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The Motivation Behind Payment Methods

Consumers in the modern day are overwhelmed with choices—not just as to what product or service they will select or who they will buy it from—but how they will go about paying for it. New payment methods are being introduced faster than we can keep up with them. What are the essential components of the “perfect” payment method that meets all needs of a consumer? The answer, like so many other questions when it comes to payments, is complicated because it depends on a number of factors.

The perfect payment method depends on the type and dollar-value of the purchase. It depends on the demographics of the consumer. It depends on whether the purchase is in-person or online. However, there are a few constants that should always be considered if the goal is to motivate consumers to choose one payment method over another.

Ease of Use

The attention span of a consumer is short. Once they decide they are ready to move forward with a purchase, they want to complete that purchase quickly and easily. The more friction that exists in the checkout process, the less likely the consumer is to see that purchase all the way through to payment. Merchants who are focused on increasing their conversion rate should be laser-focused on making the payment/checkout process easy.


Consumers want to trust that their payment method is secure, especially if there is a chance that they are at risk of personal loss if their payment method gets into the wrong hands. If there is a payment method that makes the case for trust, we can look to Zelle. Zelle payment transactions in 2020 increased by 58% over the prior year[1]. Consumers understandably feel much more comfortable sharing their user id on a third-party app like Zelle for payment versus sharing their bank account credentials. Payment methods that establish trust with embedded security will always prevail over those with inherent risk to the consumer.


Consumers are used to being rewarded for spending. How far are consumers willing to go to maximize rewards? Some consumers are so motivated by rewards that they will tolerate the hassle of managing separate card accounts and take a hit on their credit score just the take advantage of new cardholder incentives. So while some of the newer, rewardless payment methods may prevail in other ways, do not underestimate the motivation of consumers to select a payment method based on what they can get in return.

Repayment Terms Up until recently, credit cards were the only game in town for consumers who did not want to pay for a purchase immediately, and who wanted flexibility to extend repayment if needed. But they did so at a price in the form of high APR’s from credit card issuers. Now, there’s a new option for consumers who want to pay for a purchase in installments over a longer period and without incurring financing fees- buy now, pay later. Based on the rocket-like trajectory of buy now, pay later providers, this trend is here to stay. Consumers have spoken—repayment terms are an important part of a payment method.

Dispute Rights Consumers have become very knowledgeable about their dispute rights when using card for payment, and with friendly fraud on the rise, it’s clear that they are not afraid to use them. The importance of this criteria is heavily dependent on the type and amount of purchase. For example, someone who is paying a friend to split the bill is less concerned about dispute rights than someone who is purchasing a piece of furniture online.

Contact Method

Whether consumers are paying by card or with their mobile device, they are getting accustomed to not having to make physical contact with a terminal. Covid accelerated the need for contactless payments, but how much do consumers care about the extent to which they need to get physical with a terminal? And is this need for contactless a reality of a pandemic economy or will it have longer lasting impact?


Payments are personal. We can learn a lot about a consumer by analyzing their spending habits. And although we know there is some level of data sharing happening behind the scenes for the purposes of marketing to consumers, it seems that consumers haven’t felt their privacy rights have been violated enough to speak up about it. This is likely because payment information is not consolidated to a single repository, but rather exists in silos based on the source. Enter the Chinese digital yuan run by the Chinese central bank, where consumer and business payment information will be centralized and available to the Chinese government. The digital yuan is the situation to watch to see how sensitive consumers are to payment privacy.

As new ways to pay continue to be introduced, consumers will have even more choices in selecting ways to pay at checkout. The way consumers pay is highly dependent on the type of purchase, and that is not expected to change since consumers will always be making a wide range of purchases. However, it will be interesting to watch how consumers’ motivation behind selecting a payment method changes based on new trends and new choices available.


Elaina Smith is the CFO of Secure Bancard, a wholesale ISO based in Alpharetta, GA. Most recently, she helped develop and implement Pioneer by Settlement Data Systems, a SaaS solution that enables ISOs to run their business more efficiently. She can be reached at


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