Yes to more payment options but just as backup

In some parts of Europe, many people feel very strongly that the more payment options they have, the better. However, attitudes are not consistent across all countries.

In addition, despite many wanting choice, most people, regardless of where they are from, use just a handful of payment options both in-store and online. The main reason we use new or different methods is we must adapt to what’s on offer from the merchant. Not because we want to.

These are among the main findings of the latest ING International Survey on how we spend our money. Just under 13,000 people in 13 European countries were asked how they pay and why they use their selected payment methods.

When asked how true or untrue the statement “The more payment options I have, the better” is, 25% across Europe considered the statement to be completely true. Opposed to this, 13% considered the statement not true at all. Subtracting the untrue from the true responses gives a net figure of 12% who consider the statement to be true.

But there was considerable variation between countries ranging from a net low of -16% in the Netherlands, to a high of 36% in Romania.

Not surprisingly, there is a socio-economic element to wanting and using different payment options. For example, survey responses show that people are more likely to take advantage of payment choice if they are working. Those employed full-time use an average of 5.3 different payment methods, compared to 4.0 for those who are not working due to being unemployed. Similarly, those with a master’s or PhD use an average of 5.7 different payment methods, compared to 3.7 for those who did not finish high school. Consistent trends are also seen across incomes, those earning more than €7k per month use an average of 6.0 different payment methods, those without an income use an average of 3.1.

In short, it is not enough to have a choice, particularly regarding new digital options, you must have the means to take it. Unsurprisingly, people who own lots of technology devices -- the most tech savvy among us – also tend to use more options. Own 8 different devices and you will use an average of 10.2 different payment options, compared to the 3.1 that are used by those who own one piece of technology. This is potentially also a reflection of an early adoption mentality. Own more tech devices, be open to experimenting with the latest trends.

Survey responses also suggest a link between a preference for more traditional means of payments, such as cash, and an aversion to multiple payment options. The Netherlands, Belgium, France, Austria and the UK were, for example, the locations where more people said the statement “The more payment options I have, the better” was completely untrue. These countries were also where people were more likely to disagree with the statement "I would be happy to leave my wallet and cash at home when I go out".

Having extra payment choices is a zero-cost arrangement. It’s not necessarily irrational to want options, even if they aren’t used. They can be handy if something goes wrong. Keep cash in case the card payment system fails. Similarly, with Google and Apple Pay, if a wallet is left at home, tapping a phone can be a useful backup. But research also suggests there is such thing as too much choice.

Despite disparate attitudes towards wanting multiple payment options, consistent with the notion of choice overload, uptake is relatively consistent. Most people tend to use between four and six methods to make payments in-store and online across the 13 European countries surveyed.

In the last six months, three in-store payment options – cash (69%), bank card with pin (65%), and tapping a card without a pin (57%) – were used by more than half of survey respondents. To make online payments over the past month, two options dominated -- entering card details on a website (42%) or using online payments system PayPal (48%). The other options we presented could largely be considered emergency backups.

Survey responses unsurprisingly suggest that popular options are those that are secure and convenient. We want making a payment to be quick, but we must also trust it. Comfort in familiarity also therefore plays a role. Very few Europeans -- just 4% -- say they prefer to use their phone to pay for small expenses in-store, over all other options, for example.

Small in-store payments are driven by convenience, 40% say they select their preferred payment method because it is quick to use and 23% select theirs because it is easy. But for anything larger, security is more influential on choice. For small expenses, 24% say their payment preference is driven by security, moving to 34% for medium expenses and 45% for larger outgoings. Online, security outweighs convenience across all payment amounts.

Across all countries people consistently say they will be using an increased number of payment options six months from now. There is an interest in having future choice.

In some ways, this is not surprising. Writing in Psychology Today, behavioural scientist Susan Weinschenk notes that "even though it’s not necessarily true, we equate having choices with having control". In a similar vein, Stanford University psychologist Hazel Rose Markus has suggested that white, middle class Americans see having a choice as a matter of identity.

It’s relatively easy to envision adoption, but harder to follow through.

Many of the payment options on offer are new and, for lots of people, untested. Opportunities to increase awareness and familiarity may therefore support adoption over time. Our survey has continually shown a classic bell curve in people's adoption of new things -- i.e. a slow pick-up of new users until pretty much everyone has joined in and newcomers tail off.

Coordination of use by consumers and vendors can make alternative methods attractive as they grow in scale and availability. In this case, what others are doing matters. If many of our friends adopt a new payment method, for example, it becomes more convenient for us to do the same. Positive social signalling supports adoption, or at least interest in new methods.

Change is inconvenient and riskier that the status quo. Whether people follow through with change depends a lot on what drives it. A disruption, removal of old options or a new, urgent need can all prompt change. But these are not themselves, a desire for change. It is rational to ask, why change a system that already works? Half of the people in our survey (52%) said they use different ways to pay online because they must, the same payment options aren’t available from all vendors. It wasn’t because they wanted payment variety. Similarly, 49% changed between payment methods in-store due to the availability of options.

Hesitance to adopt new payment methods is also driven by inertia, which in turn, is influenced by the costs of transitioning from one method to another, considerations of prior investment in current methods, otherwise known as sunk costs, and loss aversion. Research has found inertia directly decreases intention to use mobile payment services and leads to decreased perceived value and increased perceived threat of doing so.

When we send money to someone else, whether in-store or online, unsurprisingly we want it to be easy, and we want to trust it will work. A natural human affinity for wanting lots of choice but being relatively averse to muddling through the options has been found in extensive research. Here we find payment choices are no exception. Change is tricky, trust takes time and there is a certain reliance on the actions of others, that is networks, for a payment option to really take off.

About the ING International Survey

The ING International Survey promotes a better understanding of how people around the globe spend, save, invest and feel about money. It is conducted several times a year, with reports hosted here. This online survey was carried out by Ipsos from 15 to 27 of May 2020. The total sample size was 12,824 across 13 countries – Austria, Belgium, Czech Republic, France, Germany, Italy, Luxembourg, the Netherlands, Poland, Romania, Spain, Turkey and the United Kingdom. Sampling reflects gender ratios and age distribution, selecting from pools of possible respondents furnished by panel providers in each country. European consumer figures are an average, weighted to take country population into account.