· Web viewWhile payment tendering practices differ country by country, payment behavior and preferences increasingly become a topic of interest with the advent of new mechanisms

Payment Preferences in Switzerland 2016

IBM Global Business ServicesWhite Paper

Payment Behavior and PreferencesResults from a Survey Conducted in Switzerland

© International Business Machines, 2016

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Payment Preferences in Switzerland

IntroductionWhile payment tendering practices differ country by country, payment behavior and preferences increasingly become a topic of interest with the advent of new mechanisms such as peer-to-peer payment/credit and the introduction of mobile payment. In Switzerland, cash has been the preferred payment method for many decades. Still, the relative importance of non-cash payments increases slowly but steadily. Studies show that the Swiss payment ecosystem is mainly driven by cash, debit cards and credit cards. The market share of cash at the POS was greater than 90% in 1990 and went down to 60% in 2012. However, up to now, the substitution process has been evolutionary and not revolutionary. Studies therefore suggest that even new means of non-cash payment, such as mobile payment, will only slowly gain market share. Although the market penetration of smartphones and the readiness of contactless terminals in Switzerland are excellent (smartphone market penetration is 70-80%, and 50+% of POS terminals are NFC enabled), the mobile payment market in Switzerland is estimated to be still very small. However, it is expected to grow fast: Mobile POS payments are estimated to account for 244 Mio EUR in 2016 in Switzerland with a forecasted annual growth of 74% in the next five years.This publication presents key results of primary research conducted in 2016 to gain insights about the payment behavior of consumers in Switzerland. It is based on an online survey conducted in May 2016 among IBM employees in Switzerland. The research purpose also included Millennial preferences and to what degree they have a different payment behavior compared to other age groups.


Primary Research Basic Information

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The MillennialsDefinitionThere are various ways to cluster the Millennial generation as a population age group. The term Millennials is usually considered to apply to individuals who reached adulthood in the turn of the 21st century. However, the precise delineation varies from one source to another.(1)In this document, this age group is defined as the group of people born after 1980, encompassing both, generation Y and generation Z individuals.According to this definition, and based on the information received about their age, 18.5% of all survey respondents belong to the “Millennial” age group compared to 25% in the total Swiss population.(2)


Generation Baby Boomers(55 – 64 years)

Generation X(35 – 54 years)

MillennialsGeneration Y

(25 – 34 years)Generation Z

(15 – 24 years)

CH Population Demographics

12.4% 29.8% 13.8% 11.2%

Survey Respondent

Demographics*

109 (18.6%) 342 (58.5%) 97 (16.6%) 31 (5.3%)

Main Goalin Life

Job security Work-Life Balance

Liberty and Flexibility

Security and Stability

Product Characteristics

TV PC Smartphone,Tablet

Google Glass, nano-computing,

3D printingCommunication

channelPhone Emails and SMS SMS and Social

MediaPortable devices

Communication style

Face-to-Face Email and SMS Online and Mobile Facetime,Instagram

*6 respondents (1%) did not wish to answer

Sources: Swiss Federal Statistical Office (2016, IBM Switzerland (2016), LinkedIn (2016)

Primary Research Basic Information

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Debit cards are preferred when buying goods (excl. online shopping)The survey shows that, independent of the retail format, more than 75% of respondents have a preference for plastic money. Although Millennials and non-Millennials, i.e., older age group respondents, favor debit cards, one in two Millennials pays with debit cards and slightly less than 50% of the other age group respondents prefer debit cards as well. One explanation could be that younger age groups may have a lower disposable income and need to manage their budget more tightly. Surprisingly, cash is the least used payment method for all respondents, with only 20% of respondents preferring to pay with cash in general.

Payment behavior varies by type of shopHowever, when respondents are asked about their preferred payment method in specific shops, their payment behavior varies from one shop category to another. In other words: The choice of the consumer payment method is depending on the type of shop: In kiosks, more than 50% of all respondents, including Millennials prefer

using cash.


Sources: Dietrich, A. (2015), Trütsch, T., Jaeger, F., & Höppli, T. (2011), SNB – Monthly Statistical Bulletin (2015), IBM Analysis (2016)

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In restaurants, most Millennials tend to pay cash, whereas other respondents most often use a credit card.

In clothing stores, most Millennials pay with debit card. Other age group respondents are using debit cards and credit cards in equal measure.

In supermarkets, all age groups have a similar payment behavior and more than 50% prefer paying with a debit card.

As a hypothesis, we would like to add that the selected payment method is not only depending on the type of shops, but mainly by the price of an article offered in a shop.

Swiss Millennials are more interested in using Mobile Payment Solutions than other age groupsIn general, there are more Millennials claiming that they will be using mobile payment solutions in the future than other age group respondents (46.1% vs. 37.7%). Interestingly, one fourth of all respondents are indecisive and are unsure whether they will use mobile payment solutions or not.


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Similarly to cash and plastic money, Millennials’ payment preference when using mobile pay options varies depending on the type of shops.The fact that Millennials will be keener to use Mobile Pay solutions in the future is confirmed when respondents are asked about their preferred payment method in specific shop categories.Whereas Millennials are indecisive about the usage of mobile payment in restaurants, the majority can see themselves paying with such solutions in kiosks, clothing stores and supermarkets.When asked about payment behavior in specific shops, other age group respondents (excl. Millennials) cannot see themselves using global Mobile Payment solutions.


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Conclusions1. About 50% of all respondents across all age groups, including Millennials,

prefer using debit cards when they are buying goods in brick and mortar shops. Mobile Pay solutions in Switzerland may get a higher market penetration rate in the Swiss market once debit cards will be included and available in Mobile Pay solutions in addition to credit cards.

2. When survey respondents are asked about their preferred payment method in specific shops, the payment behavior definitely varies across shop types; this is also confirmed by other recent studies. Since currently only credit cards are supported, shops with high debit card usage might be reluctant to be one of the first ones to accept Mobile Payment, especially if the terminals may not be NFC enabled yet.

3. Millennials are more inclined to use Mobile Pay solutions in the future than the other age group respondents.

4. 37.7% of other age group respondents excluding Millennials would use mobile payment solutions in the future. When asked about their preferred payment method in specific shops, they would use mobile payment solutions in kiosks and supermarkets rather than in restaurants and clothing stores.

5. Around 20% of all survey respondents are unsure at this time whether they will use mobile payment solutions in the future. By understanding the rationale for being hesitant, mobile pay market penetration in Switzerland could increase with the adequate message and adapted value proposition.


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References(1) Haughn, Matthew, in: Millennials (Millennial generation), WhatIs.com, http://whatis.techtarget.com/definition/millennials-millennial-generation, (2) Bundesamt für Statistik: Ständige Wohnbevölkerung nach Staatsangehörigkeitskategorie, Alter und Kantone, 2. Quartal 2016,https://www.bfs.admin.ch/bfs/de/home/statistiken/bevoelkerung/stand-entwicklung.assetdetail.252469.html

For more informationTo learn more, please contact:Marcel [email protected]


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https://www.bfs.admin.ch/bfs/de/home/statistiken/bevoelkerung/stand-entwicklung.assetdetail.252469.html

https://www.bfs.admin.ch/bfs/de/home/statistiken/bevoelkerung/stand-entwicklung.assetdetail.252469.html

http://whatis.techtarget.com/definition/millennials-millennial-generation


AuthorsThe authors are business consultants in strategy & transformation at IBM Switzerland Ltd., Global Business Services.Urs Karrer, Associate Partner, Business and IT Strategy ConsultantOver 30 years of management consulting and consumer focused industry experience in North America and Western Europe, deep experience in enterprise technology management and the alignment of business and IT in large and global organizations – Ph.D. in [email protected] Hättenschwiler, Managing Consultant for Talent & Change: Over 20 years of professional experience in Sales, Marketing and Advisory, which of 10 years as an organizational change manager, helping corporate clients in various industries to adopt change in global transformations – Bachelor in Business and [email protected] Blagojević, Business ConsultantTwo years of professional experience in banking, client advisory engagements as a strategy consultant and for Design Thinking, digitization, financial reporting, compliance and governance, and mobile payment solutions, Business and Market Analyst – Master of Science in Management & [email protected]


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© Copyright IBM Corporation 2016

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Produced in Switzerland October 2016

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· Web viewWhile payment tendering practices differ country by country, payment behavior and preferences increasingly become a topic of interest with the advent of new mechanisms