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Changing Mix of Payments in Petroleum Market |
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By Greg Schaub, New Business Development |
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Part 1: Stored Value and its Loyal Following
It's been a long time coming, and a recent announcement confirms that it has finally happened. Some time last year, payments
made with plastic - credit, debit, gift cards, etc. - quietly outpaced cash and checks as the payment method of choice. Since
1995, the number of American consumers who make purchases in stores with plastic has increased 430 percent. In fact, in 2003
consumers paid for purchases with plastic more often - at 53 percent of the time - than with paper - at 47 percent of the time.
And driven by a desire to increase the convenience factor and build customer loyalty, the petroleum industry - whether willingly
or not - has been leading that trend for some time.
Part 2: Private Label's Resurgence and Emerging Technologies
Private label's heritage runs deepest in the Petroleum industry, tracing its roots back to the traditional gas card that
consumers were expected to pay off each month. Yet while it was never intended as such, consumers began to treat private label
cards as they would a traditional credit card - loaned money. Last year, consumers spent more than $20 billion on private label
petroleum cards, even though transaction volume was down by 7 percent. (The Nilson Report, September 2004). With their higher
interest rates and lack of purchase incentives, consumers have begun a migration away from what is often considered a less
attractive option.
Part 3: Nailing Down the Benefits of PIN Debit
The onslaught of debit acceptance results from both consumer awareness and merchant costs. Today's consumer is more educated
than ever before, and debit, or check cards have reached a saturation level. Increasingly, consumers are turning away from
traditional credit payments and opting to pay with a debit card, in which funds are directly removed from his or her account,
in part to avoid increasing debt.
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