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Restaurant, oh restaurant, how do I pay thee? Study counts the increasing number of ways

May 12, 2016

Restaurateurs who offer the most-preferred ways to pay at their establishments are getting the edge in attracting business. That's one of the primary findings of the Second Annual Blackhawk Network Shopper Study.

The firm — which produces gift cards and other prepaid payment option products — surveyed more than 1,000 shoppers in March and found that the move away from cash and checks continues, while the use of newer options like peer-to-peer and mobile wallets is growing. Likewise, the company reports that gift card use appears to be growing now that exchanges have become popular for these payment tools. In fact, gift card may be becoming a misnomer since the survey found these cards are increasingly being used by the individual who purchased it in the first place. 

Americans' use of an ever-wider array of payment options, according to Blackhawk, is driving innovation in payment options. That's one reason why the company believes that businesses that stay abreast of the latest trends in this aspect of operations tend to be rewarded with better brand loyalty and perception.

"The role of payments in Americans' lives is increasing in importance," said Blackhawk Network Senior Vice President of Products and Marketing David Tate. "Consumers now have so many payment tools at their disposal, they can be selective about how they pay and are even influenced on where to shop based on their experiences paying."

Below is a list of the preferred payment methods among those surveyed in the last year:

• Cash: 87 percent
• Debit card: 75 percent
• Credit card: 69 percent
• PayPal: 67 percent
• Check: 60 percent
• Merchant-specific gift card: 43 percent
• Prepaid debit card: 38 percent
• Money transfer: 18 percent
• Mobile wallet: 17 percent
• Peer-to-peer payments: 5 percent
• Bitcoin: 3 percent

Other findings from the first-quarter survey, regarding customer preferences and usage of various payment methods, included:

• Payment options affect perception: Sixty-nine percent reported their experience paying affected their perception of a restaurant or other business, as well as their willingness to return.
• Consumer demand appears to drive payment innovation: Blackhawk concludes that consumers' needs appear to play a big role in driving innovations in payment options. As an example, 19 percent of those surveyed said they've used a gift card exchange — a tool born directly out of consumer demand. Additionally, 44 percent of consumers plan to buy gift cards for their own use this year.
• Role of cash declining: While the  study finds that 87 percent of Americans paid with cash in the past year, that number is down from the 93 percent who reported doing so last year. And the study finds that most consumers use cash for purchases under $20.
• Alternative payments tool use is increasing: Tools like mobile wallets are growing in use (up about 8 percent this year). And most who use them, as well as peer-to-peer payments, are using them the same amount or more than they've done in the past. Indeed, among smartphone users, about 33 percent  report using one of these tools.
• Millennials use cashless and other tools more:Though not surprising, the survey found this age group tends to adopt new payment tools more readily than other age groups.
• Gift cards are here to stay:Eighty-four percent of those surveyed expect to buy at least as many gift cards as they did last year. And 57 percent said they had unused gift cards and egifts and had an interest in using an in-store kiosk and online gift card exchange. The survey found 40 percent had an interest in a mobile app that would access such a network.
• Loyalty and promotional reward preferences: Those surveyed reported they prefer rewards in the form of prepaid debit and gift cards (45 percent) and PayPal (38 percent), over options like checks or merchandise.
• Most know and like eCodes and egifts, too:The survey found 69 percent of consumers know what ecodes and egifts are and more than half had bought them and planned to do so again this year.