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Check Payments Reviewed in FRPS: 2017 Annual Supplement

Posted by Jessica Beaudry on Thu, Jan 11, 2018 @ 07:00 AM

check paymentsFor the last 16 years, the Federal Reserve System has performed a triennial Federal Reserve Payments Study (FRPS) to analyze trends in credit, debit, ACH and check payments in the U.S. Following the FRPS 2016 study which revealed payment trends from 2012 to 2015, “a smaller and more targeted annual supplementary data collection was launched to keep information current between the triennial studies.” The 2017 annual supplement presents restated and new estimates from the 2016 study along with new estimates from 2015 to 2016.

Report estimates are sourced from two surveys: the Networks, Processors, and Issuers Payments Surveys (NPIPS) and the Depository and Financial Institutions Payments Survey (DFIPS).

In response to the evolving landscape of consumer payments, businesses must possess a solid understanding of current trends and preferences to remain competitive.

Card Payments

In total, card payments rose from 103.5 billion valued at $5.65 trillion in 2015 to 111.1 billion with a value of $5.98 trillion in 2016.

Among core payment types, credit card payments experienced the highest growth rate from 2015 to 2016 at 10.2 percent. Debit cards ranked second at 6 percent. In contrast to the growth in number of payments, growth in value for credit and debit card payments fell from 6.6 and 6.9 percent from 2012 to 2015 to 6.3 and 5.3 percent from 2015 to 2016. The FRS found that the average value of “general-purpose credit card payments decreased modestly from $90 in 2015 to $88 in 2016.”

check paymentsOf all general-purpose card payments, the growth rate of remote payments (16.6 percent) exceeded in-person payments (7.9 percent) from 2015 to 2016. In 2016, remote payments represented 22.2 percent of all general-purpose card payments with a value of 44 percent.

With the shift towards the Europay, MasterCard and Visa (EMV) credit card system, use of general-purpose cards containing computer microchips has increased substantially. “In 2016, 19.1 percent of all in-person general-purpose card payments were made using chips (26.9 percent by value), compared with only 2.0 percent (3.4 percent by value) in 2015.”

Instances of fraud largely shifted from in-person to remote over 2015 to 2016 due to the share of remote card payments and the reduction in counterfeit card fraud. “The value of in-person fraud using these cards held the largest share in 2015, at 53.8 percent, while the value of remote fraud held the largest share in 2016, at 58.5 percent.”

ACH Payments

ACH (automated clearing house) network credit and debit transfers grew in 2015 to 2016 at rates of 5.2 percent and 5.3 percent, a slight increase from 2012 to 2015. The average value of an ACH network transfer decreased from $2,159 in 2015 to $2,156 in 2016. The number of total ACH payments increased to 19.3 billion in 2015 with a value of $41.64 trillion.

Check Payments

New estimates reveal total check payments reached 17.9 billion with a value of $28.97 trillion in 2015, compared to the 2016 report of 17.3 billion with a value of $26.83 trillion. The 2015 to 2016 values are “less certain” due to a “larger variation in value between institutions.” The report estimates a 3.7 percent decline rate in value.

Current estimates for commercial checks paid show an increase of 2.2 percent per year in value, higher than earlier reports of 0.4 percent. In addition, FRPS 2016 study data revisions reveal the average value of a commercial check increased from $1,383 in 2012 to $1,618 in 2015.

Increase Revenue by Accepting Checks

check paymentsThe “total value of payment card transactions continues to be significantly lower than the total values of checks paid or ACH transfers,” the FRPS stated.

Checks continue to be the preferred method of business-to-business (B2B) payments and big-ticket consumer purchases such as down payments for autos (parts and service, too), building supplies, home furnishings, and dental and veterinary care.

Businesses that accept check payments provide a wider range of payment options for consumers, gaining more customers, positive brand association and revenue.

To further increase sales, organizations can implement one or more of CrossCheck’s payment solutions.

Our Multiple Check service gives consumers extra time to fund purchases or make down payments on big-ticket items without applying for credit. With this straightforward solution, consumers write 2 – 4 checks that are deposited by merchants over a 30-day window. Merchants receive guaranteed funding by CrossCheck with each deposited check. Consumers take items home on the sale date while merchants save the sale. To confidently accept check payments, start by downloading our free guide.

hold check, multiple check