Before jumping to conclusions about Internet commerce and other anticipated payment innovations, banks and technology companies might benefit from a dose of retailing industry reality.
Easy as it may be to overlook amid the high-tech hype, cash, checks, and credit cards have so conquered what is fashionably called "retail space" that they won't be quickly or easily dislodged by virtual alternatives.
That was the message in a merchant market survey by Payment Systems Inc., commissioned by Verifone Inc. and unveiled this week at the close of the American Bankers Association's bank card conference.
Those common payment options are almost fully entrenched among the five merchant types studied: small specialty stores, fast food, table-service restaurants, supermarkets, and hotels.
In only one of those categories does the total of cash, checks, and credit cards fall below 94% of total sales: supermarkets, at 84%, mainly because of inroads by debit cards and electronic benefit transfers.
What's more, the 350 organizations in the survey indicated that cash, checks, and credit cards will remain dominant over the next five years. While 45% said they would be accepting debit cards in five years, up from the current 21%, stored value cards did not climb above single digits.
Underscoring the point, four of the five retailers represented on a panel Verifone assembled to discuss the findings prefer cash over existing alternatives - the exception being Garden Escape, which sells garden supplies over the Internet and is paid mainly by credit card. Another participant, the Hardee's fast food chain, concluded from the Visa Cash smart card trial in Atlanta that stored value cards are superior.
"So much for the cashless society," said Neal Chambliss, group vice president of Payment Systems Inc., who presented the findings at Verifone's fifth annual symposium on retailer payment issues.
"Cash will remain king, the credit card is just about universal, and debit cards are accelerating," said C. Lloyd Mahaffey, Verifone vice president of global marketing.
Mr. Mahaffey appreciated the irony: Earlier in the week he unveiled Verifone's consumer product strategy, built on smart-card-based software called Verismart and a hand-size card reader called Personal ATM.
There was, in fact, nothing in the survey results to make Verifone question its bet on smart cards. Though the response to stored value cards, an application of chip technology, was underwhelming, the Redwood City, Calif., transaction automation company expects smart cards to gain momentum through "value propositions" like shopper-loyalty programs.
Mr. Mahaffey and Verifone chief executive officer Hatim Tyabji stressed that the company is committed for the long haul. …