Card Use Grows Fast as Check Payments, ATM Withdrawals Continue Decline


The Federal Reserve’s triennial report on payments released last week shows accelerated electronic payments growth, as well as signs that fewer people are paying by check or withdrawing cash from ATMs.

Card payments increased 10.1% by number and 8.4% by value from 2016 to 2017. For comparison, these payments had increased 7.8% by number and 6.3% by value from 2015 to 2016.

At 10%, credit cards had the highest year-to-year growth rate by value. Debit card payments, which made up 66.9% of card payments in 2017 by number, grew by 6.5%, including a 7% increase in non-prepaid card payments and a 3% increase in prepaid debit card payments.

While the number of prepaid debit card payments went up from 11.8 billion to 13.1 billion and the number of non-prepaid debit card payments went up from 63 billion to 69.6 billion between 2016 and 2017, the number of credit card payments over the same period increased from 37.3 billion to 40.8 billion.

Credit cards still constituted 55.6% of the total value of card payments in 2017, accounting for $3.60 trillion compared with the $2.88 trillion from prepaid and non-prepaid debit cards.

Meanwhile, remote payments have claimed a greater share of total general-purpose card transactions. Remote payments are those made when the payer is not in physical proximity to the payee, for example, by using a card number on an e-commerce or bill-pay website, providing a card number over the phone, or shopping through a mobile app.

Remote payments increased 22.8% by number from 2016 to 2017, compared with in-person payments, which grew just 7.2%. Over the same period, the value of remote payments increased 14.8%, compared with in-person payments, which increased by 4.4%.

According to the Fed, 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 number of in-person chip-authenticated card payments also recorded a substantial 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 said.

The number of credit card, non-prepaid debit card, and prepaid debit card payments increased 11.3 billion from 112.2 billion to 123.5 billion payments from 2016 and 2017. The value of these payments increased $500 billion from $6 trillion to $6.5 trillion over the same period.

Of all the card types, only payments made using EBT cards declined by both number and value from both 2015 to 2016 and 2016 to 2017. These payments constituted a small share of all card payments, 2% by number and 1% by value, in 2017.

“The level of EBT payments is generally driven by government policy and the needs of beneficiaries, and a decline in such payments can typically be associated with more favorable economic conditions, such as low unemployment,” the Fed study said.

Network automated clearinghouse payments grew faster than in previous years, increasing 5.7% by number and 6.9% by value from 2016 to 2017. For comparison, network ACH payments grew 5.3% by number and 5.1% by value from 2015 to 2016.

Although check payments and ATM withdrawals declined by number, they increased in value year over 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 from 2016 to 2017, compared to the decline of 3.6% from 2015 to 2016. The value of check payments, however, increased 7.5% from 2016 to 2017 after decreasing 3.7% from 2015 to 2016 and increasing 2.2% a year from 2012 to 2015.

“Swings in value in the face of accelerating declines in number could reflect generally higher volatility in large-value check-based business transactions from year to year,” the study said.

Large-institution ATM withdrawals have declined by number but increased by value in all study periods from 2012 through 2017, according to the Fed. From 2016 to 2017, ATM withdrawals fell 2.8% by number but increased 0.5% by value (although that’s well under the 2% inflation rate over the same period, the study notes).

On the reasoning behind declining ATM withdrawals, the Fed study says:

“The declines in the number of ATM withdrawals may be connected to increases in card payments. In part, increasing card payments by number may indicate the replacement of some cash payments, either directly for in-person purchases or indirectly as more shopping moves to remote payments. ATM access using a non-prepaid debit card is a common way to obtain cash, but only provides a partial, indirect indicator of the popularity of cash.”

It’s worth noting the overall growth in noncash payments has also led to a growth in noncash payments fraud, as Bank Innovation reported in October.

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