Consumers continue to show a preference for using debit cards at the point of sale, but increasingly many are using alternative payment services for online purchases, new research suggests.
Management-consulting firm Auriemma Consulting Group Ltd. conducted the research, surveying 428 credit cardholders online in June.
Some 65% of respondents use a debit card regularly each month to conduct purchases, which is consistent with research published in the Pulse Network’s 2010 Debit Issuer Study, New York-based Auriemma notes (
Consumers, however, still use debit cards to conduct purchases in smaller amounts on average than they do with credit cards. The average debit card transaction is $29.24 compared with $44.57 for credit. On average, respondents used a debit card to initiate 17.2% of their transactions compared with 12.7% using a credit card. Overall, respondents averaged $503 in monthly debit purchases compared with $566 on credit.
Despite issuers pushing rewards associated with signature-debit purchases, some 58% of respondents prefer using a PIN to complete purchases compared with 42% for signature.
Some respondents believe transactions are more secure when they use a PIN, with 42% saying the use of a PIN is a secure method of approval versus 28% who believe using a signature instead is a secure method to conduct purchases online.
Some 44% believe using a credit card is secure, and credit cards are still the most-used form of payment for online purchases. Of the 78% of respondents that shop online, 70% use a credit card. Some 39% of respondents use an alternative payment service such as PayPal, while 37% use a debit card.
The majority of respondents, 51%, view alternative payments as the most-secure method for online payments.
Products that enable PIN-debit purchases online likely would have little effect on how consumers pay, the research suggests. Nearly half, 47%, of respondents claimed the availability of PIN-debit use online would have no affect on their online purchase behavior. Only 14% of respondents said they would use a debit card more often for online purchases if they could use their PINs to authorize the transaction. The percentage increased to 34% among respondents younger than 25.
Consumers are recognizing alternative payments more than they were two years ago, the research suggests. Some 86% of respondents are familiar with PayPal, while 77% have a PayPal account. Some 31% of respondents are familiar with Bill Me Later, another payment service eBay Inc. owns. Only 8% of respondents have a Bill Me Later account.
The rise in alternative payment services represents a challenge to the card brands and issuers, especially if consumers begin to use them in brick-and-mortar environments, Auriemma notes.
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