Written by Shari R. Pogach, Regulatory Paralegal
The Federal Reserve System recently released its research on the continually evolving payments industry, 2016 Federal Reserve Payments Study, using 2015 payments data. This research is used to establish the total volume and composition of electronic and check payments in the U.S., and help determine estimates and trends in payments. The data estimates from the data study are available in a downloadable data table format here.
While it isn't really news that we are using less cash and checks than we used to, the statistics of how rapidly that is occurring is interesting. For example, total noncash payments per household jumped to almost 95 percent from 2000 to 2015. These noncash payments included checks, card payments and electronic transfers via the automated clearinghouse (ACH) systems. Checks written per household fell to 7.1 per month in 2015, down from 19.3 per month in 2000. Businesses are also increasingly replacing check payments with noncash payments. In 2015, businesses wrote 24.1 checks per month on average, compared to 66.0 per month in 2000. ACH transfers rose from 13.4 per month on average to 29.8 per month during the same time.
The study noted a substantial difference in payment type preferred by consumers and businesses in the aggregate ranking of the number of noncash payments. Consumers prefer to use non-prepaid debit cards in making payments, followed by credit cards, checks and ACH debit transfers. ACH credit transfers were the most popular payment method used by businesses, followed by checks, credit cards and non-prepaid debit cards.
The usage of alternative payment services and methods, such as payments: initiated through a mobile device; made through specialized services for person-to-person payments; and using online payment authentication methods, showed high growth from 2012 to 2015. Still, in comparison to the total number and value of noncash payments, the total number and value of payments using these methods remains low.
Information is now being collected on the number and value of noncash payments made during 2016 as part of a smaller and more targeted data collection effort for annual updates between the major studies published every three years. The Federal Reserve expects this annual supplement to be released during the fourth quarter of 2017.
In addition, the 2016 study collected information on payments identified as fraudulent, allowing for the first time, estimates of trends in payments fraud by type of payment. Additional detail on the characteristics of fraud was collected from card networks and depository institutions. Plans for the release of this information are for third quarter 2017.
So will checks eventually go the way of these items?
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