A new payments study out by the Federal Reserve--the fourth in a series that is released every three years-finds that big changes are afoot in the payments landscape. For instance, electronic payments now account for three quarters of all payments, by number of payments. In addition, since the last survey came out, not only have debit cards surpassed checks as the most-used non-cash instrument, but also prepaid card use has increased dramatically.
Plus, checks have declined at a faster rate than ever and the use of credit cards as a payment mechanism declined for the first time since the studies began.
All in all the past three years have seen a dramatic shift in the way the US companies and consumers are making payments.
Debit card transactions rose at a phenomenal rate of 14.8 percent on average per year over the past three years since the last study, while check usage continued its downward trend-the number of checks paid decreased by 7.2 percent per year, according to the study.
The growing use of electronic payments is helped along by the increasingly-advanced infrastructure that US payments, settlement and clearing organizations now boast. For example, improved check image deposit services ensure that checks will be electronified somewhere along the way-the survey found that 96 percent of interbank paper checks were replaced with electronic payment information at some point.
This is in stark contrast to the previous study, which found only 43 percent of checks being converted.
Of course, business cycle, financial conditions, improved perception of security, and other outside factors also play their part in pushing businesses and consumers to use e-payments.