Economic uncertainty influences consumer payment habits
The data: Forty-four percent of global consumers have changed their online payment habits partly because of the rising cost of living, according a Paysafe report published in June, which included a survey of 11,000 consumers in 10 countries.
- 52% of consumers use cash less often as prices rise.
- 40% say they prefer payment methods that allow them to track their spending more accurately.
- 36% of consumers also said they prefer to use contactless payments.
- And 33% said they prefer payment methods that don’t require sharing their financial information online.
Key Context: The personal consumption expenditure price index rose 6.3% a year in May, holding steady from April, according to the US Department of Commerce. Although price increases have slowed slightly from the 40-year high reached in March, consumers feel little relief and have changed their shopping and payment habits.
US consumer spending increase just 0.2% month-over-month in May, the smallest increase this year. Poor consumer sentiment, triggered in part by fears of a recession, has caused many consumers to tighten their purse strings.
What this means for payment providers: Consumers may look for ways to optimize their purchases as economic factors influence purchasing power.
This could make rewards credit cards even more appealing. Even though consumers tend to limit credit spending in favor of debit cards during times of economic instability, digital credit card spending expected to reach $501.07 billion in 2022, compared to $464.77 billion last year, by Insider Intelligence forecast. Growth may be influenced by stronger demand for rewards, which 44% of U.S. consumers cited as the top reason for switching to a new credit card during the pandemic, according to 2022 LendingTree data.
Consumers may be more interested in tools that help them manage their spending. Solutions like Apple Card’s category-based insights and Amex’s digital Receipts give consumers more visibility in their finances and can help them better manage their spending in the wake of economic uncertainty. Investing more in these services can help payment providers better serve their customers and increase customer loyalty.
Related Content: Check The Age of Uncertainty collection of reports to learn more about how recent macroeconomic factors are affecting key industries.