Digital Transactions Authoritative, insightful and timely information for payments professionals
Providing consumers more ways to pay and engage with merchants play key roles in driving consumer purchasing decisions, according to Fiserv Inc.’s Spring 2024 Carat Insights Report.
One way for merchants to engage on a deeper level with consumers is to offer apps featuring loyalty and rewards programs and that are easy to use. When asked to provide the key reasons why they favor a merchant’s app, 79% of respondents said quantity of rewards motivated them, 75% said relevance of rewards, and 73% said exclusivity of rewards. Overall, 73% of respondents deem loyalty programs important to the brand experience, up from 67% from the same period a year ago.
Ease of use is another factor influencing consumer usage of merchant apps, according to 84% of respondents.
“It’s important to remember that consumers want a memorable experience and are prone to repeat habits, so apps should be developed in a way that allows users to quickly access what they need,” the report says. “For instance, the Kroger app highlights past purchases, making it easier to find your favorite items and promotional offers.”
Fiserv surveyed more than 2,100 consumers in the United States in March for the report.
When comes to payment types for online purchases, debit cards are the most popular (37%), followed by credit cards (33%), and digital wallets (15%). Prepaid/gift card usage is increasing, however, with 63% of consumers saying they have used a gift or prepaid card online the past month, up from 55% in during the same period in 2023.
Buy now, pay later is also gaining popularity with online shoppers with 34% of saying they have used BNPL to pay for an online purchase the past month, up from 31% in 2023.
Account-to-account payments are proving to be a popular option with consumers, especially for bill payment. Some 32% of respondents say they use pay by bank for bill payments, while seven in 10 respondents say they would be compelled to use pay by bank over other bill payment options due to consumer protections.
Other purchases consumers make using pay by bank include retail/grocery purchases (12%), loading funds into accounts (10%), and other types of payments (46%). Overall, 78% of respondents say they are aware of pay by bank, up from 54% a year ago.
Reasons why consumers prefer to use pay by bank include security (72%), ease of use (71%), and making a payment without accruing debt (69%).
In the healthcare sector, health and wellness merchants, such as pharmacies, are finding acceptance of health savings account cards stored within digital wallets can build customer loyalty.
While 17% of consumers have an HSA card, about six in 10 have loaded the card into their digital wallet. Millennials (24%) are most likely to have access to HSA cards, with eight in 10 Millennials loading the card into their digital wallet.
“For merchants that do accept HSA cards, offering features that allow full or partial payments, depending on funds, can encourage consumer use and build brand loyalty,” the report says. “Specifically, some merchants with digital wallets within their mobile apps offer a feature that automatically deducts a qualifying health or wellness product from a customer’s HSA card or account. If needed, the consumer uses another payment method to cover the remaining balance.”
Top reasons consumers will pay with an HSA card at a specific pharmacy or health care merchant include earning cash back on qualifying purchases (53%), earning loyalty points from the merchants (42%), special promotions on qualifying products (35%), and exclusive or early access to sales on qualifying products (32%).
“To increase purchases, merchants should highlight what products are HSA card-eligible, such as first aid kids, over-the-counter medications and mobility aids,” the report says.
