If there’s one word that describes today’s marketplace, it’s choice. Fueling these choices is an ever-evolving purchasing environment that provides more consumer access and payment options than ever thought possible.
Specifically, today’s consumers demand optionality when it comes to where they buy, how they shop, and how they pay. And businesses that create differentiated buying experiences that maximize customer choice are finding new ways to deepen customer relationships and drive brand loyalty
Look at how the process of purchasing a pizza has evolved over the years. Consumers used to either call in an order or come in store to pay with cash. They could pick up their pie, dine in or even have it delivered. Today, consumers are able to choose the experience that best fits their lifestyle, leveraging digital technology to make ordering a pizza customizable and seamless – including how they order their pizza (in-store, website, pizzeria app, third-party app), where they eat it (in-store, at home), and how they pay (cash, credit, debit, mobile wallet, gift card). Businesses are then able to enhance the buying experience further by integrating loyalty programs, points, and rewards.
As merchants navigate the current marketplace, understanding how choice impacts their customers, both loyal and emerging, is becoming more critical to their short- and long-term success. With that in mind, Carat Insights surveyed more than 2,100 US adults to explore how consumer buying behavior is evolving amid rising demand for payment choice. Here is what we found:
Leveraging choice to enhance experiences
Today’s consumers have endless choices for ordering—they can do so via a store, website, third-party apps, or third-party delivery services; they can pay with cash, card, digital wallets, stored value, bank account and gift cards. And with more options that ever, Carat Insights found that consumers are most likely to prioritize a strong user experience (81%) and options that account for price (77%).
When leveraging customer choice to enhance experiences, businesses can focus on providing seamless options that simplify the customer journey – or even add purchasing flexibility for the buyer. For instance, consumers can mix and match using digital and physical interactions, take advantage of Buy Now, Pay Later (BNPL), buy online or at the pick-up window, or have items delivered. Consumers appreciate having this level of flexibility because it allows them to shop on their own terms. The bottom line is that consumers often select where they shop based on how the purchasing and payment experiences meet their lifestyles.
Many factors drive consumer behavior, and providing choices, including items to purchase and payment methods, helps create a positive experience.
The way consumers prefer to pay
According to Carat Insights, debit (37%) and credit cards (33%) continue to be US consumers preferred ways to pay for goods and services online – but other payment typers are gaining share. Digital Wallets are growing in popularity as businesses find new ways to integrate merchant wallets into their own digital experiences, through mobile apps and other platforms.
Adoption of Pay by Bank, gift cards, and BNPL has also grown in popularity. Pay by Bank is actively used by 40% of consumers, including 33% who use it multiple times per month to pay bills; 63% of consumers have used a gift card, or prepaid payment online in the last month; 34% have used BNPL in the last month, all up significantly since 2023.
While digital is growing, cash is still an important option for many consumers and cannot be overlooked by businesses with a physical presence. To that end, 87% of consumers have used cash at least once in the past month to make an in-person payment.
With a myriad of payment options at every consumer’s disposal, and consumer preferences varying based on each buying experience, maximizing payment options is more important than ever.
Retail apps driving brand loyalty
Retailer apps remain a popular choice among consumers, with 61% of respondents actively using them to purchase from their favorite brands. Usage is most frequent amongst millennials, with nearly a quarter using retailer apps at least weekly. In the restaurant industry, in particular, these apps are even being used by patrons that are dining in brick-and-mortar establishments. According to our study, 36% of consumers have ordered from restaurant’s app/website and dined in; 28% have ordered from a third-party app and dined in.
Why are consumers turning to apps? Whether downloading new merchant apps or installing updates to their favorites, consumers value an apps’ ease of use (84%) and ability to connect to loyalty programs (76%) to the buying experience. It’s important to remember that consumers want a memorable experience and are prone to repeat habits; with that in mind business should be developing apps in a way that allows users to quickly access what they need.
The continued rise in loyalty programs and their impact on shopping is yet another example of increased consumer choice. And the prevalence of apps across all industries combined with consumer app adoption make them a must-have for businesses building omnichannel experiences fit for modern consumers.
About Carat Insights
Carat Insights is a regularly produced report focusing on consumer omnichannel commerce preferences. Conducted in March 2024, the most recent report surveyed more than 2,100 U.S. consumers to form a representative sample of the U.S. population in terms of gender, educational attainment, age, race, and region. For more information, download the full report.
