A recent poll shows that most Americans would forgo credit card use if retailers started charging usage fees, which is a change that many expect to occur in light of recent shifts in the industry.
The survey was made to track the industry and providers consumers with much needed information for making wise money decisions. What the survey found is quite alarming: nearly two-thirds of American consumers attest that they would rather not use credit cards at all than start paying a surcharge for every transaction. This, of course, would turn the credit card industry on its head during a time when companies are scrambling to get the most out of every account.
The most recent development in the credit card settlement proceedings between Visa, MasterCard, and their customers shows that credit card companies will be allowed to finance a surcharge in the near future. While this is something that consumers had been complaining about for some time, the new industry standards still need judicial approval before they can be enacted. If it is approved, though, credit card companies will be able to charge their customers “swipe fees” of up to 3% the total cost of the transaction, for every transaction. Regardless of the charge, though, only 2% of Americans reported they would be willing to pay a 2% fee, so outlook on this policy is grim.
Perhaps the most interesting statistic this study gathered pertains to what kinds of shifts we can expect in the market should the new fee structure become a reality. Nearly half of consumers aged 18-34 said that they would be willing to use a different payment method if credit card companies started charging these fees. Compared with 63% of those in the 35-49 age range and more than 70% of those 50 and older and it is easy to see how most consumers feel. Moreover, 25% of the youngest demographic reported they would be willing to pay a $1 fee for using a card while only about 13% of the older demographic reported the same.
Indeed, Ken Manning, a marketing professor at Colorado State University says
The younger you are, the more accustomed you’ve become to electronic transactions and having credit. Young people don’t go to banks, and they tend to see dealing with cash as a hassle. So they might be willing to pay a fee.
Of course, this fee better be modest.
While the study found some consistencies among the age groups there seems to be a disparity between income brackets. For example, the income range that was least likely to change were those who made between $30,000 and $39,000 per year, with 42% saying they would quit using plastic altogether if they started charging a fee. However, 71% of those who make over 75% a year said the same thing; that’s a big difference.
Larry Compeau is a professor of consumer behavior at Clarkson University and he says that these numbers do not surprise him at all:
It’s a lot easier to say you won’t pay a fee in a telephone survey than it is to actually follow through when you’re standing at the checkout and you realize you don’t have cash.
Although there is probably some truth to this he does confirm that it is quite likely that some people will refuse to pay the fees. Regardless of the reality of these numbers, though, their existence proves to credit card companies and retailers that their customers are not happy about these changes.
Similar News
- In an Election Year, CARD Act Crucial
- FTC Warns of Prepaid Card Scams
- Unemployment Filings Up by 2,000
- AMEX to Begin Issuing Secure Chip Cards
- Europe to Blame for Weak U.S. Job Growth?
- FDIC Investigating Banks Offering Payday Loans
- What Are Parent PLUS Loans?