While under the pressure of the global economic crisis comfort with credit has increased in regions like Latin America and developing Asian markets, more North American consumers are apprehensive about using credit to fund purchases. According to GfK Roper Consulting’s study, The Global Annual 2011 – A Global Re-Evaluation, in 2006, 44 percent of consumers in North America said they didn’t mind borrowing money; in 2011, that number shrank to 30 percent. The same study shows similar shifts in Western Europe, where 33 percent didn’t mind borrowing in 2006, but only 25 percent didn’t mind five years later (see figure below).

If anything, numbers like these represent an argument for rather than against electronic payments. One of the advantages of credit cards is that they offer consumers time between purchase and payment—a float period. This interval lets consumers manage their cash flow. Used wisely, credit cards can provide consumers with flexibility for unexpected big-ticket necessities, as well as carefully planned borrowing. In addition, rewards programs geared towards paying off debt can motivate responsible financial behavior on the part of consumers.

Even those consumers who want to become less reliant on credit can take advantage of the cash management capabilities electronic payments offer. For those consumers who want to avoid credit because of concerns about accumulating debt, but don’t want funds immediately deducted from their account via debit cards, charge cards represent the best of both worlds. Banks can exhibit their responsiveness to this consumer need by highlighting the benefits of electronic payments via charge cards.

The decreasing desire among North Americans to borrow does not mean they’ve turned their backs on electronic payments. The virtue of charge cards means banks can offer debt-averse consumers some flexibility via the float while helping them manage spending in a way that works for them.

Topics: Credit, Payments Strategy