Alternative Payments Hurt Credit Cards More Than Debit Cards

Alternative payment methods are more likely to displace credit card transactions than debit card volume, according to Aric Morrison, author of a Packaged Facts report on alternative payment systems and owner of New York-based Cogitamus Consulting Inc. Alternative payment forms, such as PayPal, are electronic payments that circumvent traditional payment forms, such as cash, check, credit or debit cards, says Morrison. Debit card payments and most alternative payments are similar because, unlike credit, the funds exist and are drawn from users' accounts, he says. Additionally, most alternative payment growth is occurring in online transactions, where most purchasers historically have used credit cards, says Morrison. "The threat is really more against credit than anything," he says, adding that the threat is small now but appears likely to grow as more consumers use alternative payment methods.