A new study from Mastercard has revealed that affluent customers, particularly in the Australasia region, are more likely to manage their money using various payment methods and careful planning. It found that by optimising their wallets, they aim to capitalise on incentives, live comfortably, and save to leave a legacy.
The new study surveyed 29,536 consumers in 23 markets globally, including Australia, Hong Kong SAR and India. In it, Mastercard found that 73 per cent of affluent customers are more likely to closely manage their money with 48 per cent using ‘financial gymnastics’ to maximise rewards.
Careful financial planning
It found that affluent customers are putting in the time and effort to work out which wallet and payment method should be used for each transaction, which in turn can, earns them points, rewards and discounts.
Their high level of engagement with payment choices extends to how the affluent seek to benefit from their financial institutions, with 69 per cent worldwide trusting that they can take advantage of opportunities offered by their financial services providers. Such perks include rebates on purchases or discounted rates on dining and entertainment.
The study also found that affluent consumers take a more intentional approach to their finances to maintain their comfort level. Their payment choices are led by convenience, but not at the expense of safety. Payment methods that are widely accepted, dependable, portable, and quick, with the assurance of security, become top choices. Notably, they also want to feel respected as they seek an emotional connection with the varied payment options in their bespoke wallets, among which credit cards tend to be the favourite.
Perks of credit cards
Credit cards remain top of affluent consumers’ wallets for a few key reasons:
- Forty-seven per cent say perks (like cashback, air miles, shopping points, etc.) drive usage decisions.
- Thirty-one per cent prefer credit for making them feel valued.
- Twenty-seven per cent favour credit because of the purchase protection it offers.
Peeking inside their wallets, those of affluent consumers contain more credit cards (2.1 vs 1.7) and more payment methods overall (average of six vs five) than that of mass consumers’, demonstrating their willingness to do more to maximise the incentives from each transaction. In APAC, affluent consumers use even more payment methods, with an average of 7.5 per person.
Usage of debit cards
In comparison, debit cards are the preferred payment method for mass consumers, especially when buying daily necessities. Interestingly, the preference for debit is particularly strong in:
- Australia (83 per cent using debit vs 58 per cent using credit)
- India (85 per cent using debit vs 64 per cent using credit)
Meanwhile, Hong Kong leans more heavily on credit (79 per cent vs 42 per cent using debit).
“Affluent consumers tend to be very astute in how they select and utilise the payment tools in their wallets, strategising how and when to use each payment method to capture the greatest returns. This hands-on, intentional approach reflects the growth mindset and commitment to self-improvement that affluent consumers exhibit in all aspects of their lives, including career, health and wellness, hobbies and learning,” said Sandeep Malhotra, executive vice president, products and innovation, Asia Pacific, Mastercard.
“And while ambition has always been a core trait of the affluent audience, the difference is that nowadays they work to live, not just live to work, reflecting a departure from previous norms. The financial institutions that best serve this demographic recognise these characteristics and find valuable ways to support their customers’ financial, professional and personal progression.”
What is causing better financial management?
Illustrating this point, the study identified that while career advancement is key to 30 per cent of the affluent demographic globally, it is not the most important pursuit overall, as 52 per cent said their top personal goal for the next five years is to travel abroad more.
In the Asia Pacific region, some geographic differences stood out. Australia’s affluent are prioritising travel (58 per cent) over career (19 per cent) while India’s affluent are focusing on both pursuits (48 per cent career, 56 per cent travel). Hong Kong’s come in at the middle at 30 per cent concentrating on career and 40 per cent prioritising travel.
Taking a risk
To improve their financial situation, affluent individuals globally are quick to adopt new payment methods as they discover innovative ways to build wealth. Reflecting their higher risk tolerance (with 45 per cent willing to take risks) vis-à-vis mass consumers (65 per cent of whom prefer to avoid risks), the study found that 38 per cent of affluent consumers are early adopters of new financial technology (fintech) while only 25 per cent of mass consumers are.
The affluent embrace and use fintech innovations before they become mainstream, and enthusiastically explore new solutions that fintechs offer, including alternative payment methods like mobile payments and digital wallets.
While the affluent segment is more open to experimentation with fintech, once a new payment method is added to their wallet, time is money. This means affluent consumers expect the onboarding process to be simple and seamless. New cards need to be set up quickly, digitally, in only a few steps, and should link easily to their other accounts. To get this done fast, 45 per cent of affluent consumers globally would rather pay a little more to save time, whereas only 37 per cent of mass consumers would be willing to do so.
Experiences over possessions
Finally, Mastercard’s study found that 59 per cent of the affluent value experiences over possessions. Having built a solid financial foundation that covers their daily expenses, they want to dine out, be entertained, and travel. With comfort and security assured, the important pillars of family, life fulfilment and intentionality with finances come together with their longer-term view and desire to live a life with meaning and purpose.
This manifests in the affluent’s ultimate long-term objective to leave behind a legacy (i.e resources) for their loved ones. Affluent consumers worldwide are 1.3 times more likely than the global population to prioritise saving for legacy and are 1.4 times more likely to have a financial goal of building an inheritance. Beyond their immediate circle, the affluent also aim to leave the world, or their community, a better place.
