Academic journal article ABA Banking Journal

Electronic Payments Trump Paper

Academic journal article ABA Banking Journal

Electronic Payments Trump Paper

Article excerpt

For the first time, electronic payments have surpassed cash and checks as consumers' preferred payment method for in-store purchases, a new nationwide consumer payment preferences study conducted by the American Bankers Association and Boston-based strategy consulting firm Dove Consulting reports.

The 2003/2004 Study of Consumer Payment Preferences, sponsored by ACI Worldwide, eFunds Corp., and PULSE EFT Association, found that cash and checks now account for 47% of consumers' in-store purchases, compared to 57% in 1999 and 51% in 2001.

This evolution continues to be driven by the increasing popularity of debit cards. Four years ago, debit represented only 21% of in-store transactions; today consumers report that nearly one-third of in-store purchases are made with a debit card.

This growth in debit card use has come at the expense of both cash and checks. While cash remains the single most frequently used payment method in stores, its share of the transaction mix has fallen from 39% in 1999 to 32% in 2003. Checks also play a diminishing rote at the point-of-sale, accounting for just 15% of purchases. Comparatively, consumer use of credit cards for in-store purchases has remained relatively constant at 21%. At 2%, the "other" payments category is made up of prepaid cards.

"While in-store payment habits develop early for most consumers, they are by no means static," said Jane Yao, ABA's managing director of surveys and statistics. "Consumers will continue to took for--and migrate toward--new payment methods that satisfy their payment needs."

Changes in consumer payment behavior are occurring across all payment venues: in stores, for bill payments and for Internet purchases. …

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