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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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January 31, 2022

Quarterly Payments Data for 2020 Reflect Pandemic's Early Impact

Cast your mind back to spring 2020, the early months of the COVID-19 pandemic. With my apologies for the bad flashback, did you change how and where you shopped that spring? Maybe you ordered groceries online for the first time. Maybe you decided to skip browsing at your favorite clothing store. Maybe you exchanged eating out for ordering in.

You can see glimmers of your behavior—and that of consumers and businesses here in the United States—by looking at fluctuations in the mix of credit and debit card payments made remotely and in person in spring 2020.

Perhaps you remember making fewer in-person payments in spring 2020 because you were reluctant to be out and about, you worked at home, or businesses were closed. The Federal Reserve Payments StudyOff-site link (FRPS) recently reported that the number of in-person card payments dropped 19 percent from the first quarter of 2020 to the second.

Perhaps you moved some shopping online. The number of remote payments (including purchases and bills) was up 18 percent from Q1 to Q2 2020.

You can see the combined effect of these changes in the chart below. As a percentage of general-purpose card payments by number, in-person payments dropped from more than 68 percent in the first quarter to less than 60 percent in Q2 (shown by the red line in the chart below).

In-person payments as a share of all card payments recovered somewhat in later quarters to total 64 percent of all general-purpose card payments for the year 2020 (the blue line in the chart), a substantial drop from 72 percent in 2019.

chart 01 of 01: Share of payments made using a mobile telephone

The December report, Developments in Noncash Payments for 2019 and 2020: Findings from the Federal Reserve Payments StudyOff-site link, also contains quarterly data for depository institution accounts with digital wallet activity and with P2P activity using bank-sponsored apps.

January 17, 2022

Federal Reserve Payments Study Finds Effects of the Pandemic in US Payments

It's the week before the New Year, and we promised not to post this week. But I can't resist letting you know that a new report from the Federal Reserve Payments Study reports quarterly data related to the effects of the COVID-19 pandemic on US payments. This is interesting and important news, so I'm breaking the holiday hiatus.

Developments in Noncash Payments for 2019 and 2020: Findings from the Federal Reserve Payments Study, on the Federal Reserve's websiteOff-site link, includes new information about core noncash payments and some evolving areas of payments:

  • While data from 2019 largely show a continuation of past payment trends, with card and ACH both gaining share at the expense of check, 2020 data show that payment behavior changed sharply with the COVID-19 pandemic, with ACH gaining substantially as a share of noncash payments by both number and value.
  • The share estimates combined with other information imply that ACH was the only one of the three core payment systems to grow by number in 2020.
  • The total number of card payments declined in 2020, driven by a marked decline of in-person card payments. This was the first annual decline in the number of card payments recorded by the payments study.
  • As in-person card payments dropped in spring 2020, remote card payments took up much of the slack. Later in the year, in-person card payments recovered somewhat.
  • The pandemic may have helped spur growth of innovative payment methods, such as in-person contactless card, digital wallet, and person-to-person (P2P) payments.
    - First-time use of bank-sponsored P2P payments spiked in the second quarter of 2020, a time of business closures and stay-at-home orders.
    - First-time use of digital wallets was highest in the third quarter, when some restrictions on in-person shopping were lifted. When used with a mobile device, a digital wallet provides a low-touch option for in-person card payments.

The report covers card (credit, non-prepaid debit, and prepaid debit), ACH, and check payments.

Go to the Federal Reserve's websiteOff-site link to see other findings.

Happy new year! We look forward to continuing the payments conversation with you in January 2022!

December 27, 2021

Federal Reserve Payments Study Finds Effects of the Pandemic in US Payments

It's the week before the New Year, and we promised not to post this week. But I can't resist letting you know that a new report from the Federal Reserve Payments Study reports quarterly data related to the effects of the COVID-19 pandemic on US payments. This is interesting and important news, so I'm breaking the holiday hiatus.

Developments in Noncash Payments for 2019 and 2020: Findings from the Federal Reserve Payments Study, on the Federal Reserve's websiteOff-site link, includes new information about core noncash payments and some evolving areas of payments:

  • While data from 2019 largely show a continuation of past payment trends, with card and ACH both gaining share at the expense of check, 2020 data show that payment behavior changed sharply with the COVID-19 pandemic, with ACH gaining substantially as a share of noncash payments by both number and value.
  • The share estimates combined with other information imply that ACH was the only one of the three core payment systems to grow by number in 2020.
  • The total number of card payments declined in 2020, driven by a marked decline of in-person card payments. This was the first annual decline in the number of card payments recorded by the payments study.
  • As in-person card payments dropped in spring 2020, remote card payments took up much of the slack. Later in the year, in-person card payments recovered somewhat.
  • The pandemic may have helped spur growth of innovative payment methods, such as in-person contactless card, digital wallet, and person-to-person (P2P) payments.
    - First-time use of bank-sponsored P2P payments spiked in the second quarter of 2020, a time of business closures and stay-at-home orders.
    - First-time use of digital wallets was highest in the third quarter, when some restrictions on in-person shopping were lifted. When used with a mobile device, a digital wallet provides a low-touch option for in-person card payments.

The report covers card (credit, non-prepaid debit, and prepaid debit), ACH, and check payments.

Go to the Federal Reserve's websiteOff-site link to see other findings.

Happy new year! We look forward to continuing the payments conversation with you in January 2022!

January 4, 2021

Two Sides of the Same Story: Electronic P2P Growth in the 2010s

My colleague, T, got married last month. To celebrate, our group at the Atlanta Fed offered best wishes over a video chat and chipped in on a gift. Dispersed to home offices in Georgia, Alabama, Tennessee, and Massachusetts, here's how we anted up:

  • 62 percent used a P2P payment app
  • 25 percent paid with a paper check
  • 13 percent paid with cash

The two-thirds of us who chose an electronic way to pay seem to be aligned with the zeitgeist. For the third quarter of 2020, various P2P payment apps reported strong growth in payment volume. These results could be due to recommendations to social distance that have us worried about getting close enough to a payee to hand over the payment.

Even before COVID-19, however, P2P services were taking off in the United States. During the latter half of the 2010s, Fed survey data show the growth of electronic P2P from the perspectives of both the financial services side and the consumer side of payments execution.

First, the financial services side. According to the Federal Reserve Payments StudyOff-site link (FRPS), the number of noncash payments through person-to-person and money transfer (P2P&MT) services more than doubled from 2015 to 2018, increasing from 397 million to 841 million (25 percent year-over-year growth). Most of the growth came from payments initiated from websites and apps on mobile devices. Mobile P2P, for example, was up 275 percent over the three-year period. This category aggregates data from the various P2P services to give a picture of all U.S.-domiciled P2P and MT transfers handled by the covered providers but overlooks similar transactions internal to a depository institution or not made on a named P2P or MT system.

chart 01 of 02: p2p and money transfer payments by channel in millions

When we think of P2P, splitting the bill at a restaurant comes to mind. The average value of these payments reported in the FRPS, however, tells a different story. The average value of P2P payments drifted down from $446 in 2012 to $349 in 2015 to $246 in 2018—still quite high for a bite to eat. Other uses, such as providing financial support to a family member, repaying a roommate for a portion of the rent, or paying a household employee, are likely important, although smaller-value payments are increasing.

Second, the consumer side. Data from the Survey of Consumer Payment Choice (SCPC) show the whole wallet—that is, cash, paper check, and money order as well as card and digital payments from an account. Consumers also report multiple cards and accounts from (potentially) multiple providers, giving context for payment choice and, like the FRPS, aggregating information from multiple industry sources. As recently as 2017, the SCPC found that 71 percent of consumers' P2P payments were made with a paper payment instrument (cash, check, or money order). By 2019, the share of paper P2P had dropped to 55 percent. One-quarter of P2P payments were comprised of digital payments from an account, which are initiated through online banking by providing a routing and account number to the payee, or through an app such as PayPal, Venmo, or Zelle (which themselves may be executed by a card, ACH payment, or balance stored in a digital wallet). The increase in digital payments from an account and the sharp decline in paper payments reinforces what we've already seen from the financial services providers.

chart 02 of 02: p2p payments by consumers percentage shares by payment instrument

To learn more about these data on your own, check out the detailed data releaseOff-site link of the 2019 Federal Reserve Payments Study or play around with the interactive charts to the Survey of Consumer Payment Choice.