Federal Reserve Documents Growth in Card Payments

Financial Services Law

The Board of Governors of the Federal Reserve System (Federal Reserve) released its latest study on payments, documenting a continuing—and accelerated—“robust growth” in card payments.

According to the latest numbers, check payments and automated teller machine (ATM) withdrawals declined in number of transactions over the same time period.

What happened

Since 2001, the Federal Reserve has reported on national aggregate volumes and trends in noncash payments in the United States. The new study updated data on core noncash payment types and systems that support everyday payments by both consumers and businesses, using the latest numbers from 2017.

“The data show faster growth in electronic payments from 2016 to 2017 compared with previous years,” according to the Federal Reserve. “Remote payments continued to grow as a share of general-purpose card payments, and the value of in-person chip-authenticated general-purpose card payments exceeded the value of those without chip-authentication for the first time.”

Card payments showed “robust” growth year-over-year, the study found, collectively increasing 10.1 percent in number of transactions (from 112.2 billion to 123.5 billion) and 8.4 percent in value (from $6 trillion to $6.5 trillion). These increases represent an acceleration in overall card payment growth as compared with prior periods, the Federal Reserve said.

The boost was due in part to an increase in remote card payments (used for both shopping and bill paying) as well as in-person chip-authenticated card payments, which jumped to 41.6 percent of all in-person general-purpose card payments. This increase pushed chip-authenticated payments to more than half of the value of in-person general-purpose card payments for the first time.

In terms of all card payments, credit card payments grew 10 percent and debit card payments went up 6.5 percent. Remote general-purpose card payments increased by 22.8 percent in just one year, while in-person card payments moved up only 7.2 percent. Automated clearinghouse (ACH) payments also grew faster from 2016 to 2017, rising 5.7 percent by number and 6.9 percent by value.

At the other end of the trend are check payments and ATM withdrawals. Showing a faster decline than in prior years, the number of check payments dropped by 4.8 percent from 2016 to 2017, although the value of check payments actually went up 7.5 percent. Similarly, ATM withdrawals fell 2.8 percent by number but rose 0.5 percent by value.

To read the Federal Reserve study, click here.

Why it matters

The data in the Federal Reserve study confirm a number of perceptions, including the accelerating move toward a cashless society. Also significant are the rapid implementation and acceptance of chip cards, and the jump in “card not present” transactions. All these trends moving away from cash and checks and toward card payments bode well for fintech companies, which are at the forefront of changes facing the financial services industry.