Consumers still abandon cash for plastic cards

2008 Study of Consumer Payment Preferences conducted by BAI Research and Hitachi Consulting, and sponsored by First Data, MasterCard Worldwide, Metavante, and PULSE showed that the users of traditional methods of payment are decreasing. 41 percent of respondents said today they were using cash less often than two years ago.

Ajay Nagarkatte, managing director of BAI Research noted that “Of those who have reduced their cash use, 97 percent are shifting to credit, debit, or gift/prepaid cards instead.”  
It has also been found that an average consumer carries four credit cards in their wallet. Whereas, only slightly more than half of those cards is actually used. 75 percent of Visa and MasterCard credit cards were issued by only 10 issuers.

The study also showed that almost 50 percent of active cardholders revolved at least some of their total credit card balance, 54 percent of them paid all credit card balances in full.

Debit cards have showed a sharp increase in usage rate over the past few years. According to the study 37 percent of consumers’ in-store payments account for signature and PIN debit. 

Gift/prepaid cards made only 4 percent of consumers’ in-store purchases, which remains unchanged since 2005. Although, the growth of gift/prepaid cards was less than the predicted rate, the study findings suggest, their market is increasing.