Summary
The large increase in debit card use, including ATM withdrawals and purchases, is creating some discussion on transaction terms between lenders and retailers. The 24 percent increase between 2000 and 2003 in debit cards is in sharp contrast to the only 7 percent increase during the same timeframe seen in credit cards. The dollar amount of retail debit card transactions was also up, last year hitting $4.5 million, up 16 percent from the previous year.
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Consumers' use of debit cards is skyrocketing, escalating a long fight between lenders and retailers on how they want the cards used for transactions.
By comparison, credit card use was up less than 7 percent from 2000 to 2003, a Federal Reserve report shows.
"We are definitely seeing an increase," said Paula Saunders, vice president of marketing for Sun Federal Credit Union in Oregon.
The dollar amount of retail transactions by debit cards last year was up 16 percent to more than $4.5 million from the previous year, she said.
Financial institutions urge customers to hit "credit" when making a purchase with the debit card because that saves the institution money.
When someone uses a credit card, the card companies charge the store 2 percent fee, and the financial institution gets some of that money.
Frequent user Mark Olnhausen doesn't want people seeing him punch in his PIN and instead opts for the "credit" button on his numerous transactions at grocery stores, restaurants, and dry cleaning stores.
"I use it for as many purchases as I possibly can because it keeps cash out of my pocket and I don't like walking around with my checkbook," said Mr. Olnhausen, an account representative in the Toledo office of SBC Inc.
But Wal-Mart last year briefly stopped accepting MasterCard-branded debit cards and negotiated a deal with Visa to pay a smaller fee on each transaction.
In 2003, the latest year for which figures are available, credit card transactions amounted to $1.7 trillion, compared with $600 billion for
debit cards (which includes ATM withdrawals).
MasterCard International Inc. reports that U.S. cardholders last year generated nearly $42 billion in transactions on debit cards, up 33 percent.
Through the first three months of last year, Visa USA Inc. reported $346 billion in sales volume on its debit cards.
About the author: Mike Adams is a natural health researcher, author and award-winning journalist with a passion for teaching people how to improve their health He is a prolific writer and has published thousands of articles, interviews, reports and consumer guides, and he has published numerous courses on preparedness and survival, including financial preparedness, emergency food supplies, urban survival and tactical self-defense. Adams is an honest, independent journalist and accepts no money or commissions on the third-party products he writes about or the companies he promotes. In 2010, Adams co-founded NaturalNews.com, a natural health video sharing site that has now grown in popularity. He also launched an online retailer of environmentally-friendly products (BetterLifeGoods.com) and uses a portion of its profits to help fund non-profit endeavors. He's also a veteran of the software technology industry, having founded a personalized mass email software product used to deliver email newsletters to subscribers. Adams also serves as the executive director of the Consumer Wellness Center, a non-profit consumer protection group, and practices nature photography, Capoeira, martial arts and organic gardening. He's also author a large number of health books offered by Truth Publishing and is the creator of numerous reference website including NaturalPedia.com and the free downloadable Honest Food Guide. His websites also include the free reference sites HerbReference.com and HealingFoodReference.com. Adams believes in free speech, free access to nutritional supplements and the innate healing ability of the human body.
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Thursday, April 07, 2005
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