Fed Gov. Duke Discusses Consumer Credit, Payments Landscape
Economic conditions, new regulations, and technological innovation are shaping the consumer credit and payments landscape, said Federal Reserve Governor Elizabeth Duke in a December 2 speech. Speaking at a conference hosted by the Federal Reserve Bank of Philadelphia, she also discussed recent shifts in consumers' payment preferences.
Changes in consumer credit driven by many factors
Consumers' reluctance to take on additional debt may also be driving another trend—the rapid growth of debit card transactions. "The recent period of economic weakness appears to have caused some consumers to shift away from credit cards not only as a source of credit, but also as a method of payment," Duke noted.
Duke said that even before the economic slowdown that began in 2007, payment card use was on the increase. Between 2000 and 2008, the number of debit card payments grew 17 percent, with the value of those transactions increasing 15 percent, she said. Meanwhile, credit card transactions grew at a significantly slower pace: 2 percent a year in number and about 5 percent per year in value.
New regulations, technology also affecting credit and payments
However, "payments using prepaid cards or other devices may be governed by different regulations and interchange fee restrictions," Duke said. "It will be important for regulators to monitor, over time, the effect of differences in regulation and pricing restrictions to ensure that consumers are adequately protected regardless of their payment method preferences."
December 15, 2010