Time for a Throwback... Way back. – WBA staff dusted off our past publications and found some gems for your enjoyment:
For the first time, electronic payments have surpassed cash and checks as consumers' preferred payment method for in-store purchases, according to a new nationwide consumer payment preferences study conducted by the American Bankers Association and Boston-based strategy firm Dove Consulting.
The 2003/2004 Study of Consumer Payment Preferences found that cash and checks now account for 47 percent of consumers' in-store purchases, as compared to 57 percent in 1999 and 51 percent in 2001. This evolution of payment behavior continues to be driven by the increasing popularity of debit cards. Four years ago, debit represented only 21 percent of in-store transactions; today consumers use debit cards for nearly 31 percent of in-store purchases.
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 percent in 1999 to 32 percent in 2003. Checks also play a diminishing role at the point-of-sale, accounting for just 15 percent of purchases. Comparatively, consumer use of credit cards for in-store purchases remains relatively constant at 21 percent. At 2 percent, the "other" payments category is made up of prepaid cards.
This migration in consumers' payment behavior is occurring across all payment venues: in stores, for bill payments and for Internet purchases.
Bill Payers Still Prefer Checks
Consumers still prefer to pay their bills by check, but electronic methods are gaining popularity. In 2001, 72 percent of recurring bill payments were made with checks; today, this percentage has fallen to 60 percent.
This decline in check volume is due in part to increasing consumer adoption of automatic payment and online bill payment. Today, 60 percent of consumers use automatic payment, with only 30 percent of consumers having never tried automatic payment. While adoption of online payment is lower than automatic payment - 41 percent of consumers currently use online bill payment - it represents one of the fastest-growing payment methods.
This study is the third in a series tracking consumers' payment habits, preferences and their migration from paper to electronic payments.
Originally published in the January 2004 edition of the Wisconsin Banker.