It’s been a busy stretch for the payments professionals at the Federal Reserve. In mid-July, the Fed’s 321-member Faster Payments Task Force wrapped up two years of work with its final report, offering a market-driven roadmap to system modernization.
And at the end of June, the Fed’s Retail Payments Office released a treasure trove of data from its 2016 Payments Study, highlighting some fascinating trends in consumer and business payment choices.
A summary-level batch of results from the Fed’s study was released at the end of 2016. This new deep-dive takes a closer look at payment instrument us on a per-household and per-business level.
Check use, for instance, continues to decline—to no one’s surprise. On a per-household basis, however, consumers continue to write 7.1 checks per month—the same number as ACH transfers.
The average business still writes 24 checks per month. Both of these figures are barely more than a third of 2000 levels, but I suspect they’re higher than most would guess. The extinction of the paper check still has a long road ahead.
The big eye opener for me: Consumers made an average of 78.6 noncash transactions per household per month in 2015, nearly double their 2000 level. Increases in dollar spend and the absolute number of transactions can be explained by gross domestic product and population growth, respectively, but not per household counts.
Some of these transactions replace those once carried out with cash. While this specific study does not attempt to measure cash use, other credible sources indicate the cash decline hasn’t been nearly steep enough to explain debit growth.
The data implies households have been disaggregating their purchases, which may or not be good news for specific merchants. Someone entitled to free shipping via Amazon Prime may simply be making six separate purchases rather than a single bundled one.
Nonetheless, it does imply a greater number of shopping events and, therefore, more opportunities to influence buying decisions (and payment choices).
In part two, I’ll look at growth in debit and credit card use.
GLEN SARVADY is managing partner at 154 Advisors and senior payments expert with Best Innovation Group, a CUNA consulting partner. Follow him on Twitter via @154Advisors. His views do not necessarily reflect those of Credit Union National Association.