In the $20 - $50 category, debit payments account for more than half (55 percent) of all purchases

Debit cards are gaining in popularity for purchases under $20, making significant inroads into 'small-ticket' merchant categories that historically have been the exclusive domain of cash, according to a new MasterCard International Attitude and Usage Study. According to the findings, users of ATM/debit cards report making debit payments for nearly a third (29 percent) of all their purchases under $20 - a 61 percent increase since 2001 - while this group's cash payments for the same amount declined by nearly 15 percent. The study underscores the accelerating displacement of cash as a payment option.

Moreover, among users of ATM/debit cards, the MasterCard research confirmed that debit cards are now the most popular payment method for purchases between $20 and $100:

-- In the $20 - $50 category, debit payments account for more than half (55 percent) of all purchases, a 31 percent increase since 2001; reported preference for checks and cash declined by 50 percent and 18 percent, respectively, during the same period.

-- In the $50 - $100 category, debit payments capture 52 percent of all purchases, compared with 47 percent in 2001; check use (12 percent, compared with 25 percent in 2001) continues its steady decline, while cash's share remains unchanged at 9 percent.

Weekly grocery shopping and gasoline purchases are the most common occasions for using a debit card. The MasterCard study also found significant growth in adoption of debit cards for lower-ticket purchases at movie theatres, fast food restaurants and quick-stop convenience stores, and at higher-ticket establishments including casual restaurants and doctors' offices.

"Debit's increasing penetration of purchase categories that were previously the exclusive domain of cash and checks clearly shows that consumers prefer the convenience and flexibility of debit plastic over paper for everyday usage occasions," said Richard G. Lyons, Jr., senior vice president, Deposit Access Group, MasterCard International.

Consumer Perception of Debit
The primary advantage of debit cards is convenience, said 41 percent of survey respondents. When considering security and ease of use, respondents found debit preferable to cash. One-in-five also stated that debit cards help them control their spending, and half said debit was "better than other payment methods," including cash and checks.

While survey respondents found debit cards to be more secure than cash, they expressed concern that debit cards do not share the same level of fraud protection as credit cards. Similarly, consumers had limited understanding of zero liability protection. Surprisingly, consumers seemed unaware that they can use their debit cards internationally.

Research Overview
The MasterCard Consumer Attitude and Usage Study was conducted in December 2003 in 26 geographically dispersed markets in the U.S. The 750 respondents covered the 18 to 64 age spectrum, split half male/half female, with all participants maintaining a checking or brokerage account, with a linked debit/ATM card. The random sample of respondents yielded statistical testing at the 90% confidence level.