Inflation triggers increased payment cuts
Inflation has impacted consumers not only in how much they pay at checkout, but also in their payment experiences. With 49% of consumers annually earning more than $100,000 paycheck to paycheck in March, it’s no surprise that the leading cause of lower payments in April is insufficient funds, according to a recent PYMNTS study.
The Digital Economy Payments May 2022 US Edition is based on a census survey of 3,067 US consumers between April 8-17. The survey asked consumers about their shopping and payment experiences and the impact of their perception of rising prices on these experiences and their preferences.
Here’s what we learned:
• Consumers in all income brackets living paycheck to paycheque with problems paying bills were the hardest hit by payment fraud in April.
PYMNTS found that consumers least able to absorb the costs of fraudulent payments made on their behalf were also the most frequent targets of fraudsters. According to the report, millennials and those earning more than $100,000 were the most likely to fall victim to payment fraud last month.
Another significant development has been a reduction in how consumers spend.
• Consumers appear to have changed their spending habits in response to rising prices: PYMNTS found that consumers spent an average of $95 on their last grocery purchase in April, compared to $110 in March.
According to the report, there has been a significant reversal in consumer spending trends that emerged in March. With inflation rates still uncertain, consumers are likely shifting their shopping preferences to prioritize bargains or retailers that cater to price-conscious shoppers. Shoppers also reduced retail spending from $103 in March to $98 in April.
• In April, many consumers shifted some of their grocery shopping tasks from selling online to selling in-store
According to the report, the digital shift in retail has come to a halt, at least temporarily. Consumers may be looking for bargains in stores rather than online: Consumers who bought all or most of their groceries in-store rose from 86% in March to 88% in April. Retail consumers decreased their in-store purchases from 71% to 67% between March and April and shifted slightly towards digital, meaning the share of online purchases increased from 29% to 33%.
Consumers still choose debit cards as their preferred form of payment most often for grocery purchases, but they now choose credit cards at about the same rate (34%) for retail.
To learn more about consumer payments and shopping preferences in April, To download The report.