Academic journal article ABA Banking Journal

Plastic Lucre

Academic journal article ABA Banking Journal

Plastic Lucre

Article excerpt

It certainly would be cleaner than currency. On the other hand, you couldn't write notes on it.

We're talking plastic cards here, but not the credit kind. We're talking about cards that go by such names as cash cards, debit cards, debit point-of-sale cards, ATM cards, prepaid cards, smart cards, and so on. The names get a little confusing, but basically all of them are substitutes for either cash or checks.

Many of these cards debit your account as soon as you buy something--or the next day. Others store monetary value in their magnetic stripe or on a computer chip. The value is depleted as you use it.

For the crowd that walks around answering phones that warble in their pockets, these electronic payment alternatives surely must soon become the "way to pay."

And for the up-and-coming graduates of "Sega U," what could be more natural than electronic cash?

What about the rest of us, the Neanderthals who think a nice wad of bills in the pocket (or pocketbook) is reassuring, or who think writing a check is an orderly way to pay for something? Well, actually, more than a few of the "rest of us" are already beginning to use our ATM cards to purchase gas and groceries. And people living in Washington, D.C., New York City, and a handful of other places are using special prepaid cards for mass transit.

Could we have a trend here?

Two articles in this issue help answer that question. One, a feature, entitled, "Debit frenzy" (p.57), examines the use of ATM cards for purchases at the point of sale. The other, the lead item in our Technology Topics department (p.71), concentrates on prepaid cards.

Some additional debit-card research

came to our attention too late to

be incorporated in the feature story just mentioned, but in time to be summarized here. Mentis Corp. of Eden, Md., conducted telephone interviews of 800 consumers in 1993 and issued a report called "Consumer attitudes & preferences toward selfservice banking technology." The report examined both use of and interest in debit cards.

Among all respondents, 9% said they currently use an ATM card to make point-of-sales purchases, and 37% said they would use an ATM card for this purpose. Perhaps more relevant is that among ATM users (61% of respondents, according to the study), 15% currently use their ATM card for purchases and 43% would use one for that purpose. …

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