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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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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.

June 21, 2021

Are You Heading Back to the Grocery Store?

My mother-in-law has dropped online shopping like a hot potato. Perhaps you remember that back in November my favorite octogenarian was adjusting with equanimity to the ups and downs of grocery shopping online. Now, fully vaccinated, mom is back at the grocery store, picking every item and making her own on-the-spot decisions about out-of-stock substitutions.

For social science researchers and payments professionals, this is an important question about the past 18 months: Of the changes many of us made, how many were temporary? How many are truly new habits? You can ask this question about a wide range of activities such as hand washing, cooking at home, online shopping, etc. For today, let's ask about shopping in person.

New data from the Survey of Consumer Payment Choice, out last month, show that by September 2020, our collective reaction to the COVID-19 threat was easing. In September 2019, 95 percent of U.S. consumers reported shopping in person at least once in the prior 30 days. That percentage share was pretty much the same in September 2020: 93 percent, a statistically insignificant change.

Compare this to a couple of interim surveys conducted at the height of the COVID lockdowns. In April 2020, just 34 percent of consumers reported shopping in person at least once in the prior 30 to 60 days. By August, many of us had returned to the store: 60 percent of consumers said they shopped in person at least once in the past 30 days.

And as of fall 2020, this measure, at least, is "back to normal." Keep in mind that we're talking about shopping at least once, not the share of all shopping that happens in person. That did change from 2019 to 2020, when in-person purchases dropped from 88 percent of all purchases to 85 percent, a statistically significant change. To learn more about payments behavior in 2020, read the report, the 2020 Survey of Consumer Payment Choice: Summary Results.

April 5, 2021

New Tools to Fight Online Fraud

When consumers shift payments channels, criminals do, too. We have discussed this point in post after post. We've also written on how the pandemic has had a seismic effect on digital payments during the pandemic. This chart sums up the growth pretty handily.

chart 01 of 01: EcommerceSales Year over Year

Even before the pandemic contributed to this spike, criminals had been using purloined payment card credentials and in-store or curbside pickup to take advantage of the growth in digital payments. (In-person pickup allows criminals to quickly put their hands on their ill-gotten gains.) To improve ecommerce security, the industry began developing technical specifications and protocols, and in late 2019, the Mobile Payments Industry Workgroup (MPIW) formed a working group to provide a better understanding of these protocols and specifications. This working group published its findings in an educational white paperOff-site link just last month. (The MPIWOff-site link was facilitated by the Federal Reserve Banks of Boston and Atlanta.)

Among these specifications and protocols the white paper explains is the 3-Domain Secure protocol, released in December 2018, and the initial Secure Remote Commerce specifications, published in June 2019 (both from EMVCoOff-site link). It also discusses the WebAuthn specification, which came on the scene in March 2019 and was a product of the World Wide Web (W3C) consortiumOff-site link working with the Fast Identity Online (FIDO) AllianceOff-site link. The white paper identifies the key challenges to adopting these protocols and provides guidance about how they may complement one another to enhance the security of the online and mobile channels.

All these fraud mitigation tools are in their early stages of adoption, with additional development and functionality to come. In the meantime, we hope that the white paper provides you with a solid foundation of knowledge of these new tools and how the industry continues its battle against fraudulent payment activity.

February 1, 2021

How Have Our Own Payment Habits Changed?

During our December webinar, Nancy Donahue, Jessica Washington, and I spent a good portion of the time discussing how the COVID-19 environment has changed how consumers shop and pay. In September, I reached out to my fellow Risk Forum colleagues and asked them if they had experienced or noticed any changes in their own shopping and payment habits during this year of the panedmic. While this was far from a scientific survey or sample, I found my colleagues' responses interesting and want to share with you how their payment and shopping practices evolved during the past year.

S: Shopping every weekend was a pastime for me and my best friend and has been for years. Since COVID, we have not set foot into a mall, which consequently cut my spending to $0. I have purchased a few necessary items online such as gifts or medications but have focused solely on paying off debt and saving during this time. Haircuts and styling have also been excluded—those usually occurred every 6 weeks and were my only cash transactions.

C: Grocery shopping has switched to completely online. I used to go to the pet store to buy dog food and treats but once the pandemic started, I switched to a subscription service, where they automatically deliver the food to the house every two months. I used to never buy clothes or shoes online because I wanted to try them on first. I've made some clothing purchases online over the last few months and so far, they've all worked out great. I may never step foot in a shopping mall again even after the pandemic ends! I have been tipping much more at salons and restaurants (with my card because I never have cash on me).

N: I have quit using cash completely and was previously a heavy cash user for daily purchases. I haven't had any folding money for six months. This change in behavior was not the result of COVID concerns per se, but more a lack of need for pocket change when my movements are largely confined between the bedroom, home office, and kitchen. Online shopping has increased exponentially to include groceries and restaurant takeout and all other home goods.

J: A dramatic reduction in gas expenses and card use owing to it. We previously went out to eat only occasionally, but now look for excuses or opportunities to do so. These opportunities aren't numerous as many of our favorite restaurants have limited to no capacity for dine in. We tip heavily when we do eat out, always with folding money.

M: I am shopping less for all categories except food. Grocery and carryout spending have increased. My tipping for restaurant carryout has increased. I try to keep a stash of $5 and $10 bills for the tipping. Prior to COVID, tips were usually included on the card charge.

D: Less frequent in-person grocery store visits and increased online ordering. Also, generous tips to food service personnel at our favorite restaurants where we are doing takeaways.

C: I stopped taking mass transit, so I have been tapping to pay less often. Instead of ordering in person and paying via mobile app (QR scan) at my favorite coffee shop, I have been preordering and tipping in the app. My grocery shopping habits are unchanged as I had been buying groceries online for the past five years.

D: I have been using contactless payments with the digital wallet on my phone substantially more often and am using it wherever it's offered. I have also started to use online shopping and delivery for groceries, although I still find myself making multiple trips to the grocery store each week.

It's pretty obvious that the Risk Forum members are behaving like many of the rest of U.S. consumers, with a major shift from in-person to remote shopping Adobe PDF file format. One area where this is especially true is in grocery shopping. Just as many of us have shifted to (or maintained, for the early adopter among us) buying groceries online, this has been a significant shift for many American households. One surveyOff-site link found that as of June, over one-third of U.S. households had used online ordering to buy some of their groceries. I also love the human touch that my colleagues have shown during this time through actively increasing their tipping to the service individuals who are serving them.