As of a few decades ago, Americans paid for just about everything with cash or check. Every now and then, a consumer would use a credit card to make a major purchase but for the most part, they relied on cash or checks to pay mortgages, utility bills, groceries, and more. The rapid pace of technology change and e-commerce continues to influence payment channels and how consumers make their payments.
The Federal Reserve reveals changing payment trends by conducting a payments study on an annual basis.
As part of this study, the Federal Reserve analyzes how Americans are transacting payments and they are finding less reliance upon cash and check payments, with solid growth across card and electronic payment channels.
The Federal Reserve released their 2018 payments study recently, and it once again showed an uptick in card payments. In 2017, card payments (including credit, debit, and private) experienced 10.1 percent growth overall with debit card use increasing by 10.4 percent and credit card use increasing by 9.4 percent over the previous year. The Federal Reserve also found that chip-authenticated card use grew by more than 130 percent in 2017 due in large part to the fact that more card companies are producing cards with chips and more retailers are accepting them.
There was also a big increase in the number of electronic payments made in 2017. Remote payments increased by almost 23 percent, which was well above the 7.2 percent growth that in-person payments experienced. Meanwhile, network automated clearinghouse payments, which are often referred to as ACH payments, increased by more than 5 percent from the previous year.
To no one’s surprise, the Federal Reserve study also found that there are fewer people who used cash and checks in 2017 than in the previous year. While people tended to withdraw more money from ATM machines in 2017 than they did in 2016, ATM withdrawals were down by almost 3 percent. Large-institution check payments were down by almost 5 percent in 2017 as well, even though the value of those checks rose by more than 7 percent.
All of this suggests that Americans are continuing to increase their usage of cards and electronic payments at the expense of cash and checks. It also suggests businesses are going to need to find ways to accommodate their customers’ desires to use noncash payments by offering appropriate payment options.
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