Consumer Insights

Credit And Debit Cards Account For More Than Two-Thirds Of US Payments

Credit and debit card payments are continuing to increase in terms of usage, with the Federal Reserve finding credit and debit card payments accounted for more than two-thirds of all noncash payments in the U.S. from 2012 to 2015. What’s more, U.S. noncash payments totaled 144 billion in 2015, with a value of close to $178 trillion, up almost $17 trillion since 2012.

According to the 2016 Federal Reserve Payments Study, which was released Thursday (Dec. 22), the Federal Reserve found ACH payments only grew modestly over the same timeframe, while check payments declined — but at a slower rate than in past studies. Total noncash payments increased at an annual rate of 5.3 percent by number and 3.4 percent by value from 2012 to 2015.

“Much of the change has occurred in the new millennium,” wrote the Federal Reserve in a more than 200-page report looking at the state of the payment industry. “Just over a decade ago, checks were the predominant type of noncash payment in the United States, while, one by one, starting in 2007, non-prepaid debit card, then credit card, and then ACH payments (with debit transfers and credit transfers combined) overtook check.”

Among the key findings of the report was an increase of card payments to 19.9 billion from 2012 to 2015, with non-prepaid debit card payments leading the way, growing 12.4 billion in that timeframe. The number of debit card payments (including payments with prepaid and non-prepaid cards) grew to 69.5 billion in 2015 with a value of $2.56 trillion. That’s up 13 billion, or $0.46 trillion, since 2012. According to the Fed, it was the largest increase in number of payments among all the payment types looked at. Debit card payments grew at an annual rate of 7.1 percent by number, or 6.8 percent by value, from 2012 to 2015, with most of the growth occurring in non-prepaid debit card payments. The number of credit card payments reached 33.8 billion in 2015, with a value of $3.16 trillion, up 6.9 billion, or $0.61 trillion, since 2012. Credit card payments grew at an annual rate of 8 percent by number, or 7.4 percent by value, from 2012 to 2015. Prepaid card payments grew by less than 1 billion from 2012 to 2015.

Meanwhile, remote payments, or those in which the credit card is not present at the point of sale, accounted for 19 percent of card payments in 2015, up less than 4 percent when compared to 2012. Chip cards were also on the rise from 2012 to 2015 big time, with the Fed saying general-purpose card payments initiated with a chip-based card increased 230 percent per year but only amounted to about a 2 percent share of total in-person general-purpose card payments last year. The increase was driven by an effort on the part of the credit card industry to roll out chip card technology to fight back against fraud.

“In 2015, the proportion of general-purpose card fraud attributed to counterfeiting was substantially greater as a share of total card fraud in the United States compared with countries where chip technology has been more completely adopted,” said the Fed in the report.

As for ACH payments, the study revealed that that payment method grew to 23.5 billion in 2015, with a value of $145.3 trillion. The annual rate of growth was 4.9 percent by number of ACH payments and 4 percent by value. Check payments didn’t do so hot, falling at an annual rate of 4.4 percent by number and 0.5 percent by value from 2012 to 2015.

“The data collected for the 2016 study was substantially expanded,” said Mary Kepler, senior vice president of the Federal Reserve Bank of Atlanta, which sponsored the study. “This reflects an increased desire within the payments industry for additional fraud-related information.” Kepler noted that a limited amount of fraud information was ready for release Thursday and that further results will be released in 2017 as the complete data set is more fully reviewed and analyzed.

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