Consumer Payments Primary Research Examines Behaviors & Perceptions

Navigator Edition: April 2015
By: Frank Verhaegen

In August 2014, approximately 1 out of every 5 banked consumers in the U.S. said they would be comfortable using their smartphone to initiate all of their payments transactions, according to a First Annapolis study of consumer payments usage. Almost 90% of banked U.S. consumers, however, indicated a preference for a traditional payment method— debit cards, cash, credit cards, or even checks— as their first option for payment. When presented with other payment methods, mobile applications and wallets combined were the preference of only 4% of consumers.

The First Annapolis study surveyed over 1,000 consumers across the U.S. between the ages of 18 and 54 who have both a checking account and a mobile phone. While the survey focused on payments preference and usage, we also asked respondents their perceptions regarding the trustworthiness and innovativeness of various payments stakeholders, their receptivity to mobile payments technologies, and their preferred mobile wallet features.

Figure 1: Payment Preference by Product
(Total Survey = 1,003 Respondents)

Fig-1_-Payment-Preference-by-ProductSource: First Annapolis Consulting primary research.

Debit Preference

Debit cards were the preferred payment form for 34% of respondents. Nearly 60% of this group is female, with annual household income between $15K and $99K. Most debit users (62%) would choose cash as their second preference, while 18% would use their credit card if unable to use debit. Debit and cash were the only payment products reported to be used every week by debit preferring consumers.

Cash Preference

Cash is the preferred product of 28% of the survey population, the second highest response. This group tends to be younger, with an average age of 35, and have lower household income. While household income ranges for this subset were similar to debit (typically between $15K and $99K), the distribution skews more heavily towards lower income brackets. Cash and debit exhibit a strong relationship within this group as well: 59% of the cash subset would choose debit as their second payment preference (with credit third at 19%). As all survey respondents have bank accounts, this group could potentially be motivated to migrate their spending to debit cards.

Credit Preference

Credit cards were the third most preferred form of payment in the study, with 27% of respondents. Credit users were the oldest in the survey with an average age of 38, and report the highest annual household income (generally ranging from $50K and up, with the heaviest concentration in $100K+). Credit users’ second most preferred form of payment is also cash, presumably as an indication of locations that do not accept credit cards or situations where cash is considered to be more convenient.

‘All Other’ Preference1

A small portion of the total survey (9%), preferred prepaid cards or other emerging payment methods in lieu of debit, cash, credit or checks. This group tends to skew male, with a relatively young average age of 32 and high household income of $75K to $100K+, and reports a higher level of trust in non-financial institution payment providers than other segments.

Comfort with/Preference for Mobile Payments

Consumers’ current preferences and future preferences, however, may not be the same. As part of this research, we asked consumers to what extent they agreed or disagreed with the following statements:

  • I would be comfortable using my mobile phone for all my purchases.
  • I wish I could pay for everything with my phone.

While only 4% of consumers indicated that mobile apps or wallets are their current preference, 16% would like to make all their payments that way, and 20% indicated they would be comfortable doing so, with some variation among the different payment preference groups. Debit users were least likely to agree with these statements, while cash and credit proponents were more accepting. Unsurprisingly, the ‘All Other’ payments group was the most progressive with regards to mobile payments, with over half the subset agreeing with both statements.

In addition to general payment preferences and attitudes, this study also explored which mobile applications consumers were using; the frequency with they used them; their perceptions of the benefits of mobile applications; and the perceived value of advanced mobile features such as targeted coupons, person-to-person payment capabilities, and bank or social media integration. These findings will be addressed in a future Navigator article.

Figure 2: Respondent Demographics by Payment Preference

Fig-2_-Respondent-Demographics-by-Payment-Preference1 ‘All Other’ indicates a payment preference other than debit, cash, credit or checks; includes PayPal, mobile application, prepaid, and mobile wallet.
2 Household Income is established as the range where the percentage of survey respondents is above the U.S. household income distribution.
3 Mobile Comfort is indicated by agreeing or strongly agreeing with the statement: “I would be comfortable using my mobile phone for all my purchases.”
4 Mobile Preference is indicated by agreeing or strongly agreeing with the statement: “I wish I could pay for everything with my phone,” regardless of response to explicit payment preference questions.
Source: First Annapolis Consulting primary research.

Implications & Conclusion

Debit cards, cash, and credit cards are consumers’ most preferred payment methods, especially for frequent expenditures. However, there was already material support for mobile payment solutions among almost 20% of the population…30 days prior to the introduction of Apple Pay, which has come to be generally viewed as a tipping point for mass-market awareness of mobile payments. We are anxious to see the results of our next study, which is currently in the field, six months after the Apple Pay announcement.

1 ‘All Other’ indicates a payment preference other than debit, cash, credit or checks; includes PayPal, mobile application, prepaid, and mobile wallet.

For more information, please contact Frank Verhaegen, Associate,, specializing in Debit and Prepaid.

To read the rest of this article, please subscribe to

The Navigator Newsletter