|This information is based on research with Federal Reserve Board data. Here are links to the actual reports.
Non Cash Payment Trends
Here are general payment trends for non cash payments from 2000, 2003 and 2006 based on consumer payment data from the Federal Reserve Board.
You can see that by 2003 electronic payments passed checks. By 2009 it is painfully clear that the vast majority of your customers prefer to pay electronically.
|Not What My Staff Surveys Tell Me
I know this will run counter to what some of you may have found in surveying your staff. All I can say is your staff are telling you what they think. The Federal Reserve is telling you what is actually happening.
The Rise of the Debit Card
Here is the breakdown of the types of electronic payment used as a percentage of all electronic payments.
Debit card payments passed credit cards for the first time in 2006. Credit cards are declining as a percent. ACH is basically flat and is the least preferred electronic payment option of consumers.
|Do Demographics Matter?
The Federal Reserve studies found that age, education, income, sex, race and marital status had very little effect in determining card usage. Pretty much everybody is participating in this major behavioral change.
Decline in Usage When Fee is Charged
The other interesting data the Fed had was real data on decline of card use when a fee is included. The Fed study was based on a 1.8% fee charged by banks for the use of a non signature debit card. This fee resulted in a 12% decline in card usage.
It’s All About Convenience
The #1 reason the Federal Reserve studies give for the use of electronic payments is convenience. As an example, in a study of grocery check out lines they found paying with a card reduces time to check out by 30%. For insurance, you should add the convenience of paying after hours.
I saw a young lady in a gas station pay almost $3 for 2 Aleve tablets. Why? Because she had a need and the gas station fulfilled that need in the most convenient way.
The point is this:
This leaves you with the problem of the extremely high cost of accepting card payments. This is exactly the problem our “Security & Delivery Fee” program solves.
|Other Major Industries Turn to Third Party Security & Delivery Fee Solutions
Accepting credit card payments through third party services has been a trend in other industries over the past several years.
These industries have all instituted online Security & Delivery fee programs to enable their customers the ability to choose voluntarily to pay by card as a secondary alternative to the still available methods of paying by check or cash.The logic behind the use of Security & Delivery fees is very well summed up by the following quote from the University of Missouri web site…
“As part of our ongoing effort to provide excellence in education, the University has focused on our costs to process credit card payments. These costs are approximately $2,000,000 per year; therefore, we have decided that the Cashiers’ offices will no longer accept credit card payments on student accounts. A third-party processor will handle MasterCard and Discover card payments.”
Contact us at 800-768-0907 to discuss accepting credit cards and benefits for your company.