Visa's Push For a Cashless Society Relies On Echo Boomers and Baby Boomers Predictions and Volume Too

Implications: Why has debit and credit cards become so popular? Consumers have adopted debit cards as their preferred payment of choice over the last five years. 66% of consumers say debit and credit cards are more convenient, 60% use cards to pay for unexpected expenses, while 37% said they use cards to finance major purchases and 33% use their cards to earn points in reward programs and 30% said they use their cards to pay for things when they run out of money. Perhaps the biggest influence in debit and credit card volume growth is the two big giants, Visa and MasterCard's push for a cashless society. Visa's total volume for consumer debit and prepaid programs grew by 17% in 2006 reaching $2.68 trillion compared to $2.29 trillion in 2005. Debit and prepaid cards account for 60% of Visa's global consumer volume of $4.4 trillion and over 59 billion transactions. Approximately $828 billion of this volume occurred in the U.S., which trends show volume is up by 14% over 2005 and continues upward.

Analysis: Comments/Perspective:

Visa is pushing major advertising campaigns to convince consumers to leave their cash and checks at home and to bring their Visa card to pay for everyday purchases. The study highlights demographic differences in payment preferences amongst Baby Boomers and Echo Boomers and Visa wants to nudge or push consumers towards a cashless society. While check volume is declining at a CAGR of 6-10% annually and cash volume has declined too, Baby Boomers prefer to have some cash on hand and/or write checks to pay for household expenses and/or monthly bills. As Baby Boomers pass the torch of influence to echo Boomers, Visa may be able to persuade this generation to "go cashless" because Echo Boomers typically don't carry checks around and prefer to pay for transactions with one card.

1.  In 2005, the number of debit card transactions surpassed the number of personal credit card transactions for the first time. Debit card growth has been helped by the widespread merchant acceptance of PIN and signature debit transactions, as well as an increase of online purchases

2.  The U.S. payments model has evolved over the last decade and as new payment instruments enter the market, i.e. (contactless, smart cards, prepaid/gift cards, P2P (Person-2-Person), m-payments, direct debit and online billpay, debit cards has emerged as the "king of cash"

Will we ever become a cashless society? If Visa and MasterCard has anything to say about it we may be a "cash" free society.  However, Baby Boomers still prefer to write checks for some transactions and Baby Boomers and Echo Boomers prefer to have a small amount of cash on hand and perhaps time may tell whether we totally convert to "cashless society."