By Cathy Planchart, Senior Project Manager

Recently, when planning to go to a farmer’s market in a neighboring town to which I had not been before, I stocked up on cash. To my surprise, most of the vendors were set up to take cards as the primary payment method. So, I used my debit card to pay for my purchases, which is my primary form of payment around town. But when I travel to the city, I use my credit card, which is in my Apple Wallet on my iPhone. It is quick and convenient to use for public transportation and food purchases. I don’t want to be that person at a metro station turnstile or lunch counter holding up the line.

Today one in five U.S. consumers use seven different payment methods on a regular basis (PYMNTS) – from cash to crypto and everything in between. Curious about what payment methods people are currently using, when and why, MKP decided to conduct a survey of its employees, in addition to reviewing the plethora of online data. While the sample size for the MKP survey was not large, the results were interesting, nonetheless.

It turns out that, among survey respondents (Gen Z to Baby Boomers), credit cards are the most frequently used payment method. All respondents have at least one credit card which they use for everyday purchases, for online shopping, for large purchases and to earn rewards. Many respondents also keep credit cards on file with favorite merchants. They prefer credit cards (3 to 1) over debit cards. Within the MKP group, 60% had their credit card in their digital wallet and 30% have both credit and debit cards in their digital wallets. For online shopping, this group uses credit cards most of the time, by far, and uses debit cards the least.

Another reason why credit card use is so popular is because of SSO (Single Sign-On) technology. For example, at the supermarket self-checkout I can now pay using my PayPal account, which is in turn linked to my credit card. So, ultimately, I am paying via credit card, but I am authenticating my payment via PayPal. Similar options are available for “express check-out” on many online retailers now such as Amazon, Apple, eBay and others. It is no surprise that electronic payments, such as credit cards and digital payments, are now mainstream thanks to advances in technology. Consumers enjoy the speed, ease, convenience and security afforded by electronic payments. And it is actually beneficial for businesses to rely on electronic payments because of the many costs and risks associated with handling cash. However, there are also risks associated with electronic payments. These include data breaches, power outages or electronic systems being down just when you want to buy that hot vanilla latte on a cold winter day. And, if you are relying on your smartphone to make an in-person payment using your digital wallet, be sure it is charged before heading out!

A parallel can be drawn between electronic payments and electronic communications. Just like payments, we have so many ways to communicate electronically today including email, text, video calls, instant messaging, etc. But these technological advancements have not done away with face-to-face conversations, handwritten notes and personal phone calls. We are just communicating more using all available channels. Regarding payments, we may not be spending more, but it is certainly convenient to have so many options available for how to pay.

When it comes to payment methods, it is definitely not “one size fits all.” For example, last weekend, I (a Gen Xer) went to dinner with a group of people in their early 20s, otherwise known as Gen Z. When it came time to split the bill, three different payment methods were used: cash, Venmo and credit card (me). This experience is a perfect reminder of why it is important for financial institutions to understand consumer payment preferences and meet the needs of a diverse and ever-changing audience. By supporting a range of payment options and communicating them effectively, banks can deliver flexibility, choice and convenience for everyone.

MKP communications inc. is a New York-based marketing communications agency specializing in merger/change communications for the financial services industry.