Who carries cash anymore? Just about everybody, it turns out.

When consumers begin to use debit cards for most of their routine purchases, they tend to carry less cash, but they tend to visit ATMs more often for small cash withdrawals, MasterCard Advisors notes in a new white paper.

And while debit card use has become deeply entrenched in many developed markets globally, the sudden introduction of adverse factors such as inconvenience at the point of sale or fear of fraud can turn consumers away from using debit relatively quickly, MasterCard Advisors notes in the report.

In the report “Creating A Debit Card Payment Habit,” which MasterCard Advisors released Feb. 7, the firm discusses a study it conducted in which it reviewed transaction data from local merchants and interviewed groups of consumers in a mature, undisclosed debit market in Western Europe. The research took place over 24 months through mid-2011, the firm says. Specific transaction and demographic figures from the study were not available.

According to the white paper, consumers that initially were reluctant to shift from using cash used their debit card only when they perceived they “had no choice” for a particular purchase.

Over subsequent months, consumers gradually began using their debit cards for grocery and gasoline purchases because they perceived doing so was faster and more convenient than using cash, the report notes.

Eventually, the consumers generally began using their debit cards across diverse merchandise categories. And as their debit spending exceeded cash for routine expenditures, the consumers said one of their top reasons for using debit cards was that they offered superior methods for tracking their spending compared with using cash, the report notes.

But somewhat surprisingly, as consumers relied more on debit cards than cash, their trips to withdraw cash at ATMs rose, Ben Colvin, MasterCard Advisors senior vice president for global debit and prepaid, tells PaymentsSource.

“One would assume that as debit use goes up, ATM use goes down,” but that is not the case, Colvin says. “Where debit cards become (the primary) money-management tool, … consumers as a result carry less cash. However, they can more often find themselves in situations, usually at smaller merchants where debit cards are not readily accepted, of (needing) cash more frequently.”

Indeed, habitual debit card users carry relatively little cash, and cash represents a smaller proportion of overall purchases for heavy debit users, Colvin says. But issuers should realize that ATM access is likely to remain vital to consumers even when they conduct most routine transactions using a debit card, he says.

And because ATMs remain a vital channel for heavy debit card users, issuers also should view them “as a primary means of communicating messages,” including announcing incentives and other relevant new developments, Colvin says.

Even after consumers become deeply entrenched debit card users, fear of fraud and loss can threaten their trust, MasterCard Advisors found in its study.

Many customers are “largely unaware” of existing card-security features and avoid using their debit cards in foreign countries because of a general lack of trust and loss of control, the study found.

To overcome this, issuers should step up efforts to educate debit cardholders about how to use their cards when traveling abroad, Colvin says.

And they should not assume that the trajectory for debit card use is always forward, he says.

Especially for consumers still expanding their use of debit cards to merchant categories outside of supermarkets and gasoline, any setback that causes them inconvenience or concern about security can “break the cycle” of supplanting cash with debit transactions, Colvin says.

To keep customers using debit cards, issuers should continually reinforce the benefits of debit card use by emphasizing its convenience over cash, the ability to track and manage spending and the utility it provides for making purchases when traveling abroad, he says.

Such issuer communications can be in the form of relatively inexpensive ATM messages, account-statement messages and text messages, Colvin suggests.

“It’s the continual reinforcement that helps sustain forward momentum,” he says.

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