Consumers are relying more on their cards, both credit and debit, in making their payments – and debit cards are increasingly becoming their card of choice, a report issued Thursday stated.
In its Federal Reserve Payments Study Supplement, the Fed said payments by cards – credit and debit – grew in both number and value since last year, by 10.1% and 8.4%, respectively, boosted by continued strong growth in the number of card payments made remotely, including for shopping and bill paying.
Additionally, a “surge” in payments by debit cards was also seen, the Fed said.
In its Federal Reserve Payments Study Supplement, the Fed said the total credit card, non-prepaid debit card, and prepaid debit card payments increased in number by 11.3 billion to 123.5 billion payments from 2016 to 2017. The value increased, the Fed said, by $500 billion to $6.5 trillion, the Fed added.
The annual supplementary data, the Fed said, was collected through its triennial Federal Reserve Payments Studies (FRPS).
The Fed report said that payments by credit cards had the highest growth rate by value, chalking up a 10% increase. Increases in debit card payments – which the Fed said made up two-thirds (66.9%) of card payments last year by number – grew by 6.5%. That growth included a 7% increase in non-prepaid card payments, and a 3% increase in prepaid debit card payments.
The Fed said that “a surge was seen” in the number of prepaid and non-prepaid debit card payments relative to credit card payments – a “departure from previous reporting periods,” the agency said.
“The increase in the number of card payments in 2017 was boosted by continued strong growth in the number of card payments made remotely, including for shopping and bill paying,” the Fed said. “The number of in-person chip-authenticated card payments also recorded a noteworthy gain in 2017, increasing to 41.6% of all in-person general-purpose card payments.
“For the first time, chip-authenticated payments captured more than half of the value of in-person general-purpose card payments,” the Fed noted.
Other highlights of the report, according to the Fed, include:
- Remote general-purpose card payments increased 22.8% last year, compared with in-person payments, which grew by 7.2%. Over the same period, the value of remote payments increased 14.8%, compared with in-person payments, which increased by just 4.4%.
- Network automated clearinghouse (ACH) payments grew faster, with network ACH payments increasing 5.7% by number and 6.9% by value last year .
- Check payments, based on a survey of the largest U.S. depository and financial institutions, showed a faster decline of 4.8% by number in 2017 compared to a decline of 3.6% from the previous year. The value of check payments, however, increased 7.5% last year, reversing the 3.7% decline in 2016.
- ATM withdrawals, based on a survey of the largest U.S. depository and financial institutions, have declined by number and increased by value in all study periods from 2012 through 2017. Last year, the report stated, ATM withdrawals fell 2.8% by number, but rose 0.5% by value.