Credit card use rising, study finds, at a faster rate than use of other types of cards

Credit cards are being used for payments more frequently – and more often for remote versus in-person payment – a new Federal Reserve study released Thursday stated.

Additionally, the study showed that the 10.2% growth in use of credit cards for payments was far ahead of growth of other types of payment cards – such as debit cards, which slowed in use.

According to the Fed study – based on data collected by the Fed in 2016 – payments by credit cards totaled $3.27 trillion last year, up $37.3 billion from 2015. In the years 2012-15, the annual rate of increase in credit cards for payments was 8.1%, the Fed said.

That increase in use, according to the central bank, was fueled by continued strong growth in the number of payments made remotely. That includes online shopping and bill pay, which rose at a rate of 16.6% in 2016.

Generally, the Fed said, remote payments in 2016 by credit card accounted for 22.2% of all general-purpose credit and prepaid debit card payments – and was up from the previous year’s 20.7% of the total payments.

The Fed study also found that debit card payment growth slowed by number and value from 2015 to 2016, compared to 2012-15, growing 6% by number and 5.3% by value compared with a previous annual growth rate of 7.2% by number and 6.9% by value

Payments by check declined, the Fed study found, as did the value of checks used. The central bank said that data from the largest depository institutions show the number of commercial checks paid declined 3.6% between 2015 and 2016. By value, commercial checks are estimated to have declined 3.7% during the same period.

The Fed said the steeper decline in value versus volume suggests the average value of a commercial check paid has declined slightly since 2015. The numbers for checks exclude Treasury checks and postal money orders.

The Fed study also reported:

  • Use of computer microchips for in-person general-purpose card payments increased from 2015 to 2016, reflecting a coordinated effort to place the technology in cards and card-accepting terminals. By 2016, 19.1% of all in-person general-purpose card payments were made by chip (26.9% by value), compared with only 2.0% (3.4% by value) in 2015.
  • From 2012 to 2015, automated clearinghouse (ACH) network transfers, representing payments over the ACH network, grew at annual rates of 4.9% by number and 4.1% by value. Growth in both increased in 2015-16, rising to 5.3% by number and 5.1% by value. The average value of an ACH network transfer decreased slightly from $2,159 in 2015 to $2,156 in 2016.
  • A shift in the value of payments fraud using general-purpose cards from predominantly in person, estimated at 53.8% in 2015, to predominantly remote, estimated at 58.5% in 2016. This shift can also be attributed, in part, to the reduction in counterfeit card fraud, the sort of fraud that cards and card-accepting terminals using computer chips instead of magnetic stripes help to prevent.
  • Total U.S. card payments reached 111.1 billion in 2016, reflecting 7.4% growth since 2015. The value of card payments grew by 5.8% and totaled $5.98 trillion in 2016. Growth rates by number and value were each down slightly from the rates recorded from 2012 to 2015.

Federal Reserve payments study supplement points to accelerated credit card use