Almost 60% of Europeans and North Americans tried a new payment method in the last 12 months, according to a recent research by Paysafe, an online payments provider.
The majority (86%) of consumers confirmed their spending behavior changed, with 59% of consumers using a new payment method for the first time. Debit cards (40%), credit cards (36%) and digital wallets (32%) were the most popular payment methods among consumers.
Contactless payments adoption in the U.S. still lags behind Europe, with a third of U.S. consumers still yet to try contactless for the first time.
The pandemic forced many consumers to pivot their payment habits. Online, digital wallet and contactless payments saw an increase in customer adoption during the last year and are expected to continue growing, according to Paysafe research. The payment company surveyed 2,000 customers in the U.S. and 1,000 customers in the U.K., Canada, Germany, Austria, Bulgaria and Italy between March-April 2021.
The key driver cited by respondents for adopting new payment methods was the inability to make in-person payments (33%), but the need to track spending closely (26%) and concerns over fraud (25%) also made consumers modify their payment habits.
"Consumers have adapted and gotten to grips with alternative payment methods over the last year, partly because they had to due to the pandemic," Paysafe CEO Philip McHugh said in the press release.
Debit cards were the most preferred method for online purchases (54%), followed by credit cards (51%) and digital wallets (43%). Online checkout experience was a key differentiator for consumers' payment preferences, even more so during the pandemic. Nearly 53% of global consumers said they would not return to an online vendor if they suffered a poor experience or lack of payment choice.
Consumers between the ages of 18-24 adopted new payment methods at a higher rate than other consumers. Nearly 77% of those between the ages 18-24 tried a new payment method, as compared to 59% of consumers across the board.
Cryptocurrencies and buy now, pay later (BNPL) payment options are also gaining traction. Nearly 9% of consumers paid using cryptocurrencies for the first time, while 8% of consumers used BNPL payment plans.
Contactless payments saw a surge in users globally, with European consumers leading the way. In every European country, the percentage of consumers that have never used contactless has fallen, and the users who are using contactless payments are doing so more frequently.
Nearly 9% of consumers in the U.K. have never used contactless payment before, compared to 18% in Canada, 8% in Austria and a whopping 32% in the U.S. On average, a consumer in the U.K. used a contactless payment method at least 5.44 times in the last month, compared to 4.69 times for Canada, 5.59 times for Austria and 3.09 times for the U.S.
As payments become more digital, consumer's expectations towards tighter payment security increases as well. Consumers expect a balance between payment security and convenience during checkouts.
"Concerns around payments security have also been a constant theme coming through in our research," McHugh said. "It's also about ensuring peace of mind from a security standpoint, coupled with a frictionless experience."
Risk tolerance towards fraud has dropped in the last year as only 46% of global consumers agreed that a certain level of risk of fraud is inevitable when shopping online compared to 56% in 2020. In the U.S., risk tolerance also dipped as only 53% of consumers agreed to take on certain fraud risk while shopping online in 2021, compared to 63% in 2020.
Nearly 63% of consumers advocated tightening security processes to make payments safer while 40% are willing to accept whatever security measures are required if it eradicates fraud.
Merchants that are swiftly adapting to these trends and modify their payments offering to be safe and frictionless will succeed and emerge from this crisis stronger than before, Hugh said in the press release.