or most merchants with smaller-ticket items, cash remains king. They have eschewed accepting plastic for payment because the current interchange model does not provide a practicable solution: Interchange fees make small-ticket electronic transactions too expensive.

This may soon change, however. Visa U.S.A. announced an "aggressive strategy" to make card acceptance for small-ticket items better for consumers and merchants.

"The small ticket payments segment is ripe with opportunity," a Visa news release announcing the initiative stated. "The merchant segments that qualify for Visa's small ticket program represent approximately $750 billion in consumer spending, half of which is made with cash annually." Visa's plan includes reducing the interchange reimbursement fee on consumer check card transactions less than $15.

In addition, signatures on transactions less than $25 within select merchant segments (those with a low rate of fraud, such as drug stores/pharmacies, parking lots and movie theaters) will not be required. Visa is also expanding the types of merchants eligible for its small transaction programs. The initiative replaces Visa's Express Payment Service, which only applied to four merchant segments.

Industries that now qualify under the new program include buses, tolls and bridges, newsstands, laundries and dry cleaners, copy services, and car washes. Visa will implement the changes in April 2006.

The small-ticket, or micropayments, market suggests enormous potential. New research from the Aite Group LLC, a research and advisory firm, states that U.S. consumers make 138 billion cash transactions each year, half of which are under $10.

Gwenn Bézard, the Aite Group's Research Director, however, anticipates increased competition for the card Associations and member banks.

"Even if interchange rates are somewhat reduced, it is very likely that U.S. merchants will look for alternatives to issuers' offerings," she said. Bézard authored the report "Low Value Payments: Looking for the Code Cracker." The alternatives she cites include prepaid debit, aggregation and biometric automated clearing house payments.