WASHINGTON – A study conducted by the American Bankers Association and Dove Consulting has documented that debit cards are becoming the clear winner in the ongoing war over what type of payment consumers prefer. ACI Worldwide, a leading international provider of solutions for consumer and wholesale payments and application infrastructure, CitiGroup, The Clearing House Payments Company and Mastercard sponsored the research. “Across all payment venues, debit is emerging as the clear winner,” says Tony Hayes, vice president at Dove Consulting. “Debit is now tied with cash for the highest share of consumers' in-store purchases, and a third of all consumers report that debit is the payment method they use most frequently in stores. Consumer use of debit for online purchases and bill payments is also increasing-particularly if they receive rewards.” The shift from paper to electronic payment methods will likely continue over the next few years as new electronic payment methods with unique benefits, for example new forms of card transactions enter the mix, the survey predicted. The 2005/2006 Study of Consumer Payment Preferences found that each month consumers make 58 individual payment choices, whether by buying things in stores or over the Internet, or paying bills. The survey also found that cash and checks now account for only 45% of consumers' monthly payments-down from 57% in 2001, and 49% in 2003. “The consumer switch to electronic payments is increasing across the board -albeit at different rates,” said Jane Yao, ABA's managing director of benchmarking and survey research. “We all know that consumer use of electronic payments for in-store purchases has increased steadily for years and much of the `easy' migration has already occurred. This year's survey results show that electronic bill pay is quickly catching up.” Consumers' migration to electronic payments for in-store payments has been driven largely by the increasingly popularity of debit, which achieved significant growth at the expense of checks. Six years ago, debit represented only 21% of in-store transactions; today consumers report that one-third (33%) of in-store purchases are made with debit cards. As other surveys have indicated, the fastest growing recent products are gift cards. Gift cards now account for 4% of all in-store purchases, up from 2% in 2003. The percent of consumers who indicate using gift/prepaid cards to make at least one purchase per month in stores has increased from 12% in 2003, to 32% in 2005. Moreover, this growth looks likely to continue with 12% of consumers planning to increase their use of gift/prepaid cards over the next two years. Also continuing the current trend, checks are still losing ground as more and more consumers turn to automatic bill payment and online bill payment. Today, 52% of consumers use automatic payment to pay at least one bill per month, and 39% of consumers use online bill payment, including using these methods to pay multiple bills. Checks now account for less than half of consumers' monthly bill payments-only 49%- down from 72% in 2001, and 60% in 2003. [email protected]