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 6, 2020
Phone Payment Bingo
Let's play a game of mobile payments bingo. Say yes to all five and you win!
In the last three days, did you use your mobile phone to:
Do your answers to these questions give you the idea that you are using your phone more and more to pay? If so, you're in line with the latest results from the Diary of Consumer Payment Choice.
As you can see below, using a phone to pay—especially to pay bills and other people—has increased as a share of payments in recent years. More payments are being made with phones.
- In October 2016, 11 percent of bill payments were made via mobile phone; in 2018, 18 percent.
- In October 2016, 5 percent of payments to another person were made via mobile phone, in 2018, 17 percent.
The Diary of Consumer Payment Choice records the daily payments behavior of U.S. consumers 18 and older. Consumers report not only whether or not they used a mobile phone but also if they used a computer or tablet—either remotely or in person—or snail mail to pay. They record the dollar amount of the payment, the payment instrument used (for example, cash, debit card), and the purpose or payee (utilities, grocery store). These consumer behavior data can be analyzed in the context of household income and demographic attributes.
You can read the full report online and download the data for analysis.
By the way, I couldn't complete my bingo card. My answers:
- Yes, 34-pound bag of dog food (using the web browser on my phone).
- Yes, coffee from my local barista (using a QR code).
- Yes, see my answers #2 and #3.
How about you? Did you win?
December 9, 2019
Payments in Review: A Webinar
Whether you are out dipping your payment card at a store, waiting in line behind a check writer, trying to look like you're working while you shop online for last-minute gifts using your digital wallet, or just always looking for more information about payments, grab your headphones for the last Talk About Payments webinar of 2019. On December 19, the Retail Payments Risk Forum team continues its tradition of discussing what we consider to be the significant payments events and issues of the year. We invite financial institutions, retailers, payments processors, law enforcement officials, academics, and other payments system stakeholders to participate.
The webinar 2019: Payments in Review features a live roundtable discussion with payments risk experts Doug King, Dave Lott, and Jessica Washington. You will be able to see how your reflections on 2019 payment events compare to the Risk Forum's perspectives and reflections on the year. To liven up the party, polling questions and real-time questions and comments will let you engage with the speakers.
Last year ended with increasing momentum in technology research and development—distributed ledger technology, contactless, machine learning—which continued into 2019, mixed with the some of the largest fintech mergers and acquisitions the industry has seen. Faster payments started taking new forms with added interest from industry stakeholders. The fight against payments fraud also changed shape during 2019, with some new collaborations and methods worth mentioning. Fintech is surely to be discussed along with other topics such as the proliferation of digital payment methods versus the state of cash.
Find out what you might need to consider as you promote safer payments innovation in the coming year.
The webinar will happen on Thursday, December 19, from 1 to 2 p.m. (ET). Participation is free, but you must register in advance. Once you register, you will receive a confirmation email with the log-in and toll-free call-in information. A recording of the webinar will be available to all registered participants in various formats within a couple of weeks after the event.
We look forward to you joining us on December 19 and sharing your perspectives on the payment events that took place in 2019.
October 29, 2018
Remote Card Fraud: A Growing Concern
Where's the money in card payments? Despite all we hear about e-commerce and other kinds of remote payments, in-person payments remain strong. The total dollar value of in-person card payments exceeded the total dollar value of remote payments in both 2015 and 2016. In-person payments were 56 percent of all card payments by value in 2016, and 58 percent in 2015. By number, the race is not even close: 78 percent of card payments were in person in 2016.
Looking at change from 2015 to 2016, however, another story could be emerging. When we consider the growth in the value of card payments, remote payments grew by 11 percent from 2015 to 2016, compared to about 3 percent growth by value for in-person card payments. By number, in-person card payments increased 5 percent and remote by 17 percent.
It wasn't only remote payments that grew from 2015 to 2016—so did remote fraud. In fact, it grew faster than remote payments did overall. Remote fraud by value grew more than three times faster than the value of remote payments—35 percent compared to 11 percent. By number, remote fraud grew about twice as fast—32 percent compared to 17 percent.
In contrast to the mix of remote and in-person card payments overall, where in-person payments still are the majority, fraudulent remote card payments were more than half of all fraudulent card payments by both value and number in 2016.
These data suggest that remote card payments fraud is likely to be of increasing concern for the U.S. payments system going forward. Additional data are included in the report at www.federalreserve.gov/paymentsystems/fr-payments-study.htm.
To learn more about payments fraud, you can sign up for the Talk About Payments webinar on November 1 at 11 a.m. (ET). This webinar is open to the public but you must register in advance to participate.
By Claire Greene, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
June 25, 2018
Down but Not Out
As I noted in my last post, consumer habits are sticky when it comes to cash. Despite the many ways to pay, consumers make almost one-third of payments (by number) in cash. But sometimes cash just isn't an option. You can't use cash to buy a snack on an airplane, for example. This week, I look at factors about merchants that constrain consumers' payment options, including their unwillingness to accept cash for in-person payments or their inability to accept cash for online payments. (My colleague Doug King touched on cashless locations a couple of weeks ago.)
At the in-person point of sale, merchants' willingness to accept a payment instrument could affect the prevalence of cash. Consumers obviously cannot use cash when merchants will not accept it. Recent headlines (here and here) suggest that some quick-service restaurants, coffee shops, and food trucks may be growing reluctant to accept cash. As an example, here's a picture of a sign on a San Francisco food cart in late May.
The flip side of a merchant's unwillingness to accept cash is the merchant's willingness to accept card payments for ever-lower dollar values. And indeed, the average dollar value of card payments is dropping. For instance, the average dollar value of an in-person, non-prepaid debit card purchase fell from $35 in 2012 to $32 in 2016 (Federal Reserve Payments Study: 2017 Annual Supplement). This trend could indicate that merchants are increasingly agreeable to accepting cards for small-dollar transactions.
Consumers show they are aware of evolving merchant acceptance. The 2017 Survey of Consumer Payment Choice reported that consumers rate credit and debit cards highest for acceptance, with cash coming in third. The survey asked respondents to rate how likely each payment method is to be accepted by stores, companies, online merchants, and other people or organizations.
At the online point of sale, cash is not an option. (However, Doug mentioned in that same post that at least one online retailer is trying to make cash possible.) The share of purchases made online is still small—just about 12 percent of retail goods and services by number (2017 Survey of Consumer Payment Choice). Yet over the past four years that share has steadily increased. Data about remote card purchases in the Federal Reserve Payments Study (2017 Annual Supplement ) show the growing importance of online purchases. As Jessica Washington noted in her post in early May, remote card purchases grew more rapidly from 2015 to 2016 than did in-person card purchases, measured by both number and value.
Despite these developments, cash continues to dominate quick purchases. In October 2016, consumers paid for about half of their fast food purchases with cash. They used cash for 62 percent of convenience store purchases (2016 Diary of Consumer Payment Choice).
Cash has had staying power over decades of technological innovation. It may be down, but it isn't out.
To learn more about consumer payment choices and preferences, visit the Federal Reserve Bank of Atlanta's new consumer payments web pages that house a variety of surveys, studies, and research reports on the topic.
By Claire Greene, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
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