SAN FRANCISCO, CA -- Consumers known as “Generation Plastic,” a term coined by Visa USA, are more likely to use credit and debit for their purchases rather than cash, representing 50.4 percent of all spending among 18- to 24-year-olds in the United States, reports Inside Bay Area.
The newspaper writes that a San Francisco 24-year-old loves to shop, but doesn’t like to pay for her purchases with what little cash is in her wallet (roughly $20). She also doesn’t carry a checkbook, as it is used just once a month to pay the rent on her apartment. In fact, she gets “so annoyed” at places that only accept cash, she usually ends up “going somewhere else.”
The shopping habits of Generation Plastic consumers are “driving even more merchants to accept debit and credit cards,” writes the newspaper, therefore adding fuel to the fire for “legal battles over the fees underlying the cards and raising more concerns about the nation's shriveling savings rate.”
According to David Robertson, publisher of The Nilson Report, “All paper-based payments are in retreat,” adding, “People of a certain age don't even know where their checkbook is.”
While Generation Plastic isn’t using credit cards at a greater frequency than other age groups, they are depending more on debit cards for their purchases. According to Visa, Generation Plastic consumers use their debit cards “to pay for 28.2 percent of their purchases,” compared to only 7.1 percent among consumers older than the age of 45.
According to The Nilson Report, debit cards were used during 2005 to “pay for an estimated 23.1 billion transactions nationwide,” writes Inside Bay Area, therefore surpassing the estimated “20.3 billion transactions paid by credit card.” However, consumers tend to spend more with their credit cards, which paid for “an estimated $1.75 trillion in purchases during 2005 compared to an estimated $872 billion on debit cards.”
Meanwhile, as younger consumers reach for their plastic, retailers are also feeling the pain of card transaction fees, which according to The Nilson Report, average $1.74 for every $100 purchase.
NACS is a founding member of the Merchants Payments Coalition (MPC), which represents retailers and other businesses that accept credit and debit cards, and is concerned about the increasing interchange fees charged by banks and credit card companies to process credit and debit transactions.
NACS, along with the National Association of Chain Drug Stores (NACDS), the National Community Pharmacists Association (NCPA) and the National Cooperative Grocers Association (NCGA), filed an antitrust class-action lawsuit alleging that Visa, MasterCard and other major banks are engaging in collusive practices by setting credit card interchange fees at supra-competitive levels.
According to Inside Bay Area, “Merchants have filed dozens of class-action lawsuits against Visa and MasterCard, alleging they have illegally conspired to fix the fees,” adding that the two credit card companies “steadfastly” deny the allegations.
More information about credit card processing fees and the growing challenge for convenience stores is available at NACS Online under the “Industry Resources” section. Click here to access the NACS card processing fees fact sheet.