Survey Finds More People Will Make Micropayments Online Using Credit

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According to a new survey, 20-million Americans purchased items valued at less than $2 online last year, and their penchant for using credit and debit cards for small payments, also called "micropayments," is on the rise.

The survey, released during the third annual Micro and Small Payments Conference hosted by SourceMedia, publisher of The Credit Union Journal, found that an estimated 45-million Americans are willing to use credit or debit cards for purchases of $5 or less, up 23% from September 2004. The 20-million who bought something online for less than two bucks was up 29% over September 2004 and 350% over October 2003. Only 7% of respondents who would not use credit or debit cards for small payments indicated they find it easier or prefer to use cash rather than a credit card.

Responses were based on a survey of 1,115 Americans 12 and older by Ipsos Insight and Peppercoin. The survey examined consumers' spending habits for low-priced items, and points to potential new markets for card use.

"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 everyday items in the manner of their choosing," said Mark Friedman, CEO of Peppercoin.

Among the findings:

* When asked about purchases for which they would be willing to use their cards, more than half of the respondents (representing a potential market of more than 100 million people) indicated they would use credit and debit cards at convenience stores if they could. The other top markets included fast-food (or quick-serve) restaurants/corporate cafeterias (47%), transportation (38%), coffee/beverages (35%) and parking (32%).

* When asked where they made purchases at least six or more times over the past 30 days, 43% said they had purchased coffee or a beverage; 35% purchased items at a fast-food restaurant/corporate cafeteria; 5% (or roughly 10 million Americans) purchased fast-food/corporate cafeteria items more than 20 times over a 30 day period; and 18% purchased items from vending machines/kiosks.

Men were almost twice as likely to frequently purchase items from a vending machine as compared to women.

* Consumers are increasingly comfortable purchasing small-value items from websites beyond digital music. Approximately 10% of those purchasing items for less than $2 online in the past year did so from six or more websites, up 43% from September 2004 and 150% from October 2003.

* Women are just as likely as men to make purchases of $2 or less online-roughly 9% of men and 9% of women did so this year. For women, this represents an 80% increase from September 2004, and a 125% increase from October 2003.

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