New phase of paying

Credit, debit and gift cards are changing the way people pay while simultaneously increasing profit margins for businesses. (MCT Illustration)

By Kevin Wilson: CNJ staff writer

When the tuition bill rolls around each semester at Eastern New Mexico University, Roma Vivas throws down her Discover card even though she has the money on hand.

Several times a week, the U.S. Postal Service is a backdoor ATM when customers buy a 39-cent stamp, pay with a debit card, and get cash back without paying bank fees.

“Honestly, (our retail employees) see it three or four times a week, if not more,” Clovis postmaster John Yeast said. “Most of my employees are taking advantage (of it) themselves.”

Those are a few examples of the new ways people pay, as credit, debit and gift cards take over transactions merchants previously trusted checks to handle.

The reasons consumers prefer debit cards over checkbooks are numerous. They’re easier to carry — some companies offer small cards that fit on keychains — and remembering a four-digit personal identification number (PIN) offers security without dedicating time to presenting identification, addresses and phone numbers merchants often request in check acceptance policies.

Speed is one of the main reasons McDonald’s locations in Portales and Clovis stopped accepting checks in November, and owner John Snowberger said he’s had few complaints.

Snowberger reasoned in a fast-food restaurant, the speed of the customer’s order depends not only on the crew behind the counter, but how fast transactions are handled with the other customers in line.

“It’s different with everybody (and how fast they write checks),” Snowberger said. “Credit cards and debit cards are so much faster with today’s technology.”
That may be true, but Terry Christesson, an economics professor at Clovis Community College, has another take.

“The merchants are really getting away from personal checks,” Christesson said. “The reason is that if they force people to use cards, it shifts the problem away from them to someone else for non-payment. They divert the issues to credit card companies.”

Vivas, a graduate student in communications at ENMU, said she gets about 1 percent of her Discover balance refunded to her. When her tuition bill came in earlier this month, Vivas paid the $1,400 with her credit card, then paid the bill with money she set aside for tuition.

Vivas does that with other purchases as well, even if 1 percent doesn’t seem like a lot.

“I still do it anyway,” Vivas said, “because it says cash back (and) $14 for a college student is a lot. It’s a meal you can have outside.”

Another way to pay is the gift card, which Snowberger said is a popular option at his restaurant — especially for parents who can teach their children budgeting with the card and know where the money is going.

“They’re reloadable, they’re easy to give as gifts, and they’re easy to give to kids (for school lunches),” Snowberger said.

It also raises profit margins for a business that gets the money regardless of when or if the card is used. Customers lose cards or forget about them before they expire, or they’ll throw the card away if only pocket change remains as a balance.

“In essence, what people have done is given (merchants) money for nothing,” Christesson said. “That’s big, big business now. At the very least, they have that money from the time the gift card is sold until it is redeemed.”

Whatever way people pay, Christesson said, how it affects people boils down to the long-standing principle of fiscal responsibility.

“If a person’s not organized and systematic,” he said, “it can definitely become problematic.”