October 18, 2004
Amanda Addison was digging through her car for change to feed a downtown parking meter in Colorado Springs, Colo. The 21-year-old college student didn’t find any coins in her purse, so she rifled through the ashtray, then under the seats.
No luck. So she left the meter empty, went shopping and took a chance that she wouldn’t get a parking ticket.
It isn’t that Addison is broke. Like millions of her fellow Americans, she pays for just about everything with plastic, so she never has cash in her pocket. Last year, for the first time ever, debit and credit cards accounted for more retail sales than cash and checks, according to a report by the American Bankers Association.
"I never have any change," said Addison, who pays for everything from a $50 blouse to a 50-cent pack of gum with a debit or credit card.
It means she never gets coins back in change, which doesn’t bother her until she runs into situations where only actual money will do — like feeding the parking meter. Then she’s out of luck.
"Most of the time I just chance it. But the other day I got a $10 ticket," she said.
At least it was a cinch to pay the fine with her card online.
ONE WORD: PLASTICS
Plastic used to be reserved for big purchases. People used it sparingly. Now it is as good as cash almost everywhere.
McDonald’s takes cards. So does the hole-in-thewall taqueria down the street. Even a birthday card from grandma — that most hallowed keeper of the crisp $20 bill — now often holds a gift card instead.
Matt Henson, a spokesman for Visa International, said the expansion is being driven by convenience.
"Everyone benefits. For merchants, it’s more efficient. For consumers, it’s more convenient and safer. You can carry around the equivalent of hundreds of dollars in your wallet, and if you lose it, you’re protected," he said.
It’s also being driven by profit. Credit card companies charge merchants an interchange fee of 1 percent to 3 percent for every card transaction. The more dollars charged on a Visa, the more Visa’s member banks take home.
People argue about whether the cards make it too easy for people to slip into debt, but like it or not, they’re everywhere.
Currently, $13 of every $100 spent by consumers in the United States is spent with a Visa card, Henson said, and Visa and other credit card companies have their eye on the other $87 dollars, including children’s allowances.
Every parent knows there’s a lot of allowance being doled out. Visa estimates teens spend $153 billion a year, and most of it is cash from parents. "There’s a big opportunity for growth there," Henson said.
Visa and MasterCard have introduced prepaid cards that parents can buy for teens. They can refill them every month like a debit card. It’s safer than cash, Henson said, and frees kids to buy things online without bugging mom and dad for their card.
Immigrants and the poor also rely heavily on cash because they don’t have the bank account required to receive a traditional card. Visa’s solution for the estimated 32 million "unbanked" in the country is its new payroll card. Companies issue the cards in place of paychecks. Every payday, employees get paid on a card they can use just like a debit card.
Companies, including major employers such as FedEx, like the cards because they save money on printing paychecks, Henson said.
Even state governments are lured to plastic by the savings. Colorado and other states use similar cards to disperse child support payments.
Consumers also are streamlining their use of cash and checks with online bill payments.
COST OF DOING BUSINESS
With all these cards — 1.3 billion in 2002 according to Cardweb.com, a Web site specializing in credit and debit card news — business owners have to accommodate customers packing plastic instead of cash. They may not like paying a percentage to credit card companies for every sale, but it beats losing business to the place next door.
It started with chain stores, but more mom-andpop places have added the telltale Visa and Mastercard stickers on their doors.
Even topless dance clubs have found a way to let cashless patrons tip dancers. A $50 swipe of the credit card at one club will put $50 worth of play money in a customer’s hand, good for drinks at the bar and as tokens of appreciation slipped into the waistband of a dancer.
And the parking meter — that quietly stubborn coin demander — is joining the plas tic revo lution, too. Meters in cities such as Denver and Aspen, Colo., accept cards.
"I feel like this trend is just going to continue. It’s so convenient," said David Sklow, a coin expert with the American Numismatic Association who, despite his vocation, uses cards almost exclusively.
"It’s gotten to the point where if I pull into a gas station and they don’t take cards, I’ll drive to the next station."
Sklow said state quarters and the new nickel have minted fresh interest in coin collecting, but at the same time people use coins less frequently.
"The funny thing is that coin collectors are just like anyone else. If you go to a coin show, all the vendors are taking MasterCard," he said.