Most consumers carry more than one piece of plastic in their wallet. It’s common to have a debit card and two (or more) credit cards. But the one that receives the largest share of a consumer’s purchases is referred to as the “top-of-wallet” card, and you want to make sure your card is their first choice.
Influencing someone’s decision to choose a specific card for any given transaction can be challenging for retail banks and credit unions. And in the Digital Age, it isn’t getting any easier either. Mobile wallets like Apple Pay, PayPal and Samsung Pay are complicating the payments landscape — both for consumers and financial institutions alike.
Researchers from Tsys surveyed 1,000 consumers in the U.S. to examine people’s attitudes and preferences towards payments, which payment types they prefer, and what they look for in their credit or debit card. In their study, they identified three key ways that financial institutions can lock in that coveted top of wallet spot, while also cross-selling consumers additional products and building loyalty.
Consumers Love Cash Rewards
Consumers like rewards more and more each year. Rewards rank as the most attractive benefit a card can offer, far outpacing other features like interest rate, issuer’s brand, style/design of card, and flexible payment options. The good news? If your rewards program offers the right rewards, it’s likely that you can charge consumers a higher interest rate.
Their favorite reward type? Cash rebates. Other highly coveted features are closely related to getting cash back—saving money on both name brand and local merchants. Consumers like coupons and special offers based on their behaviors. If you know a consumer uses their debit card at a specialty food market or is a tech geek who frequents Best Buy, use data analytics to target these consumers with discounts and special offers.
So who offers the best cash reward card? According to Nerdwallet, it’s a tie between the Citi Double Cash Card and the Barclaycard CashForward World MasterCard. Global banks fared well in NerdWallet’s rankings for best cash rebates, but a variety of smaller financial institutions also make the list, including cash back rewards cards from First National Bank, Town Bank, Citizens Bank, and Johnson Bank.
It’s possible for smaller financial institutions to compete with larger national brands. In a study from J.D. Power study, there was an average of only a 10-point difference on 1,000-point scale in overall satisfaction between national Visa/MasterCard issuers and other retail banking providers.
Big banks may dominate the credit card space, but other players shouldn’t surrender the market. Regional banks, for instance, are growing their credit card portfolios by an average of 24% since 2014.
Almost half of consumers say it’s either “important” or “very important” to have all their financial products — including their plastic payments cards — with the same financial institution. That’s good news for those institutions focused on cross-sales to existing customers. Less than one-third said it was not important or not important at all.
Consumers Fret Over Security Concerns
Even though your financial institution may adhere to the highest card security standards, consumers don’t really understand how card issuers make their payments secure. They just hear reports about the latest data breach and freak out.
When asked to choose between a new card that was rated top in security and one rated top in rewards, almost three-quarters (74%) said security was the most important criteria for selection.
Many card features that consumers want available on their mobile phones are related to security. For instance, 69% say they would like the ability to use their phone to immediately stop a transaction that they didn’t make. And slightly more than half want the ability to use their phone to turn their card on and off — either based on location and/or time of day.
It’s obvious consumers are worried, so you need to foster a greater sense of security with increased education. Without getting too deep into the technical weeds, tell consumers what extra steps your bank or credit union takes so that consumers can rest easy. Once consumers feel secure, only then can they focus on the additional features of the card.
Consumers also feel more secure when they receive mobile alerts about fraudulent or unusual transactions. In addition to alerting consumers, make sure they can actually do something by stopping the transaction in real time. Don’t send an alert and then ask them to call an 800 number.
Freedom of Choice
Consumers like having choices when it comes to payment methods, and what they choose to pull out of their wallet depends largely on what they are buying.
Not surprisingly, credit, debit and cash remain on top of the payment types as digital payments continue to gain ground. But, for the first time in the history of the Tsys study, credit now tops debit. Tsys asked consumers, “If you are given a choice, which do you prefer?” 40% said credit, 35% said debit, and 11% said cash.
Although cash has supposedly been dying for years, it continues to hold its own, actually creeping up a few percentage points as the most preferred payment type.
Which payment type a consumer uses depends on the time and place. For larger transactions, consumers will be most likely to take out their credit card, but for everyday purchases such as groceries, gas, and small retail, they prefer debit. And cash is still king when paying individuals, buying a Big Mac, or getting a latte at Starbucks.