How Do Consumers Prefer to Make Payments?

payment options for customers

marketing planSmall businesses can maximize revenue opportunities by giving customers more ways to pay for goods and services

Giving consumers the option to pay with the method they prefer is a simple way to convert more of your interested prospects into customers who, ideally, become frequent buyers.

Here’s a look at the factors that contribute to consumer payment preference and how to evaluate whether you’re offering the payment methods that will maximize your sales potential.

Cards are King for Online Purchases

Accepting credit cards is becoming less of a “nice to have” and more of a “must” for any business selling online, or from a physical storefront or mobile location. (Consider that in one study conducted by SurveyMonkey, 86 percent of 300 respondents said they prefer to pay with a credit card). Because there are now cost-efficient payment processing options tailored to small businesses — and many do not require that you invest in pricey point of sale equipment — it’s now feasible for any size business to accept credit cards.

Aside from giving customers what they want, it’s also a simple way to overcome possible hurdles customers face in their purchase decision process: There is a wide body of consumer behavior research confirming that consumers spend more money per transaction, and are less price sensitive, when they use credit versus cash.

The Other Plastic

Credit card issuers require that a cardholder have a proven credit history in order to qualify for a credit card (and not everyone can qualify to secure one). In other cases, consumers may simply avoid using credit because of the potential overspending temptations credit cards can present. For these reasons, debit cards and prepaid gift cards also rank high (coming in a close second among the SurveyMonkey respondents) as a means of payment preference.

Business Purchasers like Non-traditional Payment Methods

SurveyMonkey’s data also indicates that consumers prefer to pay with non-traditional methods like PayPal (which they can choose to link to a bank account, debit or credit card). Particularly if you engage in business-to-business transactions, respondents in this segment noted a particular preference for the ability to use PayPal.

Transaction Size Matters

Cash may be taking a backseat to plastic and non-traditional forms of payment, but according to research by Transaction Age, it still has a place in the consumer wallet — especially for smaller purchases, like those made at fast food establishments.

Recurring Payment Options

The more convenience you can offer customers in the form of recurring subscriptions, memberships or replenishment/fulfillment for products used consistently, the more perceived value you may bring to the relationship — if you make the process customer-friendly. When you have the opportunity to leverage “sticky” services like recurring fulfillment (and billing), your ability to nurture loyalty is heightened, but as professor Fred Davis opined in a story on Marketplace, any financial technology (like automatic payment) has to be useful and easy to use for consumers to adopt it.

Though your business should allow the choice of establishing recurring billing through a debit card, ACH transfer made directly from a predetermined bank account or by credit card, consumers who responded to SurveyMonkey’s research indicated credit cards are the preferred method for processing recurring transactions. If you currently charge additional fees for a service like recurring bill pay, for example, consider whether your policies are working to the benefit of your business in terms of long-term customer value.

The State of the Economy Impacts Preference

Though Transaction Age’s data indicated consumer preference for using debit cards, it’s important to note that the study was conducted in 2012, supporting a theory MasterCard has shared regarding consumer preference among using debit cards, prepaid cards or credit cards. Beginning in 2012 (a time when consumers reported feeling increased confidence about the economy), MasterCard’s data indicated considerable shifts away from debit card use, and back into credit cards, resulting in an 8.4 percent uptick in credit card use compared to 2011 levels.

The customer service axiom “the customer is always right” applies to your operational policies as much as the forms of payment you allow customers to use based on their preferences — which can change based on the transaction type, and their perception of your price and value. By understanding how your consumers want to pay, you increase the chances of building the customer loyalty that ultimately boosts your opportunity to secure longer-term revenue.

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Kristen Gramigna

Chief Marketing Officer at Bluepay
Kristen Gramigna is Chief Marketing Officer for BluePay (, offering mobile credit card processing services. She brings more than 15 years of experience in the bankcard industry in direct sales, sales management, and marketing to BluePay and also serves on its Board of Directors.