How People Pay

By Jennifer Heebner, Senior Associate Editor -- JCK Online, 9/1/2002 2:00:00 AM

One out of two in-store purchases is made with electronic payment methods such as debit and credit cards, according to a new survey. Results of the 2001 Consumer Payment Preferences Study, conducted by the American Bankers Association and Dove Consulting, show that electronic payments' share of wallet grew from 43% to 49% in the past three years. Respondents' use of cash and checks shrank from 57% in 1999 to 51% in 2001. Electronic methods are expected to account for a majority of payments in the future. At present, cash is still the most popular way to pay at registers, but its share of wallet decreased from 39% in 1999 to 33% in 2001. Debit card usage grew from 21% in 1999 to 26% in 2001, with PIN debits leading the way with a 4% increase over three years. Check and credit card usage saw minimal change.

Additional findings include:

24% of respondents expect to increase their use of PIN debit cards; 6% expect to decrease their use; net future change, +18%.
21% of respondents expect to increase their use of signature debit cards; 7% expect to decrease their use; net future change, +14%.
20% of respondents expect to increase their use of prepaid cards; 2% expect to decrease their use; net future change, +18%.
17% of respondents expect to increase their use of credit cards; 23% expect to decrease their use; net future change, –6%.
10% of respondents expect to increase their use of checks; 28% expect to decrease their use; net future change, –18%.
12% of respondents expect to increase their use of cash; 18% expect to decrease their use; net future change, –6%.

To order the entire study, call (800) BANKERS or visit www.aba.com or www.consultdove.com.

Credit Card Market Share

Card	Number of Active U.S. Cards	Market
ShareVisa	357.7 million	51.2%
Mastercard	256.1 million	36.7%
Discover	49.7 million	7.1%
American Express	34.6 million	5.0%
Total	698.1 million	100%
Source: www.cardweb.com

RJO Says 'No' to Plastic

In the spring of 2002, the Retail Jewelers Organization, Des Moines, Iowa, told members they could no longer pay their monthly RJO jewelry bills by credit card. "The fees were killing us," says Bob Morrissey, RJO secretary and treasurer and owner of Morrissey Fine Jewelers, also in Des Moines.

As a service to member retailers and suppliers, RJO reconciles all payments from jewelers to vendors in-house. "Once a month, suppliers get one check from RJO, which includes payments from every jeweler that bought from them the month before," says Morrissey.

But last year, RJO paid a substantial amount of money in fees to credit card companies, and Morrissey estimates the 2002 fees could have run as high as the volume of a small store. "In the past few years, I've seen people— consumers and our members—pay more and more with plastic," says Morrissey. "The job of the buying group is to save money and provide benefits. Losses like these prevent us from better serving our members."

The Fees Jewelers Pay

The fees jewelers pay to credit card companies for customer purchases and returns vary from 1.5% to 5% of purchase price. Jewelers surveyed on the JCK Retail Panel pay:

1.5%-3% for Visa, with most paying 2%
1.5%-3% for Master Card, with most paying 2%
1.5%-3% for Discover, with most paying 2%
2%-5% for American Express, with most paying 3%.
On high-ticket sales, however, these fairly standard fees can add up to a painful but unavoidable cost of doing business.

U.S. credit card debt per household in 2001 was nearly 160% higher than it was the previous decade.

Source: www.cardweb.com