How do consumers choose their payment methods? In this article, I will offer a quick overview of some of the literature in this area.
The history of credit card processing has broadened over the years. Today, consumers frequently hold multiple credit cards, checks, bank accounts, and even stored value cards in different locations. This article offers an overview of the literature pertaining to consumer payments and their use. It will also look at why consumers make certain choices with their card information.
One of the first choices for many consumers make is whether they will use a debit card or a credit card. In addition to debit cards, there are also cash back cards and loyalty programs that many people find convenient. Cash back credit cards are issued with a rebate on purchases made with the card. Loyalty cards are issued to consumers who use the card regularly.
Consumers can also choose from a wide range of methods for making a purchase. Most cards allow the consumer to make an electronic transaction. This means a single electronic purchase will pay for the cost of a retail item. However, a credit card can also be used to make two or more payments for the same item.
Another question many consumers ask is what type of credit card payment method they will use. Some consumers prefer charge with cash, while others prefer to pay in their credit card’s plastic form. In either case, consumers may want to use a magnetic stripe card with a magnetic stripe reader. Most store card readers accept both a plastic and magnetic stripe card. A swipe of the card reader will produce an electronic receipt for the consumer to use at the checkout lane.
Some credit-card users like the convenience of using a credit card to pay for purchases online. However, the credit card company requires the consumer to sign for their purchase before it is debited from the customer’s account. This makes online payments more cumbersome. Also, many credit card companies charge a fee when a transaction is made online and cannot be performed offline. In some cases, online purchases may have a higher fee than offline transactions.
There is not enough written research available to answer how consumers choose their payment methods. However, there are several areas of interest in the literature pertaining to these questions.
Credit card usage is changing rapidly. As more consumers become familiar with the payment process, more consumers will choose the appropriate credit card payment method.
Some credit card companies offer consumers incentives to use their credit card. A few may offer cash rewards when a certain amount is charged on purchases or a low balance is maintained for a specific period of time. Consumers who use their credit card responsibly may qualify for rewards.
Many banks offer credit cards for customers to use. Consumers can usually transfer balances between their accounts. The bank may require that a certain number of months of service to be kept on the account. This is an excellent way to consolidate a number of different accounts.
Consumers may also choose to make online purchases with their card or visit a merchant with their credit card. When this is done, consumers may find that their card is accepted anywhere a brick and mortar store may accept credit. These transactions are often less costly. Since there is no paper trail, there is no need to deal with any credit card verification processes.
Charge offs are another option. With charge offs, there is no balance due. When the balance is paid off, the amount is reported to the credit card company. In some cases, creditors report charges as charged offs on credit reports.
Credit cards are a great way to shop. Consumers can use their card wisely and not make use of a credit card for purchases that they do not need.