Coffee and Credit Cards

Coffee and Credit Cards Most people still carry enough cash to pay for a latte or a pack of chewing gum, but younger consumers who are already in the habit of using debit or credit cards for 99-cent smartphone apps and music downloads may be pushing currency aside in a place that is commonly perceived as its primary domain: small, in-person transactions at businesses such as coffee shops Despite plenty of frothy debate among small merchants, bankers and government regulators about the economic merits and shortcomings of these consumer trends it may soon be stale the news as mobile smartphone payments become a reality at coffee counter. Some estimates suggest smartphones could near future, in-person mobile electronic payment systems to work. And those systems are evolving quickly. Webcams can now read and authenticate credit and debit cards without additional hardware. 50 percent market penetration in the providing an economic critical mass for in Small Transactions Small transactions of 5 or less could account for $1.3 trillion annually in worldwide commerce Cash is still the overwhelming payment choice for transactions under $10 and drops off dramatically for transactions above $25 In 2009, 58% of all debit transactions were less than $20 In-person payment to business: Cash, Check, and Other 27% Credit transactions under $20 15% 58% Debit 26% 44% transactions between $20 - $100 30% 29% 28% transactions more than $100 43% Credit |10.7% Same store transaction Signature Debit 8.5% growth by payment type for June 2011 and 2012: PIN Debit 16.0% -12.6% Check Coffee shops make up the fastest growing part of the restaurant business, with a 7% annual growth rate The U.S. coffee shop industry includes about 20,000 stores with combined annual revenue of about $10 billjon Americans consume 400 million cups of coffee per day, making the United States the leading consumer of coffee in the world Coffee represents /5% of all the caffeine consumed in the United States VS. VICE VIRTUE unhealthy food items purchased impulsively such as cookies, cakes and pies healthy food items purchased after deliberative evaluations such as fat-free yogurt and whole wheat bread A new study shows people may throw more junk food in their grocery baskets when they use a credit or debit card than when they pay for food with cash. People in the study bought the same amount of healthy food regardless of whether they used a card or cash. Average dollar value of junk food in a grocery cart study: When payment was card: $14.07 When payment was cash: $9.89 Average dollar value of healthy food in a grocery cart study: $17.50 When payment was card: When payment was cash: $17.43 Average value of food in grocery cart study: $67.60 $60.10 $37.90 Credit Debit Cash Card Drawbacks $6 A $3 latte can cost $6 if you pay a withdrawal fee at a coffee shop ATM $37 A $3 cup of coffee can be a $37 dollar steaming beverage when an overdraft fee is applied. Your bank will approve debit transactions even if you have insufficient funds in your account. A change for ¢hange 44¢ Previously, swipe fees that merchants pay for debit card use was average of $0.44 per transaction. Going into effect October 2011, a newly approved Federal Reserve cap lowers this charge to only $0.21 +.05 percent of transaction. This may lead to greater acceptance of plastic in coffee shops and small retail businesses. 21¢ Although presently it is not possible for a consumer to make a payment using their smartphone or tablet to make an in-person retail payment, the technology is already being developed. Would you like to make this purchase ? $35.72 $35.72 Debit Credit Cancel Depir CLeg Ceuce The Netswipe credit-card processing system launched by Silicon Valley upstart Jumio in July 2011 uses smartphone Webcams to examine and authenticate a charge card. The mobile payment system uses artificial intelligence and sophisticated image-analyzing technology to look at the traits and properties of a plastic credit card presented to the company server by video stream. Sources: Journal of Consumer Research Federal Reserve Bank of Boston FirstData.com Jumio.com Market Strategies International Federal Reserve Bank of Kansas City PULSE Coffee-Statistics.com Politecnico di Milano Federal Reserve Bank of Chicago Consumerreports.org Cornell University CreditDonkey