to be used at discount stores, grocery stores
and drug stores.
Most Frequently Used Method by Retail Location
Department Store
Discount Store
Grocery Store
Gas/C-Store
Drug Store
Restaurant
Cinema/Theatre
Transit
Fast Food
15%
5%
41%
20%
8%
21%
7%
24%
31%
30%
3%
60%
17%
19% 7%
11%
40%
24%
15% 7%
66%
20%
16%
10%
2%
64%
0%
19%
24%
34%
59%
16%
18%
26%
2%
13%
32%
37%
7%
17%
27%
24%
2%
26%
22%
7%
80%
7%
16%
100%
% of Consumers
Cash
Date: June, 2008
Paper Check
Credit Card
N = see page 8
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Page | 6
PIN Debit
Signature Debit
Key Insight #5: Debit Usage Expected to Increase while Checks Decrease
Consumer usage of both Signature and PIN debit for in-store purchases are expected to increase over
the next two years by 12% and 10% respectively. Credit card usage is expected to decrease by 2%
while papers checks will likely see a 15% reduction in usage. Most of the change will be due to
consumers substituting use of one payment method for another, especially in the case of paper
checks and cash. Also, a large portion of younger consumers plan to increase their use of debit over
other payment forms.
Projected Change in Use of In-Store Payments
Decrease Use
Increase Use
Net Change
Signature Debit
-9%
+21%
+12%
PIN Debit
-7%
+17%
+10%
Cash
-19%
+16%
-3%
Credit Card
-12%
+10%
-2%
Paper Check
-19%
+4%
-15%
Gift/Prepaid
-23%
+8%
-15%
Use Now, Will
Use Less
Date: June, 2008
Don’t Use Now
but Likely to Use
N = see page 8
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Use Now, Will
Use More
Sample Size
All 3,308 respondents were asked core questions related to their payment behavior in stores, online
and to pay bills. In addition, respondents were randomly divided into subgroups to answer questions
related to particular areas of interest. The following table summarizes the sample sizes by payment
method:
All
# Respondents
% Respondents
Core Survey Questions
3,308
100%
Cash
1,654
50%
Contactless
1,654
50%
Credit
1,105
33%
Debit
1,102
33%
Gift/Prepaid
1,101
33%
Or
Or
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