, ,

Revolvers Who Miss Payments Are Probably Going to Cancel Your Credit Card

(New York, NY):  Credit cardholders can be divided into two groups based on their payment behavior—revolvers and transactors. And while this distinction often identifies key differences between those who carry a balance and those who do not, revolvers are not all created equal. Recent research conducted by Auriemma Group compared on-time revolvers (i.e., those who carry a balance but haven’t missed a payment in the last 12 months) to late payment revolvers (i.e., those who skipped/missed a payment on at least one card in the past 12 months) with the aim of understanding the demographic factors that differentiate the groups from one another. In comparing the two groups, the research found that late payment revolvers are a serious retention risk, and that their card experience will need to be deeper than just paying off an outstanding debt to prevent them from cancelling their card.

Revolvers represent 56% of the credit cardholder population, with 38% qualifying as on-time revolvers and 18% as late payment revolvers. Late payment revolvers tend to be younger (34 vs. 46 average age), more highly educated (70% vs. 57% college degree or more) and employed (86% vs. 66%) when compared to their on-time revolving counterparts.

While those demographics would be a welcome addition to an issuer’s portfolio, these customers don’t tend to be especially loyal to specific cards. Most have cancelled (52% vs. 6% on-time revolvers) and/or acquired (55% vs. 14%) a new card within the past year. These customers also tend to have competing financial responsibilities—72% are parents of a minor (vs. 34%), 50% hold a mortgage (vs. 42%), and 36% hold a student loan (vs. 22%).

Because of these competing priorities, this group is motivated to consolidate outstanding balances they have on their cards—creating the opportunity to acquire these customers.

“To better manage their credit card debts, half of late payment revolvers have taken a balance transfer,” said Jaclyn Holmes, Director of Auriemma’s Payment Insights practice. “This is in comparison to just 9% of on-time revolvers, which showcases one way to get these customers into your portfolio.”

While there is ample opportunity to convert late payment revolvers to new customers via balance transfers, the real challenge is keeping them engaged with the product. Late payment revolvers have more inactive cards in their wallet—only 43% have used all their cards (compared to 58% of on-time revolvers), demonstrating a consolidation of spend. And while an attractive balance transfer offer could entice late payment revolvers to acquire a new card, the likelihood of abandonment is high, with more than half of this population cancelling a card in the last 12 months.

Issuers must also contend with the group’s general sentiments toward credit cards as a product. Most (52%) prefer debit over credit. They also tend to have lower average FICO scores than their older on-time revolving counterparts (570 vs. 720), partly due to having limited credit histories. The group also has lower credit lines and lower average outstanding balances ($2,640 vs. $4,446).

“We know from previous research that cardholders’ top reasons for cancelling a card are paying off the balance or getting a new card,” says Holmes. “It is critical for issuers to entice cardholders to want to spend with their cards and not just chip away at an outstanding debt, especially as the balance gets closer to zero. For late payment revolvers to become loyal to a product or brand, they must first develop a more positive relationship with credit generally. Offering incentives to these cardholders that encourage spend and develop loyalty will be the best chance issuers have at retaining the customer.”

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group among 800 US adult credit cardholders in March 2018. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 25 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, Jaclyn Holmes at (212) 323-7000.

/by
, ,

34% of Those Eligible Are Using Mobile Payments, But Few Would Recommend Them

(New York, NY):  After a year of celebrity following its release in late-2014, Apple Pay had to share the spotlight with Android Pay and Samsung Pay. Since then, the market has grown even more crowded, with merchants, such as Walmart and Kohl’s, developing Pay options for their consumers to use at the point of sale. But according to Auriemma’s Q1-2018 Mobile Pay Tracker, usage of Apple, Google (formerly Android), and Samsung Pay has still managed to grow five points (to 34%) compared to Q1-2017. While this growth is a positive for mobile payments, a declining proportion of these users would recommend the service, signaling trouble ahead.

“The influx of new players makes the future of the Big Three uncertain,” says Jaclyn Holmes, Director of Payment Insights at Auriemma. “Being first to market hasn’t given Apple, Google, or Samsung a leg up on mobile payment newcomers. Providers who are able to deliver a more positive, reliable Pay experience are most likely to encourage continued Pay usage, while others may struggle in the years ahead.”

Problems at the point of sale can prevent even the most enthusiastic Pay users from developing the habit of paying with their mobile device. This, in turn, lessens the opportunity and likelihood for recommending the service. In fact, 42% of mobile payment users wouldn’t recommend the service, up 11 points compared to last year (31%).  And because these sentiments are strongest among the most inactive Pay users (87% very inactive vs. 6% very active), it’s clear developing the habit is key to the success of mobile payments. But this routine could be more easily developed with merchant mobile payments, which have more control over their Pay experience and can eliminate many of the barriers that trouble Apple, Google, and Samsung Pay users.

Merchants have an advantage over the Big Three: a guarantee of acceptance across all its stores and a uniform in-store experience. While most of Apple, Google, and Samsung Pay users think in-store acceptance has improved since these mobile payments launched, reported issues at the point of sale have remained the same compared to last year. Among the issues, unfamiliar cashiers and an inability to complete the transaction come out on top, with a plurality of in-store Pay users who quit and decide to swipe their card instead. All of this could potentially be avoided with a well-conceived Merchant Pay option.

“Merchants have the power to create a frictionless mobile payment experience,” says Holmes. “They can train their store employees to become Pay champions who promote the payment option, offer assistance, and do so in a way that keeps lines moving and customers smiling.”

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group (Auriemma) in January/February 2018, among 1,527 mobile pay eligible consumers. Respondents were screened to own an iPhone 8/8+/7/7+/6/6+/6s/6s+/SE/X or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S8, S8 Edge/Edge+, S7, S7 Edge, S7 Active, a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5, Note 7 or Note 8 – Gear S2 or S3 watch (in combination with an Android/iPhone smartphone) – and/or other Android phone with KitKat (4.4) OS or newer. All respondents also have a general-purpose credit card in their own name.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (212) 323-7000.

/by
, , ,

How Instalment Plans Can Alleviate Persistent Credit Card Debt

(London, UK): Consumers experiencing or on the brink of persistent debt are now covered by new rules and guidance aimed at protecting them, thanks to the Financial Conduct Authority (FCA). The FCA is calling upon issuers to identify and assist at-risk consumers and those within the cycle of persistent debt. In a policy statement released on 27 February 2018, the regulator anticipates savings up to £1.3bn a year in lowered interest charges for those in persistent debt. It would benefit issuers, however, to help at-risk consumers before they get to this point. Instalment plans can be used to discourage persistent debt and ultimately encourage healthier payment behaviours.

Instalment plans are popular among consumers who receive offers for them. New data from Auriemma shows 61% of those solicited have taken one – but a minority (38%) of credit cardholders have ever been offered an instalment plan. Regardless of whether they receive an offer, consumers like the benefits instalment plans can provide, particularly being forced to pay off their balance within a set period (58%) and reducing the stress of large purchases (54%). These motivating factors encourage big ticket purchases while also setting clear expectations for payment, a win-win for lenders who want to best serve at-risk customers and help them develop positive payment habits.

“Instalment plans give consumers a great way to manage their budgets by spreading the cost of a purchase over a series of fixed monthly payments,” says Wendy Bradley, Director at Auriemma. “They take the guesswork out of how much is owed each month. By preempting the negative experience of persistent debt with the more positive, guided experience of an instalment plan, issuers can rescue what may otherwise become a contentious customer relationship.”

 Some creative solutions in the marketplace bundle an instalment plan feature within a more traditional credit card product. And while consumers are mixed on whether they prefer the flexibility of revolving or the predictability or instalment plans, a blended product has the potential to cater to individual preferences while garnering interest from a larger pool of customers. If created, the offering would need to have an optimal user experience and be communicated simply and clearly—41% of consumers believe the terms of instalment plans are too confusing.

“Instalment plans are typically presented at the point of sale for larger purchases, but they could also be a tool for issuers to help their customers manage their existing unsecured debt,” says Bradley. “While they don’t guarantee repayment, instalment plans could help motivate consistent repayment behaviours to get customers back in good standing before they require the greater assistance the FCA’s new guidance calls for.”

 Survey Methodology

This study was conducted online within the UK by an independent field service provider on behalf of Auriemma in November-December 2017, among 500 adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, call +44 (0) 2076-290075.

/by
, , ,

Equifax Breach Hasn’t Eroded Trust in Banks

(New York, NY): Following its breach more than six months ago, Equifax is the least trusted credit bureau, according to new data from Auriemma Group. While this may be a natural outcome of such a high-profile event, the research shows there has been a ripple effect that has weakened trust in Experian and TransUnion, sparking consumer skepticism about how credit bureaus are protecting data. But while consumers’ trust in credit bureaus has been damaged by the breach, they continue to express confidence in their banks’ and issuers’ ability to protect their financial information—82% of cardholders believe their financial accounts are secure and about 80% reporting confidence in their bank’s and/or credit card issuer’s ability to protect their financial information.

Although the Equifax breach wasn’t the largest data breach of all time, the bureau received increased scrutiny from government officials and consumers alike for not having the same regulatory oversight on data protections as banks, issuers and other financial institutions. In January, senators introduced a bill to create mandatory penalties for data breaches at credit reporting agencies. While the political reality of such measures is unclear, it could be championed by the public: According to Auriemma, 78% of consumers believe credit bureaus should be subject to greater regulation. Recent news places the Equifax investigation on hold, however, as sources recently said interim director Mick Mulvaney has yet to request subpoenas against the reporting agency, or sought sworn testimony from its executives.

Consumers’ trust in Equifax has been eroded—31% believe they were impacted by the Equifax breach, which also likely affected trust for all credit bureaus, according to Auriemma. One-quarter (25%) say they have don’t trust any of the reporting agencies with their financial information. Only 10% of cardholders say they trust each of the credit agencies a lot. Equifax falls at least 10 points behind TransUnion and Experian in credit cardholders that have at least a little trust in each respective credit agencies.

“While levels of trust with TransUnion and Experian are near equal, Equifax is likely suffering from the handling of its recent data breach,” says Jaclyn Holmes, Director of Auriemma’s Payment Insights practice. “The level of distrust is even more stark among those who believe they were impacted by the breach – just over half of those individuals no longer trust Equifax with their financial information.”

More than half (53%) of respondents believe the Equifax breach was handled poorly by the company, likely due to the delayed response and remediation efforts. But Equifax’s eventual efforts to communicate with and provide ID theft protections to impacted consumers did not go unnoticed by the remaining 47% of respondents, who say the bureau responded at least somewhat well.

While Equifax offered web-based tools to help consumers post-breach, a very low proportion (38%) of respondents who believe they were impacted used these tools. Impacted consumers opted to check their credit report themselves more frequently than those not impacted (46% versus 21%), began monitoring their existing credit and bank accounts more closely (46% versus 18%), enabled two-factor authentication where possible (23% versus 6%), and placed fraud alerts and credit freezes on file (21% versus 3%).

“Even among those who say they’re certain they were impacted, only half say they visited www.equifaxsecurity2017.com to see if they were exposed, which speaks to a general weariness for Equifax’s online portal and their response to the breach,” says Holmes.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group among 800 US adult credit cardholders in November 2017. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 20 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (212) 323-7000.

 

/by
, ,

While Holiday Shopping Hit Record-Setting Numbers, Consumers Don’t Expect to Continue the Trend Throughout 2018

(New York, NY):  Retailers saw one of the biggest jumps in consumer spending during holiday 2017, bringing cheer to retailers and issuers alike. But while holiday spending is typically indicative of consumer confidence and purchasing plans for the upcoming year, new research from Auriemma Group reveals that consumers don’t plan to increase their spending from 2017 levels. According to the new research, consumers generally feel positive about the country’s financial outlook, but enthusiasm for increased spending and borrowing on credit cards has waned compared to October 2016.

For example, 21% of consumers say they are likely to increase their monthly spend (down from 37% in 2016), only 16% plan on taking out a loan (down from 31% in 2016) and only 14% plans to increase borrowing on credit cards (down from 28%). When asked which purchases consumers anticipate making in 2018, the intention to spend in several categories decreased. For example, 43% of consumers plan to spend on vacations (down from 48%), 21% plan to spend on electronics (down from 36%), and 21% plan to purchase cars (down from 29%).

“Increased spending around the holiday season is normally predictive of greater consumer confidence and increased spending overall,” says Jaclyn Holmes, Director of Auriemma’s Payment Insights practice. “But these results show that merchants will need to be aggressive to court increased spending in 2018.”

The good news is that consumers generally feel that the U.S. economy is stable, with 43% of cardholders believing that the U.S. economy will be in the same condition one year from now, and 32% believing the economy will be better off. While the proportion who say the economy is good/excellent is comparable year-over-year, the proportion who describe it as “excellent” has decreased by half. A notable 25% percent believe the economy will be worse off one year from now. Although sentiments on the future of the US economy are, for the most part, positive, enthusiasm for borrowing is not.

Among all respondents, 69% say they are just as willing to borrow from banks in 2018, but only 7% are more willing to borrow from banks over this period, down from 14% who were more willing to borrow from banks in 2017. This appetite for borrowing becomes even more stark when considering the respondents’ future outlook on the economy.

Of those who feel the economy will improve in the next year, 16% said they were more likely to borrow in 2018, with 11% saying they were less likely to borrow. On the other hand, of those who believe the economy will worsen, 4% are willing to increase borrowing in 2018, and 53% say they are less likely to borrow.

“While the holiday season seemed indicative of more robust spending in 2018, it’s important that issuers have the right expectations for the new year,” says Holmes. “There are also many ongoing developments that will shape consumer spending in 2018, such as tax reform, which will need to be monitored closely.”

Auriemma plans to conduct further research in 2018 to provide the latest snapshot on consumer confidence and planned spend.

 Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group among 800 US adult credit cardholders in November 2017. Comparative data was fielded in a October 2016 study among the same population. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 20 minutes.

About Auriemma Consulting Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (212) 323-7000.

/by
, , ,

Auriemma Conducts Parallel Study of Mobile Pay Usage in the US and the UK

(New York, NY): In both the US and the UK, a growing ecosystem of mobile pay providers hope to become consumers’ go-to payment method at checkout. But the future of mobile payments appears more positive across the pond, where contactless payment technology has made familiarity with tapping at the point of sale more prominent.  Auriemma Group recently conducted a parallel study among cardholders in both the US and UK markets, aimed at learning about mobile payment adoption, satisfaction, and how comfort with contactless technology could impact mobile payments moving forward.

A small but notable proportion of credit cardholders (‘cardholders’) in both geographies have adopted mobile payments. While UK cardholders are slightly more likely than their US counterparts to have used Apple Pay (12% vs. 9%) and Visa Checkout (9% vs. 6%) within the past month, other options, such as PayPal In-Store Checkout (5% each) and Android Pay (4% each) show similar usage patterns. Although usage metrics are low, satisfaction with each technology is extremely high.

Over 90% of users in both geographies say they are satisfied with their mobile payment app. However, while it may be true that satisfied users are more likely to continue using than dissatisfied ones, user satisfaction alone does nothing to introduce non-users to the technology. UK consumers have a slight advantage in this area, given their introduction to contactless payment technology has familiarized them with tapping at checkout.

“UK consumers were introduced to contactless payments in 2007,” says Jaclyn Holmes, the Director of Auriemma’s Payment Insights. “Their increased comfort with this technology, in the decade since its inception, makes payment behavior at the point of sale less of a barrier for mobile pay adoption. If anything, paying with a tap has become more natural for this population than their US counterparts, who only recently began the move from swipe to dip.”

While exposure to contactless payments may increase comfort with mobile wallets, the shift from brick-and-mortar to online shopping creates an opportunity for mobile payments to grow. Most US and UK cardholders have made an online purchase on their smartphone, but a notable minority (31% and 40%) have not. And there is a link between comfort with making an online purchase via a smartphone and usage of mobile wallets more generally. Notable proportions of US and UK cardholders who have made online smartphone purchases have ever tried mobile wallets (33% and 43%, respectively). This is in stark comparison to their less smartphone-friendly counterparts, who are much less likely to have used a mobile wallet (7% and 5%).

“Cardholders who are more accustomed to shopping on their smartphone are more likely to pay with their smartphone in-store, especially in the UK,” says Holmes. “The US may have had the advantage of earlier exposure to mobile wallets, but the UK’s history with contactless has made the locale ripe for adopting a variety of mobile payment options. Increased familiarity with contactless payment technology and comfort with the smartphone as a payment device will be necessary to encourage the growth of mobile payments.”

Survey Methodology

These studies were conducted online within the US and UK by an independent field service provider on behalf of Auriemma Consulting Group. The UK study (Cardbeat UK) was fielded in August 2017 among 500 adult credit cardholders and the US study (The Payments Report) was fielded June/July 2017 among 800 debit cardholders, of which 567 were also credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 20 minutes.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  Founded in 1984, Auriemma has grown from a one-man shop to a nearly 50-person firm with offices in New York and London.  For more information, contact Jaclyn Holmes at (212) 323-7000.

/by
, ,

Security Concerns and Problems at the Register Continue to Depress Mobile Pay Usage and Net Promoter Scores

(New York, NY):  Mobile pay usage among eligible consumers is down 5% compared to this time last year (25% vs. 30%). And the decline in adoption is expected to continue into Q4 – a period that has seen seasonal dips in Mobile Pay usage the past two years, according to Auriemma  Group’s Mobile Pay Tracker. This new research reveals a myriad of reasons why consumers aren’t adopting mobile payments quickly, including a lack of need and interest, and that Net Promoter Scores (NPS) are seeing significant declines. But some barriers are directly influenceable by merchants and issuers alike, namely security concerns and problems at the Point of Sale (POS).

Nearly one-third (32%) of consumers cite security concerns as a top barrier for using mobile payments. A slightly smaller proportion (21%) actually believe the method is unsafe. Auriemma’s research identified specific ways mobile pay providers could alleviate concerns that block the trialing of mobile payments.

For one, 58% of consumers want issuers to assure them that mobile payments fraud will be covered by the bank, similar to card-based payments. And 57% of customers would like to see data demonstrating the security of mobile payments, with 43% wanting direct comparisons to more common payment methods such as magnetic stripe and chip cards.

“Issuers who do these things could find themselves at the top of the mobile wallet for new adopters within their customer base,” says Jaclyn Holmes, the Director of Auriemma’s Payment Insights. “In an environment of heightened consumer anxiety regarding data breaches, it is critical to clearly communicate mobile payments’ security to customers.”

Confidence with security alone, however, isn’t enough to grow mobile pay adoption. Merchant acceptance is crucial for establishing habitual use, but many Pay users run into problems at checkout. These issues at the POS are a great risk to the most active mobile pay users, who experience the highest incidences of disrupted transactions.

The majority of Samsung Pay (74%), Android Pay (63%), and Apple Pay (52%) users consider themselves to be at least somewhat active. A notable proportion of each have said they encountered a problem at the register (44%, 33%, and 37%, respectively). The top reason for the issue, however, is unfamiliarity of store personnel (55%) followed closely by problems with the actual terminal, including “transaction did not go through” (46%) and “terminal took too long” (35%).

These issues have a clear impact on Pay user’s likelihood to recommend the service. Auriemma research reveals sharp declines between Q4 2016 and Q3 2017 in the Net Promotor Scores (NPS) of Apple Pay (from 22 to 4), Android Pay (from 18 to 13), and Samsung Pay (from 46 to 21). While Samsung Pay’s technology should render it mostly immune to problems at the POS, even it has had difficulty staying away from issues.

“One of the key benefits of Samsung Pay is that it can be used anywhere that accepts cards,” says Holmes. “But even its enthusiastic user base risks becoming disenchanted by recurring issues at the POS.”

Problems at the register don’t just impact behavior at the transaction-level. Half of those who had problems at a retail location that accepts mobile payments say the issue made them use the service less often overall. Problems at POS are particularly perilous for cards at the top of the digital wallet, who have the most to lose if the Pay transaction is unsuccessful. In fact, 45% of in-store Pay purchasers quit trying to use mobile payments entirely, and use a physical card instead.

There are many ways to educate those wary of the method, but the real question is whether issuers and merchants are willing to put in the time to train their customers and employees. While merchants may want to offer their customer’s preferred payment method, offering it without the proper employee training and support stops mobile payment adoption in its tracks. Likewise, issuers who make their card compatible with a mobile wallet without educating customers of its benefits are forfeiting potential utilization. Issuers who want to remain or become top of the mobile wallet, and merchants looking to provide a seamless payment experience for those Pay-preferred, play a pivotal role in getting them off the ground.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group (Auriemma) in July/August 2017, among 1,505 mobile pay eligible consumers. Respondents were screened to own an iPhone 7/7+/6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S8, S8 Edge/Edge+, S7, S7 Edge, S7 Active, a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5, Note 7 – Gear S2 or S3 watch (in combination with an Android/iPhone smartphone) – and/or other Android phone with KitKat (4.4) OS or newer. All respondents also have a general-purpose credit card in their own name. In addition to the quantitative web survey, eleven in-depth interviews (IDIs) were conducted in August 2017.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  Founded in 1984, Auriemma has grown from a one-man shop to a nearly 50-person firm with offices in New York and London.  For more information, contact Jaclyn Holmes at 212-323-7000.

/by
, ,

Four Things That Will Make UK Consumers Want Your Credit Card

(London):  UK cardholders have 1.77 credit cards in their wallet on average, and while some may assume consumers aren’t in the market for a new card, the majority are actually open to new card offers. But consumers aren’t settling for just any card, and to earn their business, issuers need to be smart about their products’ value propositions and how they’re marketed. In the densely populated field of credit card options, how can issuers stand apart from the pack? Offering the best rewards is a good start, according to new data from Auriemma Group. But consumers want more. Here are some of the more compelling ways issuers can increase their chances of getting into consumers’ wallets.

  1. Offer attractive rewards.

No matter the category, rewards continue to push consumers over the tipping point when making acquisition decisions. When faced with the long list of elite options, the 66% of respondents interested in acquiring another rewards card most frequently cited the richness of rewards as the chief factor for their selection. But just offering rewards isn’t enough.

  1. Highlight your card’s exclusivity and prestige.

When some consumers select a card, they do so because the card embodies a particular lifestyle. Aspirational or otherwise, cards perceived as prestigious (28%) and those with the best benefits (21%) (e.g., exclusive events, lounge access) are highly coveted by those looking for a new card. This group seeks cards that tout platinum or titanium status, viewing them as having the most enticing benefits.

  1. Maintain a well-known and respected public image.

Card selection is also heavily impacted by the familiarity with and reputation of your brand. Among those surveyed, approximately three-quarters (73%) indicated they would be unlikely to take a card from a brand they are unfamiliar with. Consumers over 55 years old were even more likely to say this (83% vs. 67% under 55). Likewise, 74% reported a brand’s reputation (positive or negative) would impact their decision, a factor even more important for cardholders under 55 (79% vs. 65% of 55+). And 21% of current cardholders in the market for a new card say they would base their decision on their personal affinity for the brand associated with it.

  1. If you’re UK-based, tell people!

Consumers see real value in products from issuers who have a distinct presence in the UK: 73% of cardholders said it was important for their card issuer to be headquartered in the UK. In fact, if rewards and rates were equal, 77% of cardholders with a preference would prefer their issuer have a national presence (vs. 23% global). UK-based issuers that are not calling attention to their geographical connection to cardholders are missing an opportunity to increase their wallet share and acquire new customers.

“Issuers who can effectively communicate these four attributes stand the best chance of acquiring new customers,” says Jaclyn Holmes, Director of Payment Insights at Auriemma. “The challenge will be in striking the proper balance and ensuring your message is targeting the correct consumers.”

Survey Methodology

This study was conducted online within the UK by an independent field service provider on behalf of Auriemma in June 2017, among 500 adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

About Auriemma Consulting Group

Auriemma is a boutique management consulting firm with specialised focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  Founded in 1984, Auriemma has grown from a one-man shop to a nearly 50-person firm with offices in London and New York.  For more information, contact Jaclyn Holmes at 020 7629 0075.

/by
, ,

Don’t Blame Payments for Abandoned Shopping Carts Online

(New York, NY): Online shoppers browse for items differently than their in-store counterparts. They peruse products without salespeople, lines, or the pressure that comes with hours of operation. In this environment, shopping carts can sit idle for days while shoppers mull over a potential purchase. A whopping 79% of consumers have left an online cart unattended, according to new data from Auriemma Group, developed specifically for the Merchant Advisory Group’s (MAG) 2017 Annual Conference. The study of 800 debit cardholders revealed why consumers abandon an online purchase, how often these abandoned carts make it to checkout, and shed light on how retailers can use online checkout services and mobile payments to improve conversion rates.

When asked why they abandon their carts, online shoppers typically cite merchant-controlled reasons, such as finding a better price elsewhere (33%), waiting for a sale (29%), or trying to reach a free shipping or discount minimum (29%). The good news? Abandoned carts don’t necessarily stay abandoned forever. In fact, 80% of cardholders say the majority of their online purchases are completed at a later date.

“Online shoppers don’t feel the same sense of urgency consumers may experience in-store,” says Jeff Tennenbaum, Director at Auriemma. “For some, adding items to their cart could simply be a way to keep track of them. Will they go on sale? Are they cheaper somewhere else? And while payment options may not push consumers to begin the purchasing process online, they certainly encourage completion once a purchase decision has been made.”

Online checkout services and mobile payments increase the likelihood of online order completion for those that use them. This is true for those who have ever used Apple Pay (63% are more likely to complete), PayPal (61%), Visa Checkout (59%), and/or Android Pay (57%). Although it is not instrumental in getting them to checkout, the smooth, secure payment experience online checkout and mobile payments provides does help online shoppers complete their purchase.

“We’re excited to share more data that illustrates how retailers can use the online checkout experience to improve their online conversion rates,” said Tennenbaum. “Retailers who attend the MAG Conference this month will gain a new understanding of how their customers interact with them online, what that means for brick and mortar, and how that translates to the overall shopping experience.”

Tennenbaum will be speaking at MAG’s 2017 Annual Conference on Wednesday, September 27th from 4:15-4:35 p.m. in a TED-style presentation titled, “New Customer Experiences and Expectations in Omnichannel Commerce.” He will also be a panelist for “Top of Wallet in Digital Commerce: The Critical Role of Default Payments” on September 28th at 10:15 a.m.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma in June and July 2017, among 800 adult debit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. For more information, contact Jeff Tennenbaum at (212) 323-7000.

/by
, , ,

Prepaid Card Issuers Can Benefit from Integrating Offerings with P2P

(New York, NY):  Older millennials are increasingly eschewing cold hard currency for budget-friendly alternatives, considered to be even more secure than credit, debit, and store cards. This older millennial population, and other desirable demographic groups, are increasingly turning to P2P payments and reloadable prepaid cards when transferring funds. In fact, over one-third of cardholders have used P2P payments (42%) or a reloadable prepaid card (36%), according to a new study from Auriemma Group, which was conducted in partnership with the Network Branded Prepaid Card Association (NBPCA). The study highlighted use cases for P2P payments and prepaid among the banked population, shedding new light on who uses them and why they are an attractive payment alternative.

The results point to an opportunity for prepaid card issuers to integrate their offerings with P2P to better capture market share. The commonalities between these user groups make a compelling case. Most current P2P payment users and prepaid cardholders are male (57% and 53%, respectively), college-educated (62% and 53%), parents of minors (56% and 50%), and report a household income over $50,000 (67% vs. 55%). While these attributes register most strongly with the P2P payment users, their similarities highlight the connection between both groups.

“Our previous research tells us that those who use P2P payments are about twice as likely to currently hold a prepaid card than their non-using counterparts,” said Jaclyn Holmes, Director of ACG’s Payment Insights. “This cross-section of users could create increased engagement with prepaid cards should they be accepted by P2P payments.”

Users of both prepaid cards and P2P payments are more than just demographically similar. When looking at the perceived benefits of both methods, users of each report comparable advantages, namely security, budgeting, and convenience.

Reloadable prepaid cards are a particularly attractive payment alternative for consumers for whom security and budgeting are top of mind. Despite having a banking account, those who have used prepaid cards believe the most beneficial aspects are that they don’t link to a bank account (44%), offer a secure payment method (33%), and help with budgeting (33%). Prepaid cardholders aren’t the only ones who think the method is secure—most consumers believe prepaid cards are more secure than credit (59%), debit (60%), and store cards (58%). And unlike cash, prepaid cards bring these benefits to the digital shopping experience.

“The payment method allows cardholders to purchase online worry-free, as doing so will not compromise their checking account,” said Holmes. “And prepaid cardholders can set limits for category or everyday spend, allowing them to more easily maintain a budget.”

The perception of security is also high with P2P payments. Although users have a more positive impression of the method’s security than non-users, both believe the method is secure (88% and 65%). And this isn’t the method’s only similarity to prepaid cards.

“A small group of consumers utilizes P2P as a budgeting tool,” Holmes said. “About half of those who leave money in their P2P account do so because it helps them save money.”

Convenience and speed also earn top marks with P2P, with about nine in ten users reporting P2P payments make it easier to pay people far away (92%), that payments clear faster than checks (90%), and that splitting checks or bills is easier (87%).

“It’s safe to say we aren’t moving towards a cashless society, but we are certainly using less cash than before,” Holmes said. “By themselves, P2P payments and prepaid cards provide more flexibility, convenience, and a greater sense of security.”

The collaboration with the NBPCA marks the first time ACG has partnered with an industry association to conduct custom consumer research and signals ACG’s ongoing commitment to work with industry associations to illuminate solutions in an evolving environment.

“The findings of this study affirm what we in the industry have long known, that consumers turn to prepaid for the security and convenience the products provide,” said Brian Tate, president and CEO of the NBPCA. “From budgeting to safety to digital access to funds, it is clear that prepaid products are meeting the needs of our consumers, and prepaid providers will continue to build on the long tradition of evolving our products to continue to do so in the future.”

While this study focused on the banked population, a potential future study may focus on the unbanked population.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group in March 2017, among 800 debit cardholders. The purpose of this research was not disclosed nor the criteria for qualifying. The average interview length was 20 minutes.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  For more information, contact Jaclyn Holmes at (212) 323-7000.

/by
© Copyright - Auriemma Group