Fed Study: Prepaid is Fastest-Growing Noncash Payment Type (April 28, 2014)
Prepaid cards continue to be the fastest-growing form of electronic payment, with the number of prepaid payments in the U.S. increasing 15.8 percent annually between 2009 and 2012, according to a new report by the Federal Reserve Bank of Atlanta’s EconSouth. The steady rise in prepaid mirrored an overall shift toward electronic payments and away from checks, noted the report, entitled How We Pay and based on data collected during the 2013 Federal Reserve Payments Study.
Increasingly, how businesses and consumers pay is electronically. In 2012, payment card (debit, credit and prepaid) and ACH transactions comprised 85 percent of all noncash payments by number and 67 percent of total noncash payment value, with check payments making up the remainder. Those numbers represent a sea change from 2003, when checks represented 46 percent of all noncash payments. Debit continues to be the dominant form of card payment, with 47 billion transactions in 2012, compared to 26.2 billion credit payments. But it’s prepaid that is experiencing the fastest growth; in 2012, there were 9.2 billion prepaid payments, compared to 3.3 billion just three years earlier. Over the same period, credit card payments jumped by an annual rate of 7.6 percent, while debit card transactions increased 7.7 percent per year.
The report also noted that consumers still using checks increasingly are turning to remote deposit capture. In 2012, 17 percent of checks were deposited as images, up from 13 percent in 2009. And while the number of paper checks being written is declining, checks still comprise a high value of overall noncash payments, at nearly 44 percent, due partially to high-value business payments, many of which still are made via check.
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