MasterCard PayPass Increases Customer Loyalty and Moves Payments Away From Cash

MasterCard PayPass Increases Customer Loyalty and Moves Payments Away From Cash

PayPass Significantly Changes Consumer Use of Credit and Debit For Small Everyday Purchases

PURCHASE, NY, (BUSINESS WIRE), July 18, 2006–Approximately 10 Million PayPass Cards and Devices Issued To Consumers and Approximately 32,000 Merchant Locations Accepting PayPass Globally

MasterCard(R) PayPass™ users are showing a marked change in their behavior while making their small, everyday purchases, MasterCard Worldwide announced today. The results of internal MasterCard data, dating back to September 2005, coupled with performance data provided by a major PayPass issuer, showed that consumers are loyal to PayPass merchants, use their PayPass-enabled cards more often than traditional payment cards and are showing an overall preference for electronic forms of payment rather than cash.

“This is the first true ‘report card’ showing how contactless payment technology is directly impacting consumer behavior and PayPass is proving to be a winner,” said Art Kranzley, executive vice president and group executive, Advanced Payments, MasterCard Worldwide. “PayPass was specifically designed to replace cash payments and our data shows that goal is being met. Consumers appreciate it and are using it and merchants who accept it are seeing tangible benefits.”

PayPass offers consumers a convenient alternative to cash that allows for small ticket purchases to be completed quickly, securely and easily. Consumers no longer need to fumble for cash and coins, swipe a card, or sign a receipt for any PayPass purchase under $25. Users simply tap their PayPass-enabled card or device on the PayPass reader at participating merchants and they are on their way.

MasterCard PayPass Making Inroads vs. Cash

According to internal MasterCard data, the average PayPass transaction, credit or debit, is approximately $20. Consumers also use their payment cards more frequently once those cards become PayPass-enabled, approximately 18% more often on average. Though PayPass technology can also be used for transactions exceeding $25 (at which point a signature or PIN is required for verification), roughly 75% of all PayPass transactions were for purchases below $25 and approximately 45% of all PayPass transactions were for purchases below $10.

According to a major PayPass issuer’s performance data* of PayPass users, based on a study of the same three-month time frame in 2006 vs. 2005, PayPass provided a:

  • 36% increase in usage per account
  • 45% increase in total transactions per account
  • 230% increase in usage at PayPass merchants
  • 270% increase in the number of transactions at PayPass merchants

“The fact that almost half of all MasterCard PayPass transactions are made for small purchases, totaling less than $10, shows that consumers continue to move away from using cash,” said Cathleen Conforti, global PayPass product manager, MasterCard Worldwide. “Once consumers begin using PayPass, our research shows that they keep using it. Consumers appreciate the flexibility of electronic payments and not having to be limited to whatever cash they have on hand. They also appreciate the ability to accurately track their small purchases, so they know exactly where and when they are spending their money.”

These latest research findings are consistent with the results of a national Consumer Payments Survey conducted in 2005 by Ipsos and commissioned by MasterCard, which showed that growing numbers of U.S. consumers are using less cash these days in favor of alternate payment methods, such as credit and debit cards. The Consumer Payments Survey was designed to gauge national attitudes towards the use of cash versus alternate payment methods, as well as to determine consumer interest in using new technologies, such as contactless payment technology.

According to the survey, consumers are carrying less cash and using less cash these days as compared to five years ago.

  • Nearly half (49%) of respondents said they carry less cash today than they did five years ago–representing a 9% jump as compared to a similar survey conducted in September 2003
  • 60% of respondents had only $20 or less in cash on-hand–representing an 11% jump as compared to 2003
  • Three out of four respondents (74%) said they no longer believe it is necessary to carry large amounts of cash
  • More than six in 10 (62%) use cash less often for purchases today, compared with five years ago
  • 56% of respondents believe that there are few places that accept only cash, representing a 16% jump as compared to 2003

Sheetz, one of the top convenience retailers in the United States, announced acceptance of MasterCard PayPass in January 2005. “We have realized time savings of approximately eight seconds per transaction,” said Rich Steckroth, Director of Business Development at Sheetz. “Consumer acceptance was the easiest part of the entire process. We are very thankful we went down this path.”

There are a number of PayPass-related programs currently underway in ten countries around the world. PayPass rollouts and trials have been announced in the United States, Canada, United Kingdom, Japan, Korea, Lebanon, Malaysia, Australia, Taiwan, and the Philippines, with more programs and rollouts anticipated throughout 2006.

As of Q2 2006, there are nearly 10 million PayPass cards and devices in the market and approximately 32,000 merchant locations around the world that accept PayPass, including McDonald’s, 7 Eleven, CVS, Duane Reade, Sheetz and Regal Entertainment Group. Interest in PayPass has not been limited to retail establishments. PayPass technology has proved popular in sports facilities as well, and PayPass is now accepted in many Major League Baseball and National Football League stadiums as well as at numerous golf events.

Earlier this year, MasterCard received two 2006 Breakthrough Awards from Card Technology magazine at the CardTech/SecurTech industry conference. MasterCard was honored with the “Most Significant Implementation” award for PayPass, while Art Kranzley was named “Visionary of the Year.” Additionally, in recognition of its success in leading the contactless payment market with its innovative PayPass program, MasterCard was also awarded Frost & Sullivan’s “2006 Market Penetration Leadership Award.”

For more information about MasterCard PayPass, visit www.mastercard.com/PayPass.

About MasterCard Worldwide

MasterCard Worldwide advances global commerce by providing a critical economic link between financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes close to 14 billion payments each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard(R), Maestro(R) and Cirrus(R), MasterCard Worldwide serves consumers and businesses in more than 210 countries and territories. For more information go to http://www.mastercardworldwide.com.

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