October 07, 2008 -
DALLAS— Consumers are using electronic payments at higher volumes than cash and checks, according to new survey results by BAI and Hitachi Consulting.
The 2008 Study of Consumer Payment Preferences, sponsored by First Data Corp. and its STAR Network, Harland Clarke, MasterCard Worldwide, Metavante and PULSE, found that 63 percent of all consumer purchases are made using electronic payment methods.
"Bill payment has historically been a stronghold for checks," noted Ajay Nagarkatte, managing director of Syndicated Research at BAI. "But increases in the adoption and usage of online bill payment over the past three years have significantly eroded the number of paper checks being mailed to pay bills."
Retail store purchases, the report found, account for the majority of consumer payments. For in-store purchases, electronic payments are driven by the increasing popularity of card-based payments, particularly debit. PIN and signature debit now account for 37 percent of consumers’ in-store purchases, up from 21 percent in 1999.
In-store check-based purchases declined from 18 percent in 1999 to 8 percent in 2008. Cash transactions dropped to 29 percent. Contrary to robust forecasts, gift/prepaid card’s share of purchases has not increased significantly over the past three years, the report noted.
"I expect the shift from paper to electronic payments to continue as consumers increase their use of cards and new forms of electronic payments gain traction," Chris Allen, director of consulting services in the Financial Services Practice at Hitachi Consulting, said.
"Although the proliferation of payment methods increases the complexity of managing payments, it also creates opportunities for financial institutions and payment service providers. There are a lot of changes taking place, and it's an exciting time to be in the industry."
This year is special for Convenience Store News, as it marks the 40th year of publication, making it the longest continuously published news source for the convenience store industry.
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