Survey: Interest in Micropayments Rising Fast Among Consumers

The willingness of U.S. consumers to use credit or debit cards to buy things like cups of coffee or cans of soda is rising fast, according to a survey being released this week at a conference in New York on micropayments, or transactions for less than $5. Some 21% of survey respondents?translating to 45 million consumers?said they would use a card for a sub-$5 ticket, an increase of 23% from a similar survey in September of last year, said researcher Ipsos Insight and Peppercoin Inc., a micropayments processor and sponsor of the conference. At the same time, consumers' appetite for low-value digital content is expanding beyond song downloads, Ipsos and Peppercoin say. About 10% of consumers who bought items online for less than $2 in the past year purchased from six or more Web sites, up 43% from September 2004 and 150% from the first such survey in October 2003. The results could bolster a nascent trend?exemplified by increasing interest in so-called contactless cards and other tokens as well as digital content sales on the Web and in mobile commerce?among banks, processors, and merchants to enable electronic payments for items either traditionally paid for with cash or unavailable for lack of a means to accept payment electronically at affordable rates. “Over the past year, it has been increasingly obvious that there is a fundamental shift in the payments industry as technology makes it easier for consumers to purchase every-day items in the manner of their choosing,” said Mark Friedman, president and chief executive of Waltham, Mass.-based Peppercoin, in a statement. Peppercoin's software reduces the effect of interchange and other costs on small-value payments by aggregating transactions accepted by each merchant. Indicating a growing market potential for cash replacement, survey respondents said they'd be most interested in making card purchases at convenience stores, with 47% indicating this type of merchant as a top choice. Ispsos and Peppercoin extrapolate that response to a potential market of more than 100 million. This market is followed by fast-food outlets and corporate cafeterias (47%), transportation (38%), coffee and other beverages (35%), and parking (32%). The parking option includes meters as well as garages and lots. Of those who said they would not use cards to buy sub-$5 items, 7% said they preferred cash or found it easer to use. When asked where they bought things at least six or more times over the previous 30 days, 43% indicated sellers of coffee and other beverages. Second was fast-food or corporate-cafeteria places (35%), while third place went to vending machines or kiosks (18%). Frequent users of vending machines were more than twice as likely to be men rather than women. The survey canvassed 1,115 U.S. citizens aged 12 and up. Its margin of error was plus or minus 3%.