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10/12/2009 -
Credit card processing is losing ground to debit card processing thanks to the recession and credit crunch, a trend that may not reverse itself once the economy recovers, said a new report from payment processing research firm Mercator Advisory Group.The study, titled Switching from Credit to Debit: A Long-Term Trend Gets a Boost from the Recession, found that 50 percent of all cardholder surveyed and 61 percent of all cardholders with both debit and credit cards agreed with the statement, "I try to pay for more purchases with debit or prepaid cards to avoid borrowing on my credit card(s)."
Furthermore, of those who agreed with the statement, 86 percent of all cardholders and 90 percent of cardholders with both debit and credit cards felt that this would be a permanent change.
Mercator primarily cites the recession and its consumer financial concerns as the reason for the shift, as customers became reluctant to rely on credit.
However, the report also notes that the growing popularity of rewards programs may sustain credit card use in the future.
Businesses with merchant accounts are advised not to eliminate their credit card processing services in the face of this trend, as both credit and debit cards remain two of the most popular payment options among consumers.
