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Take On Payments

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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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December 12, 2022

Digital Divide Trickles Down to Payment Account Adoption

Four in 10 consumers with household income less than $30,000 did not have broadband access or a desktop or laptop computer in 2021, according to Pew Research GroupOff-site link. One-quarter with household income less than $30,000 did not have a smartphone. This digital divide trickles down to the adoption of payment accounts like PayPal, Venmo, and Zelle, which are predicated on either a computer and internet access or mobile access.

New data from the Survey and Diary of Consumer Payment Choice (SDCPC) show steady growth across all income categories in the use of these digital payment accounts, increasing from 43 percent of consumers using these accounts at least once in the 12 months leading up to October 2016 to 66 percent in 2021.

Diving deeper into use by income, consumers in high-earning households were most likely to use digital payments accounts and those in low-income households were least likely. Eight in 10 consumers with household income north of $125,000 a year used digital payment accounts in 2021, compared to about half of consumers with household income less than $35,000.

These relationships have held true over all the years from 2016 to 2021: members of all income groups became more likely to use digital payment accounts, and lower income groups were less likely than others to use them each year. A snapshot from 2021 illustrates the intra-year differences.

Chart 1 of 1: Shares of consumers using digital payment accounts in 2021, by household income

While payments innovation could end up helping lower-income US consumers, these data show that it's important to view payments as part of an ecosystem that includes digital access. As my Atlanta Fed colleague Oz Shy wrote back in 2020, "Low-income consumers are not only constrained with spending, but also with the type and variety of payment methods available to them." Despite the upheaval in the years of the COVID-19 pandemic, the 2021 results for consumers' use of digital payment accounts show that this constraint still exists.

I invite you to play around with the Survey and Diary data.

Photo of Claire GreeneBy Claire Greene, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed