Cash is king, but 25% of smartphone owners use mobile wallets

While cash remains king at the point-of-sale, a variety of other digital payment methods are preferred by consumers, with 25 percent of all smartphone owners now using mobile wallets.

Credit cards and cash are the favorite ways to pay among shoppers, but a broader variety of payment options, such as digital and mobile, are increasingly in the mix, according to a research study from Blackhawk Network, a prepaid gift card distributor.

"Consumers still have a strong preference for traditional payment methods like debit cards and prepaid cards," said Teri Llach, Blackhawk's chief marketing officer. "Those payments tools are not going away anytime soon, even as interest in and usage of new payment methods grows.

"Our findings prove that payments is not either/or when it comes to legacy payments versus emerging products. It's really about convenience and providing a mix of options."

The study, which surveyed 1,000 American adults in April 2015, reported the following usage of payment methods: 93 percent used cash; 58 percent used debit cards; 68 percent used checks; 67 percent used PayPal; 48 percent used retailer gift cards; 45 percent used Visa or MasterCard gift cards; 33 percent used prepaid debit cards; and 14 percent made mobile payments on smartphones or tablets.

 View full Blackhawk Network infographic

But cash and checks showed the greatest decline in use compared to past studies, with 68 percent of mobile payment users reporting that they are using alternative payment methods more than last year.

The Blackhawk study found that 25 percent of smartphone owners now use mobile wallets. In those mobile wallets, 64 percent have debit cards; 58 percent have credit cards; and 45 percent have gift cards.

The research also concluded that the popularity of gift cards is significant, with 87 percent of consumers saying that merchant-specific gift cards are convenient to use, more popular than bank-connected debit cards at 82 percent. Gift cards are now mainstream payment methods with 48 percent of consumers using them in the last year.

When asked to select the most convenient payment methods, 93 percent of consumers selected cash; 92 percent said credit cards; 90 percent chose PayPal; and 87 percent cited retailer-specific gift cards. Bitcoins and checks were ranked most inconvenient, according to the study.

Blackhawk Engagement Solutions, a new division of Blackhawk Network, issued a study last month titled, "Where It's At: A Connected Shopper Study." The company sought to identify how and where consumers are using connected technologies to discover, filter and shop.

The research found that only 15 percent believe loyalty programs provide the most savings; 62 percent regularly seek out and sign up for digitally delivered special promotions; and 54 percent of shoppers would use a mobile wallet instead of a traditional wallet if it were accepted everywhere.

"The smartphone is the most prevalent internet-connected device, with the laptop not far behind," the study said. "That means you're never further away from your customers than they are from their devices, at home or at work." When asked which devices consumers own and use daily, 71 percent said smartphone; 66 percent said laptop; 50 percent said desktop computer; and 43 percent said tablet.

In every retail vertical, consumers who were asked about an incentive for purchases said they prefer a deeper discount offered as a rebate or post-purchase validated reward. Sixty-seven percent chose a $25 prepaid debit card that is accepted almost everywhere; 26 percent said a $25 Amazon gift card; 6 percent said a gift card for the store where the purchase was made; and 2 percent said a $25 Google Play or iTunes gift card.

The buy online, pick up in-store (BOPIS) option has a strong appeal for shoppers when tied to incentives. Eighty-six percent would consider BOPIS to save $10 on a $50 item; 78 percent would consider BOPIS to receive an item three days earlier; and 45 percent have used BOPIS in the last six months.

For more:
-See this Blackhawk Network press release
-See this Blackhawk Network infographic
-See this Blackhawk Engagement Solutions study

Related stories:
Everybody's talking 'payments'
Amazon, Blackhawk expand gift card capabilities
Momentum to implement mobile payments grows
Charming Charlie grows sales with online digital gift cards
62% of shoppers want a gift card

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