MatchWatch published a reports summarizing a survey conducted by CreditCards.com. The survey’s punch line is that more cardholders are using cards, especially debit cards, for very small purchases below $5.00:
The percentage of cardholders who use debit cards for small purchases hit 27% in 2016, an increase of five percentage points since 2014, according to a new survey of about 600 people with major credit cards from CreditCards.com. Just 11% of cardholders say they use credit cards for those small purchases of less than $5, about the same number who said they did in 2014.
The cashless society pundits are suggesting that this is evidence cash is on its way out. What isn’t clear is if the survey also took into account the proliferation of vending machines, parking meters and other self-serve devices that only permit cards.
It would also be interesting to conduct a survey of businesses to better understand the impact to their operations if cardholders are in fact using cards for smaller and smaller purchases. Fixed fees payed by merchants as a part of their processing costs can make these small transactions very costly. Merchants are likely to become more aggressive about taking cards for larger purchase only. This type of steering is now permissible.
The survey also found that the use of cards for small payments is especially increasing with the large millennial aged group, suggesting this trend will only increase:
The preference for credit and debit cards is especially prevalent among millennials CreditCards.com surveyed; 46% said they typically use debit cards for small purchases and 18% said they use credit cards. This is even as news credit of breaches at retailers becomes more common.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
Read the full story here
