Debit Card Use Soars, B2B Checks Fall as Fed Revises Initial Data
The 192-page report, released last month, updates a December 2013 payment study and includes new data on credit and debit cards, wire transactions, cash deposits, withdrawals, and third-party fraud payments.
The reports are part of the Fed’s ongoing effort, started in 2001, to help banks plan for the future by measuring broad trends in noncash payments.
In addition to information that is compared with previous studies, this report contains new estimates of total unauthorized transactions (third-party fraud) involving checks, ACH, and cards as well as some information on the use of alternative payment initiation methods provided by depository institutions including commercial banks, savings institutions, and credit unions.
Here are a few highlights that we found interesting:
Noncash Payments Grow at Slower Rate
There were an estimated 122.4 billion noncash payments, excluding wire transfers, in 2012, with a value of $174.4 trillion.
The number of noncash payments in the U.S. increased at a compound annual rate (annual rate) of 4.2 percent from 2009—the year examined in the previous study. That is down slightly from the annual rate of 4.6 percent over the 10-year period from 2003 to 2012.
B2B Checks Falling
It is no surprise that business and consumers are writing fewer checks these days as more payments move online.
Business-to-business (B2B) checks fell faster than any other category, confirming industry assessments that B2B checks have been challenging to replace.
From 2009 to 2012, the rate of decline for the number of B2B checks accelerated to 3.8 percent per year compared with a decline of 3.5 percent per year from 2006 to 2012.
Nonetheless, overall paper check writing continues to persist as a significant portion of noncash payments, but interbank processing and clearing of these checks are virtually all electronic. As in 2009, almost all checks in 2012 were either cleared by electronic image exchange or converted to ACH payments.
Increasingly fewer checks enter the banking system as paper at all: in 2012 about one in seven checks was deposited by accountholders as an electronic image rather than paper.
Value of ACH Payments Triple Previous Estimate
The total number of Automated Clearing House (ACH) payments previously reported in the December 2013 report has been revised downward slightly to 21.7 billion.
The new estimate of the value of in-house on-us ACH payments of $144.1 trillion is approximately triple the size as the previously reported value.
Debit Card Use Soaring, Fraud Rate Falling
The number of debit card payments increased more than any other payment type from 2009 to 2012.
In 2012, the number of debit card payments had reached 47.0 billion—much higher than the 26.2 billion credit card payments in the same year. The number of debit card payments exceeded the number of credit card payments for the first time in 2004.
And while credit card fraud grabbing headlines, debit cards fraud is on the decline. Single-message, or PIN, debit card transactions had the lowest fraud rate among all general-purpose cards in 2012 by both number and value. The ranking applies to debit cards used for both purchases and ATM cash withdrawals.
After declining from 2006 to 2009, credit card payments (including both general-purpose and private-label) returned to growth from 2009 to 2012.
The number of credit card transactions grew at an annual rate of 7.6 percent, rising from 21.0 billion in 2009 to 26.2 billion in 2012.
The number of private-label credit card transactions, which led the decline from 2006 to 2009, bounced back strongly at an annual rate of 17.1 percent.
The number of general-purpose credit card transactions, which were relatively flat from2006 to 2009, increased a total of 4.2 billion or 6.8 percent annually.
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The 2013 Federal Reserve Payments Study Summary Report released on December 19, 2013, was updated on July 24, 2014, to reflect revised estimates.