Electronic Money Supervisory Commission

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How people pay in the USA – Fed Reserve Payments study 2016

The Federal Reserve has just reported their estimates of the total number and value of all non-cash payments made in 2015 in the United States, both by consumers and businesses. The study provides insights on adoption trends for new payment methods. Main findings of the study may be considered under 3 key areas:

(1) Differences between consumer and business payment choices in 2015 and changes over the 15-year period since 2000

No surprise, check payments are being replaced with card payments and ACH transfers. In number, check payments dropped from  57.8% of non cash payments to 13.4%. By value the drop was from 66.7% to 15.4%. However this still remains high in comparison to leading European economies that have considered altogether doing away with checks.

Total noncash payments by households increased by around 94.7% over the 15 year period, again no surprise as this period from 2000 to 2015 precisely marks the growth period for electronic payments worldwide.

New methods studied included payments initiated via a mobile device (for instance mobile wallet), payments through specialized services for person-to- person payments, and the use of online or Ecommerce payment authentication services to help verify the payer and secure payment information.

(2) Adoption and intensity of use of different types of general-purpose payment cards in 2015, along with more recent changes since 2012

Consumer and Business payments differed in terms of popularity of payment type. Top four consumer payment types were non-prepaid debit cards, general-purpose credit cards, checks, and ACH debit transfers, with the first two categories substantially in the lead. The top four business payment types were ACH credit transfers, checks, general purpose credit cards, and non-prepaid debit cards. The number of checks written is still alarmingly high as compared to that in many Western economies such as the UK, that have made the transition to instant electronic payments.

The figure above, drawn from the Federal Reserve report illustrates the way in which US consumers and businesses pay and how this differs in terms of payment type.

(3) Growth in selected alternative payment initiation methods and services

Over the 15 year period there was strong growth in the number of mobile wallet payments, but online bill payment through banks increased only marginally as payments can now be made directly to billers. The figure below, extracted from the report shows the change from 2012 to 2015.

Although P2P and money transfer payments increased over the period, they remain very low by number. Online payment authentication methods on the other hand grew from 1.8 billion in 2012 to 3.4 billion in 2015.