Plastic card usage study

By 2009/04/17Profile

DAYTON, OH-Credit, Automatic Teller Machine (ATM), and membership cards top the list of Americans’ most widely used plastic cards, with debit and other types of prepaid cards poised for major growth, according to results released from Standard Register’s National Consumer Survey of Plastic Card Usage. The research found the following percentages of adults use: credit cards, 89 percent; ATM cards, 61 percent; membership cards, 59 percent; debit cards, 37 percent; prepaid cards, 33 percent; prepaid phone cards, 29 percent; loyalty cards, 25 percent; and smart cards 5 percent.

Standard Register, which provides comprehensive services to card issuers, commissioned the telephone survey of 1,202 randomly selected adults to determine consumers’ awareness, opinions, and usage of plastic cards. Results of the survey, which was conducted in conjunction with Card Marketing, were released at the CardTech/SecurTech trade show in Chicago.

`The survey reinforces our expectation that usage of debit cards (linked to bank accounts), gift, and other types of prepaid cards will increase significantly over the next two years,” said Susan Kraus, marketing manager, Imaging Services Group, Standard Register. “With results showing the number of people aware of debit and prepaid cards is more than double the percentage of those actually using them, there’s tremendous potential to increase usage by educating consumers about the financial benefits, ease of use and other advantages of debit and prepaid cards.”

Half of adults (50 percent) reported regularly carrying one to three plastic cards on a regular basis, while 30 percent say they usually carry four to six. However, the survey indicated that the number of cards people actually have used is significantly higher.

“Consumers reporting that they carry such small numbers of cards was a key finding of the survey,” said Kraus. “It points out that people think only of those cards they use on a regular basis, such as credit and ATM, which indicates that other types of cards are being underutilized. Card issuers can increases their overall effectiveness and consumer awareness by linking more benefits directly to card usage.

Prepaid phone cards rank number one among cards for prepaid services and have been used by 29 percent of Americans. Slightly more than one-half (52 percent) of people who use prepaid phone cards report using them while traveling. Compared to a three-minute call made via payphone, traditional calling card, collect or person-to-person, prepaid cards can save travelers as much as five dollars per minute on long-distance calls. Other situations cited by prepaid phone cards users include placing long distance calls from home (20 percent) and making calls from a payphone (16 percent).

“As the survey makes clear, prepaid phone cards offer tremendous potential for consumer growth and acceptance,” said Kraus. “By 2002, approximately ten years after prepaid phobe cards were introduce domestically, we expect consumer usage to be above 50 percent. Retailers and promotional marketers will drive growth by issuing prepaid cards for promotional giveaways, sales incentives, surveys tool, and a host of other special purposes.”

Other services for which people use prepaid cards include gasoline, cellular service, and Internet Services. Approximately a quarter of consumer reported giving or receiving a prepaid card as a gift ( 25 and 29 percent, respectively), with prepaid phone cards cited as the most frequently given or received card.

“Gift cards issued by retailers represent another opportunity for growth of prepaid cards,” said Kraus. “Gift cards are convenient alternatives to paper gift certificates. They can he used more than once, which means the recipient can shop at a store until the specified dollar amount has been spent. Retailers appreciate that all of the money on a card is spent in their store, and we look for the number of retailers issuing gift cards to increase significantly in 1999.”

Debit cards tied to checking accounts, introduced by banks over the last two years, are used by 37 percent of adults. Debit functions are available as stand-alone cards or included on an ATM card. Forty percent of consumers who own debit cards use them more frequently than their ATM card; 33 percent use debit cards less often than ATM cards; and 21 percent use the two types of cards about the same.

Smart cards, or plastic cards embedded with a microprocessor chip for multi-functions, continue to have low levels of usage (5 percent) and awareness (25 percent) among consumers. Even after consumers were given an explanation, only 28 percent reported having heard of smart cards.

The survey revealed one of the key reasons smart cards haven’t caught on in the U.S.-64 percent of consumers reported having no interest in a card that combined frequent flyer or other her loyalty benefits, credit and debit functions, medical information or other features on one card. Of those who would be interested in such a card, medical alert information was given as the most important service feature (29 percent).

Used by 25 percent of Americans, 36 percent of loyalty cards owners report shopping more often at stores where they participate in a loyalty program. In addition, the influence of a loyalty card on shopping preference was most evident with younger consumers.

A total of 1,202 telephone interviews with consumers throughout the U.S. were conducted during the first two weeks of March, 1999. The interviews were collected using a “National Probability Sample,” which allowed the results to he projected at the 95 percent confidence level with an error of only plus or minus three percent.