Please enable JavaScript to view the comments powered by Disqus.

We use cookies on our website to give you the best online experience. Please know that if you continue to browse on our site, you agree to this use. You can always block or disable cookies using your browser settings. To find out more, please review our privacy policy.

COVID-19 RESOURCES AND INFORMATION: See the Atlanta Fed's list of publications, information, and resources; listen to our Pandemic Response webinar series.

About


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.

Comment Standards:
Comments are moderated and will not appear until the moderator has approved them.

Please submit appropriate comments. Inappropriate comments include content that is abusive, harassing, or threatening; obscene, vulgar, or profane; an attack of a personal nature; or overtly political.

In addition, no off-topic remarks or spam is permitted.

February 16, 2021

Federal Reserve Payments Study Finds Increase in Low-Dollar-Value Card Payments

In a February 2020 post, I reminded myself—and you—that we shouldn't use ourselves for survey research. Isn't it pleasing, though, when the data line up with our personal experience and the anecdotes we are reading and hearing about?

That's the case with some of the data from the Federal Reserve Payments Study (FRPS) released in late October.

The study found that the number of general-purpose card payments for less than $5 grew 16 percent a year from 2015 to 2018, exceeding the 9 percent annual growth rate for all transactions on these cards, which include nonprepaid debit cards, general-purpose prepaid cards, and general-purpose credit cards. This higher growth is, in part, an indication of a continuation of cards replacing small-value cash payments over the period.

The chart below depicts data gathered from general-purpose card networks, showing that from 2012 to 2018, the growth in the number of card payments of less than $15—a category likely to see a lot of cash replacement—was faster than the growth of card payments of higher values.

chart 01 if 01: Number of general-purpose card payments, by dollar value in billions

Although the increase is less pronounced than for the smallest-value category, I chose "less than $15" for the comparison to align with research by Atlanta Fed senior policy adviser and economist Oz Shy who, using consumer payments survey data, has found it is likely consumers will choose cash for such small-value payments. (See his paper "How Currency Denomination and the ATM Affect the Way We Pay.") The data from the FRPS show that general-purpose card payments of less than $15 grew a total of 83 percent over the period compared with a total growth of just 46 percent for higher-value payments. (If you like, you can download the detailed dataOff-site link from the FRPS and arrange the value bins as you prefer.)

These data show what we know from personal experience: we are using cards more and more for micropurchases and have been for a while now. But we can also see the effect of this behavior at the high end of the dollar-value distribution: in 2018, 30 percent of general-purpose card payments were for $50 or more. That's a drop from 35 percent in 2012. Micropayments for less than $5 still have a ways to go, though: they make up just about 12 percent of card payments by number.

To learn more about these data on your own, check out the detailed data release of the 2019 Federal Reserve Payments StudyOff-site link.