Visa Takes Big Step into Small Ticket Payments

Visa Campaign Drives Small Ticket Acceptance and Usage Visa has launched a comprehensive strategy to grow its presence in this burgeoning electronic payments space. Visa anticipates that the No Signature Required program and expanded Small Ticket Payment Service will accelerate card acceptance and usage at traditionally cash-heavy merchants by increasing cardholder convenience and providing economic incentives to acquirers. As part of Visas No Signature Required program for transactions less than $25, a broad range of cash-heavy businesses can now accept Visa for purchases without obtaining a cardholder signature. Visas small ticket strategy also expands the Small Ticket Payment Service to offer acquirers decreased credit and debit interchange rates on consumer card transactions of $15 or less in seven new merchant categories. Now, a total of 14 categories can benefit from the reduced rates for transactions below this threshold, including a further reduction on debit interchange beginning this month. Visas preliminary estimates indicate that by the end of 2006 as many as 27 percent of all Visa transactions may qualify for Visas No Signature Required program. Small Ticket Means Big Prospects The small ticket payments segment represents a sizable opportunity for Visa, as consumers increasingly use their cards for everyday purchases. The merchant segments that qualify for Visas No Signature Required program represent approximately $750 billion in consumer spending, half of which is cash today. According to a recent Visa survey of 1,132 Americans, more than one in three (38 percent) stated that they use their payment cards at least four times per week for small ticket purchases. The types of small ticket purchases most frequently made by survey respondents are: gas and service stations (71 percent); meals and fast food restaurants (60 percent); drug stores (51 percent); and convenience stores (50 percent). Consumer Preference for Electronic Payment Grows Visas volume on purchases less than $25 in targeted small ticket segments totaled $49.1 billion in 2005, up 25 percent from 2004. In the recent Visa survey, 45 percent of respondents said they use their payment cards for small ticket purchases more frequently than they did three years ago. Consumers surveyed overwhelmingly said that they use payment cards for their convenience (73 percent), efficiency (44 percent) and speed (39 percent). In addition, 50 percent noticed that small ticket purchases without signature were faster than cash or signing a receipt. Visa attributes continued growth to a number of factors including: rising consumer preference to use cards for everyday purchases, the popularity of the Visa check card over cash for small purchases and enhanced payment solutions like Visa Contactless that add value across a variety of small ticket merchant segments. Visas Small Ticket Program at a Glance Visas initiatives provide merchants with greater incentives to accept Visa and motivate cardholders to use Visa for small ticket purchases. -- Merchants can forgo obtaining cardholder signatures on receipts for authorized Visa transactions less than $25 in order to expedite checkout. This signature elimination is available in several merchant segments where fraud has been historically low, such as fast food restaurants, drug stores/pharmacies, parking lots and movie theaters, among others. -- Visa has also extended its small ticket program to merchant segments that previously did not qualify such as: bus lines, tolls and bridges, news dealers and newsstands, laundries and dry cleaners, copy services and car washes. -- Visa has reduced the interchange reimbursement fee to acquirers on Visa check card transactions of $15 or less in several small ticket merchant segments in order to potentially lowe