Financial impacts of the ongoing pandemic continue for many consumers, even as the United States government prepares to increase consumer confidence in spending with its stimulus checks and other programs. Consumers, however, remain budget conscious, with a study finding that 75% of people are looking for coupons, promotions or other ways to cut prices when shopping.
Merchants need to adjust their product offerings and customer engagement strategies accordingly, especially since the effects of the crisis are also impacting how consumers pay for their purchases. Forty-one percent of consumers now prefer to make payments with debit cards, for example, by avoiding fees or interest charges associated with other methods such as credit cards. Linking these two distinct trends – the desire for promotions or other financial rewards as well as the switch to debit – could allow merchants to better engage and retain consumers in this new environment. Programs such as debit bonuses could therefore prove to be more attractive to both consumers and merchants.
In the last Next Generation Debit Tracker®, PYMNTS examines the role that debit bonus programs play in the payments space and how merchants can keep pace with these changes.
In the world of next-generation debit
Neobanks seem more than willing to fill the void left by the old banks. Digital only bank N26 recently announced a partnership with a cashback and rewards provider Dosh to help support its Perks system as it expands in the United States, for example. Dosh’s network will support benefits in the country, allowing US debit cardholders to receive cash rewards when making purchases with these cards. The bank will also connect this feature to its mobile app, allowing debit cardholders to seamlessly track their spending and associated Perks points within the banking app. N26 officially launched the Perks program in December 2019. Its expansion into the United States comes as consumers across the country continue to grapple with the financial impacts caused by the pandemic.
New interest in debit programs or other rewards programs from these banks is also coming, as many consumers begin to shift more of their spending from their credit to their debit cards. A study found that 64% of European consumers said they prefer to buy e-commerce debit purchases, for example. The increased control over their level of spending was one of the main reasons given to justify this preference, the report also noted. Keeping a close eye on this change can prove essential for marketers looking to increase engagement and trust with consumers. The study also found that 70% of those surveyed would wait to receive refunds from retailers before making another purchase from that specific merchant, for example – indicating many customers keep a close eye on their own spending.
Consumers who participate in Loyalty programs are much more likely to spend more with merchants participating in or offering these programs, according to another study. Eighty-one percent of Millennials said membership in merchant loyalty programs caused them to spend more with those retailers, for example. This shows a strong appetite for loyalty and rewards, especially among younger consumers, which could be critical not only in getting consumers to spend initially with their brand, but also in keeping their business. Merchants need to approach the rewards space strategically to capitalize on this trend, matching potential cash back rewards or other benefits to the payment methods that consumers increasingly prefer to use when transacting online. and in store.
To learn more about these and other stories, visit the News & Trends Tracker.
How digital payments trends in the first place shine the spotlight on debit rewards
Speed and convenience have always been important factors for consumers when making payments, and their importance has only increased during the global health crisis. More and more people are using online banking tools or making purchases through websites or mobile channels to make purchases, looking for quick and easy transactions that don’t break the bank. It is increasingly important for merchants to support the fast payments that consumers desire in a variety of channels, in addition to programs that offer points or rewards when these transactions are made, especially when it comes to young consumers.
To learn more about how increasing online banking ad spend is leading more consumers to expect rewards wherever they shop, check out Tracker’s featured article.
Focus: How the pandemic is driving interest in debit rewards and what it means for merchants
The ongoing pandemic has only increased the attractiveness of loyalty and rewards programs for many consumers looking to balance their budgets amid the lingering financial impacts of the crisis. More and more people are also moving away from spending with their credit cards in favor of debit as they seek to better manage their finances – which may spark higher interest in debit rewards programs that could offer them discounts. in cash or other benefits when transactions. Participation in such programs could therefore offer merchants key benefits as they seek to engage more with consumers.
To learn more about how the pandemic is affecting consumer perceptions of debit rewards and how this could prove essential for merchants, visit the Tracker’s Deep Dive.
About The Tracker
the New generation Debit Tracker®, a collaboration between PYMNTS and IMPULSE, a company of Discover, examines changes in consumer payment behavior, innovations that are reshaping the way they use debit, and how advanced solutions like machine learning technologies can help financial institutions secure payments through debit.