Credit scores affect consumers' decision to use credit or debit cards, study shows
17/02/2012 - By Alexander Galasso
A new study shows that consumers with higher credit scores are more likely to use credit cards.
Tag:
Credit Card Processing
Analysis of a Payments study by the Federal Reserve (FRPS) revealed that a consumers' decision to use debit or credit cards for
payment processing is affected by his or her credit score.
The study, conducted by the Federal Reserve Bank of Boston, found that consumers with higher credit scores were more likely to own and use credit cards, while consumers with lower credit scores were more likely to own and use debit cards. Additionally, cardholders with higher FICO scores generally used credit cards for more purchases and more expensive purchases than they used their debit cards for.
Overall, consumers are increasing use of both payment methods. The rapid acceptance of debit cards, increasing by 18 percent annually, has sparked interest about consumer payment choice and led to several studies, the source reports. In the 2010 FRPS, studies revealed that more than 37 billion transactions were completed using debit cards, making it the most popular non-cash payment method. In comparison, credit cards grew at a far less rapid rate, just 3.7 percent year-over-year.
If trends continue, retailers can expect an even greater portion of customers making payments with debit cards. To best accommodate this demographic, they can develop security strategies tailored to counteract vulnerabilities and update to a wireless debit machine for PIN authentication.
Articles written by ChargeNational.com's editorial team. For more information, click here.
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