A new study by PYMNTS and Elan Financial Services shows that Americans are using their debit cards more for online shopping. However, they’re not moving away from credit cards entirely, which remain the most popular way to pay. 

Key Takeaways

  • Since the pandemic began, 14.9% of consumers have used their debit cards more than previously and 16.3% have used their credit cards more.
  • Credit cards remain the most popular way to pay online, cited by more than 4 in 10 consumers surveyed. 
  • Credit cards offer better fraud protection, which is a major motivation for many to use credit over debit. 
  • Though not as popular as debit and credit, PayPal saw the largest net increase in usage, with mobile wallets close behind.

Why Credit Cards Continue to Dominate in Online Transactions

Credit card debt went down in 2020, dipping below $1 trillion for the first time since 2017. But while balances have decreased, credit remains the most common payment method for online shoppers, with 41% calling it their preferred way to pay. In fact, 28% of consumers increased their use of credit cards during the pandemic.

One big factor in the decision to use credit cards is the protection they offer against theft. If someone manages to steal your credit card information, the maximum amount you can lose is $50. Even then, most credit card issuers go the extra mile and provide zero-liability fraud protection. 

With a debit card, though, you could lose up to the full amount in your account, depending on when you report the fraud to your financial institution. 

Even if your bank or credit union ultimately covers your loss, the money is gone from your account temporarily, which can make it difficult to pay your bills. With a credit card, it’s technically the card issuer’s money until you’re required to make a payment, and you’ll generally get a statement credit while the issuer investigates. 

This may be a big reason why 24% of people who have used their debit cards less cited concerns over having their account information stolen.

PayPal and Mobile Payments Gaining Popularity

The net increase for credit and debit card usage was 16.3% and 14.9%, respectively. But PYMNTS also asked about PayPal and mobile wallet use. PayPal, which offers a secure checkout experience at millions of online stores, saw a net increase of 22.3%. Mobile wallets, which allow you to connect your credit or debit card to a mobile device, came in second at 20.4%. 

One reason for the big shift toward PayPal may be the online payment service’s financing options. The Pay in 4 program allows users to make four installment payments without interest. 

While mobile wallets offer the same security as your credit card’s EMV chip, the pandemic has increased consumer interest in contactless payments, allowing folks to avoid touching common surfaces. 

The study was based on a survey conducted by PYMNTS of nearly 2,500 U.S. consumers.