Nearly 80 Percent of U.S. Noncash Payments Are Now Electronic: Fed Study

Following the pattern established in the early 2000s, American consumers continue to adopt electronic means for making noncash payments, according to the Fed’s 2010 Payments Study, released in segments in late 2010 and early 2011.

The use of paper checks continues its steep decline. In 2001, paper checks accounted for approximately 60 percent of noncash payments, where today they account for only about 20 percent. The number of electronic payments is up 9.3 percent, or three-quarters of all payments, since the Fed’s 2007 study, which concluded that roughly two-thirds of payments were made electronically. From 2006 to 2009, all types of electronic payments included in the study grew with the exception of credit cards.

Highlights of the study also include:

• Of the nearly 109 billion noncash payments in 2009, approximately 84.5 billion were electronic and about 24.4 billion were checks paid.
• Debit card use now exceeds all other forms of noncash payments and represents approximately 35 percent of total noncash payments.
• Payments made with prepaid cards increased at the highest rates of all payment instruments, reaching a total of 6 billion transactions in 2009.
• The electronification in clearing interbank checks has more than doubled between 2006 and 2009 as image exchange between banks has expanded.

Said Richard Oliver, executive vice president at the Atlanta Fed, “Not only does this study show the continued move from checks to electronic means of making payments, but we also see the extraordinary progress the industry has made in electronifying the clearing process for the 27.5 billion checks still being written.”

In addition to the 2010 study, the Fed conducted studies in 2001, 2004 and 2007 to measure the changing nature of the nation’s noncash payments system and inform future investment decisions facing the payments industry.