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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.

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January 18, 2022

Payments Report Sheds Light on Pandemic’s Early Impact

Cast your mind back to spring 2020, the early months of the COVID-19 pandemic. With my apologies for the bad flashback, did you change how and where you shopped that spring? Maybe you ordered groceries online for the first time. Maybe you decided to skip browsing at your favorite clothing store. Maybe you exchanged eating out for ordering in.

You can see glimmers of your behavior—and that of consumers and businesses here in the United States—by looking at fluctuations in the mix of credit and debit card payments made remotely and in person in spring 2020.

Perhaps you remember making fewer in-person payments in spring 2020 because you were reluctant to be out and about, you worked at home, or businesses were closed. The Federal Reserve Payments StudyOff-site link (FRPS) recently reported that the number of in-person card payments dropped 19 percent from the first quarter of 2020 to the second.

Perhaps you moved some shopping online. The number of remote payments (including purchases and bills) was up 18 percent from Q1 to Q2 2020. You can see the combined effect of these changes in the chart below. As a percentage of general-purpose card payments by number, in-person payments dropped from more than 68 percent in the first quarter to less than 60 percent in Q2 (shown by the red line in the chart below).

In-person payments as a share of all card payments recovered somewhat in later quarters to total 64 percent of all general-purpose card payments for the year 2020 (the blue line in the chart), a substantial drop from 72 percent in 2019.

chart 01 of 01: Shares of general-purpose card payments made in person by number

The December report, Developments in Noncash Payments for 2019 and 2020: Findings from the Federal Reserve Payments StudyOff-site link , also contains quarterly data for depository institution accounts with digital wallet activity and with P2P activity using bank-sponsored apps.

December 27, 2021

Federal Reserve Payments Study Finds Effects of the Pandemic in US Payments

It's the week before the New Year, and we promised not to post this week. But I can't resist letting you know that a new report from the Federal Reserve Payments Study reports quarterly data related to the effects of the COVID-19 pandemic on US payments. This is interesting and important news, so I'm breaking the holiday hiatus.

Developments in Noncash Payments for 2019 and 2020: Findings from the Federal Reserve Payments Study, on the Federal Reserve's websiteOff-site link, includes new information about core noncash payments and some evolving areas of payments:

  • While data from 2019 largely show a continuation of past payment trends, with card and ACH both gaining share at the expense of check, 2020 data show that payment behavior changed sharply with the COVID-19 pandemic, with ACH gaining substantially as a share of noncash payments by both number and value.
  • The share estimates combined with other information imply that ACH was the only one of the three core payment systems to grow by number in 2020.
  • The total number of card payments declined in 2020, driven by a marked decline of in-person card payments. This was the first annual decline in the number of card payments recorded by the payments study.
  • As in-person card payments dropped in spring 2020, remote card payments took up much of the slack. Later in the year, in-person card payments recovered somewhat.
  • The pandemic may have helped spur growth of innovative payment methods, such as in-person contactless card, digital wallet, and person-to-person (P2P) payments.
    - First-time use of bank-sponsored P2P payments spiked in the second quarter of 2020, a time of business closures and stay-at-home orders.
    - First-time use of digital wallets was highest in the third quarter, when some restrictions on in-person shopping were lifted. When used with a mobile device, a digital wallet provides a low-touch option for in-person card payments.

The report covers card (credit, non-prepaid debit, and prepaid debit), ACH, and check payments.

Go to the Federal Reserve's websiteOff-site link to see other findings.

Happy new year! We look forward to continuing the payments conversation with you in January 2022!

July 12, 2021

Young and Old Want to Keep Their Money Safe

My colleague Doug King recently moderated a panel about age-related attitudes toward banking and payment practices. He spoke with a boomer, a gen-Xer, a millennial, and a gen-Zer.

Most notable about these panelists: not how different they were from each other but how alike. Keeping in mind that a sample of four is not representative and that all were Federal Reserve employees, panelists of every age agreed about risk when it comes to their money: they hate it.

All four had used a brick-and-mortar bank one way or another in the last year, and there was no interest in switching to a digital-only bank or fintech option—even though all panelists struggled to remember the last time they had written a check. One panelist said, "I stick with what I know." Another: "I just don't have time to do the research." A third, "I'm staying with the traditional, just in case." They wanted not the bricks, not the mortar, but rather the security implied by the existence of solid real estate.

They admitted to more risk-averse behavior: no one—not the youngest, not the IT guy—owned crypto assets. Too risky, they said. Most are storing card numbers with an online merchant with high brand recognition but not at other online shopping websites. It's worth the small amount of time to put in the number at lesser known sites, said three of the four.

Do you see a marketing opportunity out there? Some newer services are selling the idea of speed—that is, payments that are fast and frictionless. Or the social benefits of tagging payments with emojis. Or convenience. Or a user-friendly app. But these four people, at least, want safety.

Of course, newer ways to pay do offer security enhancements—for example, two-factor authentication when you use a phone with fingerprint or face ID authentication to pay. And, with so many choices available, panelists said they would like to better understand their payment options. This means that maybe customers are waiting to hear more about product features and benefits that emphasize security and, according to these four, at least, that are delivered by recognized brands they already know and trust.

June 28, 2021

Talk about Payments during the Pandemic—Join Us on July 13

When the conventional wisdom holds true, it still can be a good idea to look under the hood. Sometimes survey data confirm the conventional wisdom. That's the case with new data from the Diary of Consumer Payment Choice, which show that the use of cash for purchases and person-to-person (P2P) payments dropped in 2020. In 2019, cash was used for 31 percent of these payments while in 2020, the pandemic year, the cash share fell to 23 percent.

"Of course," you may say, "I haven't been shopping or paying others in person. And for months, I avoided handing over a payment to a retail clerk. That's why the share of cash fell." I agree, this is a completely obvious point.

Even the obvious, however, contains nuances. That's why the Talk About Payments webinar on July 13 will ask questions about factors that may underlie these data, including the following:

  • What's the impact of remote purchasing on payment instrument choice?
  • Were there generational differences in purchasing behavior in 2020?
  • Fewer consumers carried a balance on their credit cards in 2020. Did that affect purchasing behavior?
  • Are more consumers ready to use payment apps?

I hope you'll join me and Joanna Stavins from the Boston Fed alongside Shaun O'Brien from the Cash Product Office at the San Francisco Fed for the next Talk About Payments webinar, July 13, 2021, at 1 p.m. (ET). We'll chat about not only remote shopping but also other factors that could be affecting the use of cash for purchases and P2P payments.

This webinar is open to the public but you must register in advance to participate. (Registration is free.) You can register onlineOff-site link. Once registered, you will receive a confirmation email with login and call-in information. We hope you will join us on July 13, when you will have an opportunity to ask questions about the results of the research.