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Paper bills less prominent as electronic payments, new technology become more popular By Kim Rainbolt J201 Reporter Driving with the radio on full blast and the windows down, Indiana University senior Julie Morris comes to a jerking stop as she pulls up to the nearest gas pump. She steps out of her 2000 Jeep Cherokee, pumps gas into her car, pays at the pump with a plastic card, and drives off again at full speed.
As lunch approaches, Morris reaches for her student ID to pay for food with Campus Access points — a pre-paid method of payment — instead of cash. After her classes, Morris makes a special trip to the grocery store to pick up the essential ingredients to make tacos for all three of her roommates. While her groceries are being scanned, an employee asks, “Will that be paper of plastic?” Plastic, for sure. The only decision Morris faces as she reaches into her wallet is which plastic: Visa or MasterCard? Morris' penchant for plastic has transformed her wallet into an overload of cards, ranging from store specialty cards to debit and credit cards, which continue to increase as more merchants accept card payments and offer more card options. She is one of the many who have fallen into the convenient world of electronic payments and joined the card mania trend, rejecting paper money in favor of plastic. Debit and credit cards are now used for a little more than half of in-store purchases. According to a research survey conducted by the American Bankers Association and Dove Consulting, cash, once the leading method of payment, is now used in less than a third of the transactions, while checks are used only 15 percent of the time. “Debit cards have gone up because more of us are carrying more of them, and because of the increasing number of shops and places such as dentists, corner shops and pubs all accept them and it's much safer than cash,” said Sandra Quinn, Association for Payment Clearing Services director of corporate communications. The convenience of debit cards, which make it possible for cardholders to access their financial accounts with a single swipe of a card, are responsible for the explosion of their use. Unlike credit cards, users do not receive a bill in the mail with a large percentage of interest attached. The money is taken directly from individuals' bank accounts and the purchases are paid in full. Visa reports its worldwide debit sales volume hit an astounding $1.48 trillion last year, surpassing Visa credit sales for the first time. Aside from debit cards, Visa USA reported that sales volume on Visa-branded cards grew to a record $1.045 trillion in 2004, a 19.1 percent increase compared with 2003. Consumer credit card sales grew more than 11 percent, and Visa's debit card sales grew 19.7 percent. “By any measure, 2004 was a record year for Visa USA and our members,” said Carl Pasarella, president and CEO of Visa USA. “Visa's performance last year is proof that we continue to deliver what consumers and businesses value most – payments that are convenient, secure and accepted at a plethora of locations worldwide. Consumers love convenience and as more and more businesses are accepting card payments, more people are using them. That's why Visa continues to be the payments brand that cardholders turn to most often.”
Cash and checks will soon become obsolete as electronic payments take over as the preferred method of payment, according to a nationwide consumer payment study by the American Bankers Association and Boston-based strategy firm Dove Consulting. Credit and debit cards were once used for expensive items. Now, consumers have fallen into a world of convenience as more and more merchants are accepting card payments. Consumers are using cards for everyday use instead of for larger, more expensive items. These payments, known as “micro payments,” are becoming the norm. For example, McDonald's, White Castle, and many other fast food restaurants now accept credit and debit cards. And Apple Computer Inc. charges customers 99 cents to download a single song on its digital music store iTunes, payable with plastic. Even convenience stores are part of the trend. “You would be surprised how many people come in to debit a polar pop for 69 cents,” said BP gas station employee Sam Stocksdale. “People come in all the time and debit a dollar or a pack of cigarettes. It's amazing how little I receive cash payments.”
Many Indiana University students take advantage of the convenience the cards offer them outside of their homes, as well as inside. The Internet recently bought into the card trend, making it almost impossible to buy anything without a card. Online bill payments also make it easier to pay bills, since it eliminates the need for stamps and envelopes. It also grants students more time to pay bills because of the electronic method of payment. Online bill payments ensure bills arrive on time and they also reduce the amount of late fees. “I love the fact that I can literally pay all of my bills online,” said Morris. “I pay every household bill with my debit card, and I can even pay credit card bills. I am not the most responsible person when it comes to bills, but this new invention of online billing has saved me probably over $700. I have so much going on everyday that paying bills are the last thing on my mind.” The Internet has made it a necessity to own and use a debit or credit card if consumers want to make online purchases. With the rising trend of booking vacations online, online travel agents like Expedia and Travelocity require patrons to book using a credit or debit card. These tourism sites offer cheaper prices along with the free use of their service. Without a credit or debit card, people face problems booking flights, hotels or car rentals. If consumers thought debit and credit cards created convenience, they will soon be faced with even more technology at their fingertips. Biometrics, a new form of technology, will entice people to make purchases with nothing more than a finger. Biometrics is the science of using digital technology to identify individuals based on unique physical and biological characteristics. It uses a technique to verify a person's identity from a physical characteristic, such as using a fingerprint, hand print, face, scent, iris pattern or other personal trait (voice, handwriting, or acoustic signature). Pay By Touch, the pioneer of consumer biometric payments, developed a system to provide customers with a new convenient way to purchase items by linking their fingertip to their financial accounts. “Consumer habits are constantly changing, especially since the introduction of the debit/MasterCard,” said Craig Ramsey, chief executive officer of Pay By Touch in California. “Consumers can enjoy the convenience, speed and increased protection against identity theft, instead of worrying about a credit card in a lost wallet.” Pay By Touch is already installed in four Piggly Wiggly grocery stores in South Carolina and will appear in over 80 other stores in the surrounding area by the end of June.
Pay By Touch has not only presented customers with a new and easier way to purchase groceries, it has also made checkout lines move 33 percent faster, according to Piggly Wiggly. The new technological advancement requires a one-time free registration to record the customers' finger tip pattern. The device stores a set of 40 encrypted data points and is stored in IBM databases. “I think the fingertip payment program will make my life a lot easier, but it seems a little scary knowing that technology is becoming so advanced,” said IU senior Isabel Amezcua. “I feel like technology is taking over the world and I have no control over it, but the system sounds like it provides more convenience, and that's all that matters." The new emerging technology is sprouting other forms of biometrics. In the future, handwriting, face detection and voice detection will also become devices of identification. “There is no telling where we will be in a couple years, soon people will access financial accounts with other forms of technology other than cards,” said Visa USA CEO Pasarella. “In the future there will be more machines handling money and less people processing payments. This is a new era in time when technology is moving faster than it ever has before.”
Page designed and edited by: Sean Abbott Last updated: May 2, 2005 |
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