Will that be cash or charge? Debit or credit? Bill Me Later, Billeo or PayPal?
Consumers have more choices than ever in how they pay for goods and services, and it is clear the days of paying with paper - cash or check - alone are long gone.
In a recession, experts predict alternatives that offer non-credit options, such as same-as-cash installment plans, likely will receive renewed attention from consumers. And given the technology, more options are available online to let people pay without using credit cards.
"Everyone nowadays is worried about entering into risky transactions," said David Evans, a vice chairman of global consulting firm LECG Corp. and founder of Cambridge, Mass.-based Market Platform Dynamics, a consulting firm focused on the payments business. "Anything that involves regularity and certainty is more attractive now, and anything where people are uncertain about ... their bills ... is less attractive."
For years, consumers have been relying less on paper payments, which account for just over half of all consumer purchases. Shoppers are just as likely to pay with a credit card or debit card whether they're buying groceries, stopping at a fast-food restaurant or paying bills online or via cell phone.
"You don't need cash anymore," said Bill Hardekopf, chief executive of Web site LowCards.com. He believes that even though card issuers are clamping down, lowering credit limits and raising interest fees, consumers are not likely to give up their plastic anytime soon.
But "credit card issuers will be more prudent in who they grant cards to," Hardekopf said. "The days of getting a card in everyone's wallet and a house to everyone who has a pulse, those days are over. They want your business, but really only if you have good or excellent credit."
Even if they continue using credit, consumers are likely to be more careful to avoid running up huge balances on their cards when they're feeling less confident about their financial future, experts said.
"Consumers are more wary about using credit," said Chris Allen, director of consulting services in the financial-services practice at Hitachi Consulting. "The lessons learned about what's going on today are 'staying more within your means.' "
One increasingly popular option for consumers who want to limit use of credit, or don't qualify for a credit card, are prepaid debit cards issued through check-cashing outlets, according Financial Service Centers of America, the national trade association for neighborhood financial-services outlets.
In 2004, the trade association formed a partnership with NetSpend Corp., a provider of prepaid debit cards, to offer a card that lets users allot part of the card's funds to savings and earn 5 percent interest on that amount.
"People can't run up credit card debt, because there's not a credit element on it," said Edward D'Alessio, deputy general counsel for the association. "You can't go over your limit. It's ideal for people who would like to have that discipline."
Card users, many of whom lack traditional checking accounts, can have paychecks deposited to their account, or cash checks and load the money onto their card, which can then be used wherever credit cards are accepted. In the first eight months of the year, customers deposited more than $31 million into their savings accounts, a more than 100 percent jump over deposits in 2007, the association said.
Some growing online alternatives include eBillme, Bill Me Later, Billeo, PayPal and ShopText, Evans said.
EBillme, a way to shop online and pay cash, lets consumers make purchases directly through an online bank account without entering a credit card or checking account number. The company promotes itself as a secure payment option that does not require a credit card.
Evans said that this appeals to consumers who prefer the security of not entering all the information on the Web but like paying through an online bank account.
Bill Me Later, a Timonium, Md.-based company that agreed in October to be purchased by eBay Inc. for $945 million, is an online payment option offered by about 1,000 retailers. Consumers checking out with Bill Me Later provide their name, address, birth date and last four digits of their Social Security number. Bill Me Later authorizes or denies credit within seconds. Customers are sent a bill, which is either due on a certain date or can be paid in installments, sometimes interest-free, over a specified period.
Bill Me Later had been a smaller rival to eBay's online purchasing system, PayPal.
Unlike a credit card, which offers a specific line of credit, "we make decisions based on [a single] transaction," said Bill Me Later spokeswoman Sara Parker. Other emerging alternatives include Santa Clara, Calif.-based Billeo and ShopText.
With Billeo's bill-pay feature, consumers use a downloaded toolbar on their computer, where they can store credit card, debit card or bank account information. A user can go to the toolbar to pay merchants who accept Billeo by automatically linking to bill-payment pages. Other features include having receipts saved automatically and receiving online bill-payment reminders.
ShopText, a mobile commerce and promotions company, aims to give consumers a way to order products advertised on TV or in print by texting on their mobile phones.
Consumers who have registered with ShopText online or via their mobile phone are able to text message a code word attached to a product to have it shipped to them, without placing a call.
The success of newer payment options will depend on how well they are accepted by merchants and consumers, Evans said.
"Merchants have to feel like more consumers are being driven to their stores," he said. "Consumers have to feel they're getting considerable value out of it. The challenge is providing something better than what they have now."