December 21, 2006:

More than 67 million Americans have used a credit or debit card for a purchase of less than $5 in the past 30 days, according to the fourth annual survey on the small payments market released at the 2006 Micro and Small Payments Conference in New York City.

Consumers surveyed expressed strong interest in using a prepaid balance at merchants where they frequently shop with 27 percent of survey participants responding positively when asked if this was of interest. Younger Americans are even more likely to adopt a prepaid program with a positive response rate of 42 percent for those ages 18 to 34.

Specific survey responses include:

Hot small payments markets—Consumers are most likely to use credit or debit cards for small payments purchases at convenience stores, quick service restaurants, to buy coffee or pay for the subway or tolls.
Specifically, over the past 30 days:

• More than 67 million consumers have used a card for a payment of less than $5 at a convenience store.
• More than 57 million consumers have used a card to make a purchase at a quick service restaurant.
• Roughly 42 million consumers used a credit or debit card to purchase coffee.
• Roughly 26 million consumers used a credit or debit card to pay for the subway or tolls.

Pent-up demand in transportation and vending—The survey found that 63 million Americans would use credit or debit cards to make purchases for transportation services (subways and tolls) if they could, but only 25 million have done so to date. The vending market reported similar numbers, with more than 42 million willing to use credit or debit cards. This represents a significant revenue growth opportunity for transit and vending operators and card companies, as consumers typically spend more when using card-based payment mechanisms.

Frequent transactions—By examining consumer spending habits, the survey sheds light on the most common cash transactions. When asked where they made frequent purchases over the past 30 days, respondents indicated:

• 32 percent purchased coffee or a beverage at least six times. Approximately 11 percent (or roughly 21 million Americans) purchased coffee more than 20 times over the last 30 days.
• 24 percent purchased items at a fast-food restaurant at least six times.
• 15 percent purchased items from vending machines/kiosks at least six times.

Source: Peppercoin, Inc.