STAMFORD, Conn.-- Banks and credit-card issuers have put significant efforts into marketing contactless and signature-based debit card payments, but they have failed to win over consumers, according to a survey by Gartner Inc.

The survey found that consumers prefer alternative payment types that earn banks less revenue, but which consumers believe are more secure.

“Despite significant marketing campaigns by banks and card issuers to steer consumers towards using debit cards with a signature — ostensibly so that the banks can earn more interchange revenue — consumers prefer entering their personal identification number (PIN) to pay for groceries with their debit card over all types of signature-based card payments, whether credit or debit,” said Avivah Litan, vice president and analyst at Gartner.

“Banks promote signature-based debit payments because they earn more fee revenue from card-accepting merchants, on the premise that they are riskier and more prone to theft, so the banks need to earn higher fees to compensate,” Litan said. “Fraud rates on signature-based debit card payments are at least 10 times higher, and banks usually eat these costs if they are incurred in a card-present (or store) environment. Higher interchange fees paid by merchants to banks and card issuers for signature-based transactions must offset these costs or else banks wouldn’t promote the signature variety.”

When shopping at grocery stories, consumers prefer debit-card payments that require entry of a PIN despite the fact that only debit- and credit-card payments with physically signed receipts typically earn them reward points. Consumers’ least-favorite payment type when shopping for groceries is contactless (wireless) payments, and there is similarly small interest in using mobile phones for making payments.

“Brick-and-mortar businesses who accept electronic consumer payments should promote use of PIN-based debit card payments by steering consumers to them through payment terminal programs and/or by offering store-based incentive programs,” Litan said. “Businesses pay less to banks for PIN-based payments and since consumers prefer them anyway, this is a win-win strategy for all parties except credit card issuers and banks.”