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The main weapon against cash and checks is plastic -- credit cards, bank debit cards and so-called smart cards. Together they represent 9% of total consumer payment transactions and are expected to reach 15% by 2001. Besides taxicabs and newsstands, credit cards are employed in parking garages and movie theaters and could soon be the way that Americans pay their taxes, if industry lobbyists prevail. But since card issuers charge an average of 16.5% while the irs extracts only 7% for late payments, consumer groups warn that taxpayers should be wary. So far, stiff interest rates have done little to curb the use of plastic. The number of Visa and MasterCards in use has climbed 3% in the past year, to 225 million, while credit-card transactions have jumped 7.3%, to 1.7 billion.
But the fastest-growing charge cards are the ones that automatically deduct money from checking accounts. The amounts riding on such debit-card use could zoom nearly 600% over the next eight years, according to H. Spencer Nilson of the Nilson Report, an Oxnard, California, newsletter that follows this industry.While Visa's credit-card business grew 16% last year, the use of its "CheckCard" debit service jumped 47%, as consumers sought to avoid finance and interest charges.
Both credit and debit cards could one day be eclipsed by smart cards, which look like conventional bank plastic but store information on computer chips instead of magnetic stripes. Such cards could hold, say, the profile of an airline passenger, including his frequent-flyer points and seat preferences. With a single swipe of a card through an airline's electronic reader, a traveler could make a reservation and get a seat assignment.
The card can also carry specific dollar values. Newspapers like the Philadelphia Inquirer are testing $10 cards that would deduct 50 cents each time they are inserted in news racks. No more fumbling for loose change. Telephone companies are issuing cards good for so many minutes of calling time. And a brand-new electronic highway toll system developed by AT&T and Lockheed in Orange County, California, lets drivers pay without stopping. Radio receivers pick up signals from dashboard-mounted cards as vehicles zip through toll lanes. The fees are deducted directly from the drivers' bank accounts. Says Bob Bess, a customer-service representative who lives in Trabuco Canyon, California: "It's kind of fun to whiz by at 60 miles an hour while others are waiting in line."
Not everyone striving to be cashless has achieved this sense of breezy convenience. But the vision seems only a few mishaps and controversies away.