In The Cards: Debit Used For Recurring Payments
Increasing numbers of consumers are using their debit cards to make automatic recurring payments, according to a new survey from MasterCard International.
The survey similarly found that fewer households are writing checks for recurring bills than in the past, and nearly two out of every three consumers report paying bills automatically.
MasterCard noted that debit cards experienced the greatest growth in use as 26% of all U.S. households now link automatic payments to a debit card, which is a 30% increase since 2000.
The survey also found that among debit card users: debit card recurring payments account for almost half of their automatic payments; 48% would consider using debit cards for additional recurring payment industries; 62% are less likely to change their financial institution relationship if recurring payments are linked to their debit card.
MasterCard said that its study of consumers also uncovered that many consumers lack knowledge about how recurring payments work, and it urged financial institutions and recurring payment merchant partners to focus on educational programs.
Bills of a consistent monetary value were deemed most suitable for debit card recurring payments, particularly for amounts less than $100, though current recurring payments users would consider adding higher bills as well. Additionally, insurance premiums and health club memberships were the most popular bills in terms of debit card recurring payments, with telephone, cable/satellite TV, and utility bills generating strong interest among current debit card owners.
Notably, credit card recurring payments continue to be the number one method of paying bills automatically. Of the two-thirds of respondents (67%) who use some automatic method to pay bills, about one-half of them (or 37% overall) currently have automatic charges linked to a credit card. Credit card recurring payment users average 2.4 automatic charges on their credit cards-which represents almost one-third (31%) of their total recurring bill portfolio and 62% of their automatic payments.
The MasterCard Recurring Payments Study was the third research project sponsored on the subject by MasterCard International in the past seven years. Conducted between April 17 and 27, 2003, the study included 727 in-person interviews in 25 diverse geographic markets. Respondents were "banked" males and females and had most or all household bill paying responsibility.