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Retailers lose out as credit card denials drive customers away: report
Key points
A new report from PYMNTS found that one-third of shoppers abandon purchases when their preferred credit method is denied, risking revenue and customer relationships.
The lack of accessible credit options leads many consumers to forgo essential purchases rather than seek alternatives.
Younger generations often rely on informal credit networks, borrowing from family or friends when credit is unavailable.
Retailers and banks face lost sales and damaged customer relationships due to inflexible credit limits and lack of backup options.
When a shopper's preferred credit method is denied, there's a one-in-three chance they will walk away from the purchase entirely, according to a new PYMNTS Intelligence report. The finding puts both revenue and customer relationships at risk for retailers and financial institutions, as even a third of consumers trying to buy essential goods will abandon the transaction.
No plan B: The study highlights what it calls an “unmet demand for accessible credit.” That so many consumers would rather abandon a necessary purchase than find another way to pay suggests for many, a backup plan doesn't exist or their other credit lines are already maxed out.
The family bank: Younger generations show a heavy reliance on informal credit networks, with one-third of Gen Z and nearly 30% of millennials saying they would borrow from family or friends. Surprisingly, this behavior is most common among people at opposite ends of the financial spectrum: those with no active credit products and those juggling more than five.
Limits of loyalty: A customer's loyalty to their favorite card hits a hard wall in an emergency. Shoppers who normally choose a card out of familiarity are more than four times as likely to borrow from family for an essential purchase than for a nonessential one, proving the comfort of a go-to card is no match for a tight credit limit.
The bottom line: For retailers and banks, this isn't just a lost transaction—it's a fractured customer relationship at the moment of need. The data shows that inflexible credit limits and a lack of accessible backup options are actively costing businesses sales.
Also on our radar: The pressure of credit denials is felt most acutely by subprime borrowers forced into alternative options. Meanwhile, new data shows how different consumer groups approach credit for essentials, and other research explores why rewards-focused shoppers are often averse to loans.
