67 Million Americans Use Plastic for Purchases under $5
NEW YORK -- A new survey found that more than 67 million Americans used a credit or debit card in the last month to pay for a purchase under $5. This proves that the American consumer is willing and able to use plastic to make small payments, the survey said.
"The data shows that credit and debit cards are becoming a preferred payment method for a variety of small payments purchases in the physical world," said Matt Kleinschmit, vice president with market research group Ipsos Insight. "This suggests that merchants, retailers and card issuers alike could all benefit from increased consumer access to credit and debit cards as a small payment option."
The survey found that consumers are most likely to use plastic for purchases at convenience stores, quick-serve restaurants (QSR), when purchasing coffee, or paying for mass transit such as the subway. More than 67 million consumers used a credit or debit card to pay for a purchase under $5 at a convenience store in the last 30 days, while 57 million used the cards at a QSR and 42 million used them to purchase coffee.
In addition, the survey found that merchants face limited growth within traditional membership rewards cards as a part of a loyalty program. Less than 20 percent of respondents said they would carry additional rewards cards. The top three obstacles the cards face are the inconvenience, cited by 21 percent; the slow rate of reward accumulation, cited by 21 percent; and 18 percent found that the enrollment was "too much of a hassle."
However, 27 percent of those surveyed expressed interest in using prepaid cards at retailers where they frequently shop. Additionally, younger Americans were more interested in this type of program, with 42 percent of 18 to 34 year olds expressing an interest in the cards.
"The current loyalty program model needs to be reworked to eliminate the overwhelming amount of cards consumers need to carry," said Mark Friedman, president and CEO of Peppercoin, which conducted the survey. "Merchants today have an unprecedented growth opportunity by combining credit and debit card-based small payments with loyalty and prepaid programs."
The survey, which released its results at the Micro and Small Payments Conference, studied 1,000 consumers' spending habits for low-priced items.
"The data shows that credit and debit cards are becoming a preferred payment method for a variety of small payments purchases in the physical world," said Matt Kleinschmit, vice president with market research group Ipsos Insight. "This suggests that merchants, retailers and card issuers alike could all benefit from increased consumer access to credit and debit cards as a small payment option."
The survey found that consumers are most likely to use plastic for purchases at convenience stores, quick-serve restaurants (QSR), when purchasing coffee, or paying for mass transit such as the subway. More than 67 million consumers used a credit or debit card to pay for a purchase under $5 at a convenience store in the last 30 days, while 57 million used the cards at a QSR and 42 million used them to purchase coffee.
In addition, the survey found that merchants face limited growth within traditional membership rewards cards as a part of a loyalty program. Less than 20 percent of respondents said they would carry additional rewards cards. The top three obstacles the cards face are the inconvenience, cited by 21 percent; the slow rate of reward accumulation, cited by 21 percent; and 18 percent found that the enrollment was "too much of a hassle."
However, 27 percent of those surveyed expressed interest in using prepaid cards at retailers where they frequently shop. Additionally, younger Americans were more interested in this type of program, with 42 percent of 18 to 34 year olds expressing an interest in the cards.
"The current loyalty program model needs to be reworked to eliminate the overwhelming amount of cards consumers need to carry," said Mark Friedman, president and CEO of Peppercoin, which conducted the survey. "Merchants today have an unprecedented growth opportunity by combining credit and debit card-based small payments with loyalty and prepaid programs."
The survey, which released its results at the Micro and Small Payments Conference, studied 1,000 consumers' spending habits for low-priced items.