How the spread of Internet devices changes payment habits
Devices connected to the World Wide Web, such as smartphones, tablets, voice speakers, smart watches and car dashboards, have a tangible effect on consumers' approach to choosing and paying for purchases.
This is not about a specific audience, but about a mass phenomenon, the scope of which is allowed by a new study of the analytical group PYMNTS.
Smartphones and applications are used for automatic payment at gas stations, searching for a parking space or ordering a pizza using a voice assistant, and these are not the only examples of using Internet devices.
People of different ages, from millenials to retirees, are increasingly turning to the convenience of Internet devices. They like to buy, without spending time and energy on visiting regular offline stores. Consumers buy goods previously available mainly in physical stores: food, medicines, clothing, etc.
The driving force behind these changes is the desire to save time. People are adapting to new payment options that are more suitable for a quick pace of life. The buzzword "omnicanality", which was recently used to describe the features of digital shopping, has become outdated and does not reveal what is happening in this area.
Shopping consumer routes do not just move from the physical to the digital world. They are increasingly dependent on Internet devices used by customers and their location at the moment when a person has a desire to purchase something.
Consumers care that commerce is convenient. And this convenience is increasingly being achieved through Internet devices and the payment methods they support.
PYMNTS analysts, together with Visa, studied the shopping habits of 2800 American consumers.In this sample there are representatives of all social groups of the adult population of the United States. Respondents were asked a series of questions about what kind of Internet devices they have, and how respondents use them to purchase and pay for goods and services. As part of the study, consumers listed all their purchases over the past 7 days, and also told where they were at the time of payment of the order and which devices they used for this.
The PYMNTS group has been working with Visa for the second year, and it was interesting for researchers to assess changes in consumer behavior during this time. And there have been serious changes. For a detailed picture, we recommend that you read the full report.
As part of this material, the key ideas of the report are shed, shedding light on the strategy of behavior of all participants in the Internet payment ecosystem.
Any consumer can be called an Internet consumer.
According to the study, 80% of Americans in addition to the main device (smartphone, laptop, PC or tablet) simultaneously use other devices connected to the network. Compared with last year, this figure increased by 75%. For comparison, only smartphone owners among respondents turned out to be only 3.1%.
Separately, it is worth noting the group, which the researchers called super-connected. These are owners of six or more devices. In 2018, they became 53% more: 36% against 23% in 2017. More than half of them are women. The average representative of the group is 42 years old. This is below the average median American figure of 47 years, but at the same time it is two decades older than the age of young millennials, who, according to popular belief, are the main users of Internet devices.
In generation X and baby boomers, possession rates of six and a large number of devices are 40% and 24%, respectively.
The simplicity and accessibility of PCs and mobile devices change the attitude of people from different social groups and generations to the online purchase of goods, which previously were conveniently purchased only in physical stores.
The survey showed that more than half of consumers used online shopping devices in seven of the thirteen survey categories: 28% reported on the purchase of clothing and accessories, and 20% on the purchase of products. This is a significant increase compared with 2017.
Internet devices in this case are any devices - smartphones, computers, tablets, voice-driven speakers, etc. Internet purchases are equally available today not only through computers, but also on a wide variety of devices used by people.
Internet devices accelerate the rejection of physical stores
Respondents told which products they bought over the past week and how they paid for them, and analysts found interesting behavioral patterns.
The respondents more often preferred to buy online and refused to shop at a real store. The exception is food. The specific numbers are as follows: 63% of consumers went to the store to buy food, but for all other categories of purchases they left home in less than 50% of cases.
The main catalyst for abandoning physical stores is the desire to save time by online shopping or by speeding up offline payments with devices. 78% of respondents noted that saving time is the main reason why they turn to Internet devices to buy something.
The use of Internet devices for auto payments is the most common scenario in cases where the payment process takes time and is fraught with additional difficulties. This, for example, refueling cars (49%), buying clothes (41%), parking fees (40%) or restaurant bills (39%).
A third of the study participants expressed interest in paying bills using such devices, and, compared with last year, this figure grew by 10%.
Saving time and smoothing the payment process in stores also provokes an increase in consumer interest in contactless cards. Twenty-six percent of consumers said they were interested in using contactless cards when placing an order. Eighty-four percent would use them when buying groceries, 79% in fast-food restaurants, and 72% in public transport.
Voice control is already changing the face of payments
Voice-driven devices are changing consumer habits, although a year ago it seemed incredible. Such developments have been on the market for only four years, but their ecosystems of skills and capabilities have already proven themselves and have great potential.
According to the study, the number of owners of voice devices over the past year has almost doubled, from 14% in 2017 to 27% in this. It is noteworthy that 29% of respondents from this group used the devices to make purchases.
Voice control does not just change the face of payments. It does this quickly and decisively.
Voice assistants relieve consumers from boring routine purchases, transforming a long process into an online payment that is performed in real time with the help of several commands. Twenty percent of voice device owners use them to buy products, 22% buy digital goods, 15% order takeaway food, and 29% buy clothing and accessories.
Trust is the guiding star of Internet consumers
Despite the enthusiasm with which consumers met the idea of using Internet devices to pay for purchases, the more abstract this payment experience becomes, the more concerns arise about the security and integrity of personal data.
In 2018, 79% of respondents noted that uncertainty about data security issues may negatively affect their desire to buy using Internet devices. 78% of survey participants are concerned about the safety of their personal data. These figures increased by 11% and 3%, respectively, compared to last year.
Most consumers trust those brands and companies whose services they use daily. The four leaders included card networks (55.3%), Visa (41.9%), Amazon (37.1%) and PayPal (35.6%).
To understand what the future payments will be, pay attention to the payment habits of the senior millennials.
The older members of generation Y, born in the 1980s, are 20.7 million Americans. To study consumer behavior when choosing and buying clothes and accessories, researchers identified them as a separate group and found a serious difference between the actions of 25 and 35-year-olds while shopping using Internet devices.
Older millennials have already built a career, returned a substantial part of their student loans, and some of them give birth to families. High income gives them a large purchasing power, inaccessible to young millennials and comparable with the capabilities of their parents from the previous generation X.
At the same time, representatives of this group came of age already with Internet devices in their hands, using them for a variety of purposes, from checking social networks, sending money to friends, and shopping with mobile devices. Applications with built-in payment functions for these people are something ordinary.
Half of the representatives of the studied group are super-connected. In general, the senior millennials make up 29% of the total number of super-connected. They also have more voice devices than other research groups, and millennials often use them to make purchases. 42% of senior millenials own voice devices (against 27% among all other respondents). Almost a third (32%) of owners of such devices use them for purchases (against 28% among other groups).
Older millennials are much quieter doing online purchases of goods of those categories that have recently been decided to buy in regular stores: from food and personal care products to jewelry and car parts. 59% of the members of the group use various Internet devices for this purpose, and 17% use voice devices.
As for the rest of the studied groups, for them the figures were 53% and 11%, respectively.
This makes the elder millennials the first generation of Internet consumers with real purchasing power, and a leader who should be equal to the rest of the Internet generations.
The future of payments is very similar to the present.
Payment innovators like to talk about innovations that will help consumers connect the physical and digital worlds. But people are used to differently assess the quality of shopping and service.
They are simply looking for easy and effective options, and in this sense, Internet devices are a good helper, simplifying the search and payment for goods. This is especially noticeable in the categories of products, the choice of which takes a lot of time: food, clothing, cosmetics, prescription drugs, and bills.
Devices that are firmly embedded in the daily lives of consumers, will soon also become an integral part of the process of paying for purchases.
Of all the cases reviewed by analysts, the American respondents most liked the various autopayment options. This shows how convenient this approach has become, and how much time is valuable for people.
So, the point of no return is passed. In the near future, consumers' payment experience will be closely related to the choice of Internet devices and the available payment methods. Most of the payments will go to those companies that provide their customers with an efficient and secure Internet payment experience.