You are here
NATIONAL REPORT -- More consumers are passing on plastic and choosing to pay for their purchases using cash rather than credit or debit cards, according to an eCreditDaily report that cites a new survey by Javelin Strategy & Research. The research indicates that new regulations put into effect by swipe fee reform are causing confusion among consumers about the best payment method.
Javelin's report is based on a survey of 3,200 consumers, 79 percent of which stated they made a purchase using cash within the past seven days, and 65 percent of which stated they paid using credit or debit cards during that same time period.
Some of their hesitancy over debit/credit use stems from lack of education about the Durbin Amendment, which caps the amount banks can charge merchants per debit card swipe. After banks sought to regain those lost profits through other means, such as Bank of America's eventually cancelled $5 monthly fee for debit card holders, they suffered a "big public relations hit in the last quarter of 2011 when they lost the opportunity to educate their customers," Javelin found.
Another cause of consumer confusion is the banks' increase of swipe fees for small ticket items, which has prompted some merchants to promote the use of cash.
Seventy percent of consumers now believe the new regulations will benefit banks, strongly outnumbering the 30 percent that believe they will benefit merchants. The Javelin data also shows that if banks impose debit card fees on consumers, 32 percent would switch to cash, 25 percent would use a credit card and 26 percent would move their accounts to a bank that does not charge such fees.
"Consumers love their debit cards, but the majority would choose different payment options if they were charged a fee for using debit," said Beth Robertson, Javelin's director of payments. She noted that banks should improve their messaging and educate consumers to improve understanding of the new regulations.