5 key findings about holiday payment habits

Shopping mall at Christmas

Expect this holiday shopping season to be a busy one with U.S. consumers spending roughly $730 billion according to the National Retail Federation (NRF). The NRF forecast is a growth of 3.8% to 4.2% in total November and December retail sales over 2018. The NRF reported that online and other non-store sales will grow between 11% and 14% over last year to reach between $162.6 billion and $166.9 billion. In comparison, 2018 overall sales grew a tepid 2.1% to reach $701.2 billion.

The NRF reported in its survey that consumers will spend on average $1,047.83 this holiday season, up 4% from the $1,007.24 they said they would spend in the 2018 survey. Shoppers between the ages of 35 and 44 stated that they planned to spend the most at $1,158.63.

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When it comes to holiday shopping, more consumers are turning to e-commerce as a solution for avoiding all of the challenges with shopping in-store — such as busy parking lots, crowds of people at the malls and out-of-stock items. Online shopping is also an easy way to get the latest discounts and earn loyalty points from retailers.

According to TransUnion’s 2019 Holiday Retail Fraud Survey, over 75% of consumers plan to conduct at least half of their shopping online this year. The survey also found that mobile devices are being used as much as desktop devices when it comes to online shopping – over 70% of consumers reported that both smartphones and desktops were the among the most commonly used devices for shopping. Tablets were reported as among the most commonly used device for online shopping by just under 30% of respondents.

“One surprising finding was the importance of coupons and loyalty points. These can play a major role in where consumers shop. Yet, they are also aware of the fraud and security risks at this time of year when shopping online,” said Shannon Wu-Lebron, senior director of retail and e-commerce markets at TransUnion.
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The downside of shopping online from the convenience of your laptop or smartphone is the potential risk of fraud either through compromised websites, phishing scams or other exploits Roughly half (46%) of consumers are worried about becoming victims of fraud, based on data from TransUnion’s 2019 Holiday Retail Fraud Survey. When examining the data it’s clear that Gen Z consumers (38%) are significantly less concerned about becoming fraud victims than Baby Boomers at 54%.

While consumers often claim that they want a more safe and secure online shopping experience, retailers know that instituting onerous identity verification challenges creates friction. In the TransUnion survey, 95% of shoppers viewed additional identity validation as positive — however, in raising the amount of friction experienced in an online shopping session retailers risk losing some customers in the hope of providing better security.

“People want a seamless shopping experience, so it’s a balancing act for retailers to weigh in security measures. Baby Boomers are more worried about the risk of becoming a fraud victim whereas millennials and Gen Z are more concerned about the shopping experience. In general, older people are more risk averse and are less confident with technology,” added Wu-Lebron.
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When it comes to gift giving during the holidays, not all gifts are created equal and not all are welcomed by their recipients. Half of consumers receiving an unwanted gift during the holidays would get rid of it, according to InComm’s 2019 Holiday Index study. Most consumers getting rid of an unwanted gift chose a method that would least likely offend the gift giver — such as regifting at 19%, donating it at 13% or even tossing it at 1%.

“The biggest surprise for me was what people did with unwanted gifts. In these cases, 29% of people will 'learn to love it' rather than returning or getting rid of it. I think we can say that people are pretty flexible and willing to try new things, even if a gift wasn’t on their wish list,” said Tammy McGill, Research and Market Insights Manager at InComm.

In terms of gifts that people want for this holiday season, according to the InComm study, gift cards were tied for first place along with clothing, followed by toys and then electronics.
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For those brave enough to fight the crowds and shop in-store, there is also a shift occurring in how people are planning to pay for their holiday purchases as consumers are increasingly willing to use a mobile payment. According to Ibotta’s 2019 Holiday Shopping and Mobile Payments Study roughly six in ten consumers expect to use a mobile payment in-store, with fully 25% reporting it as very likely. The Ibotta study was conducted during October 2019 among over 1,000 consumers between the ages of 18 to 65.

“We were encouraged to see that 60% of consumers plan to use mobile payments this holiday season, marking a shift in the direction of widespread adoption. With 55% of consumers inclined to adopt a new mobile payments platform or retail rewards program if it saved them money, our survey findings further validate that rewards are a key factor for continued adoption,” said Bryan Leach, founder and CEO of Ibotta.

The study also found that consumers want convenience, with 54% of respondents saying mobile payments solutions are more convenient than using card payments in-store.
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When it came down to the type of store consumers would most likely use a mobile payment to complete an in-store purchase this holiday season, the Ibotta study found overwhelmingly that consumers would use it at a major retailer. According to Ibotta’s 2019 Holiday Shopping and Mobile Payments Study two-thirds (66%) said they would most likely make a mobile payment at major retailers, followed by convenience stores at 16% and then restaurants at 13%. Only 5% of survey respondents stated that they would likely use a mobile payment at boutique shops.

It’s possible that part of the desire to use a mobile payment at a major retailer is that many have added mobile acceptance when they did their EMV upgrades, as well as a number of major retailers also have mobile payments such as Walmart Pay. It could also be that mobile payments may be used more for larger purchases than less expensive items often found in convenience stores where cash tends to be used.

“By allowing consumers to take control of their entire shopping experience, retailers can harness the excitement of cash rewards to drive adoption for new forms of mobile payments and retail programs,” added Leach.