The United States’ Federal Reserve has issued an update to its Federal Reserve Payments Study (FRPS) on the US payments market to include findings from recent survey data.
The findings highlight changes in card payments and increased adoption of innovative payment methods following the emergence of COVID-19.
For example, the recent data show that the number and value of both in-person and remote (e.g. online, over the phone) card payments grew in 2019, broadly in line with recent trends.
The year 2020, by contrast, saw an unprecedented decline of 11.7 billion, or almost 13%, in the number of in-person card payments accompanied by a similarly unprecedented surge of 8.7 billion, or almost 24%, in the number of remote card payments.
Despite the resulting decline in the total number of card payments, the total value of card payments increased once again in 2020, suggesting consumers consolidated their card spending into fewer, higher-value purchases.
Reflecting the shift away from in-person card payments toward remote card payments, the total value of remote card payments exceeded that of in-person card payments in 2020 for the first time.
The increase in remote card payments in 2020 was driven primarily by a surge in e-commerce, and quarterly data show that the greatest shift to remote card payments occurred in Q2 2020.
In addition, the pace of adoption of new payment technologies increased in 2019 and 2020, with the share of in-person card payments initiated with contactless technologies increasing many times over.
Card payments initiated with digital wallets, which securely store payments information on mobile devices or online, saw similar growth in recent years, including accelerated adoption in the H2 2020.
Finally, adoption of person-to-person payments between bank accounts also exhibited growth in 2020 with a surge in first-time use in Q2.
ACH Payments on the rise rapidly
“The latest update to the Federal Reserve Payments Study highlights the importance of the fast and modern ACH Network to our nation’s payment system,” states Jane Larimer, President and CEO, NACHA.
“In 2020, many businesses and individuals turned to the ACH Network to send and receive payments because of pandemic-related disruptions. In 2020, there were a record 26.8 billion payments on the ACH Network, an 8.2% increase compared to 2019.
This growth included a 12% increase in Direct Deposit payments, a 15% increase in internet-initiated consumer bill pay payments and a 10.7% increase in business-to-business payments.
This momentum continued in 2021. Through the third quarter of last year, there were 21.7 billion ACH payments, an increase of 9.6% compared to the same period of 2020. This growth included a dramatic 73% increase in Same Day ACH payment volume.”
“As we begin a New Year, Nacha and our partners will further expand the capabilities of the ACH Network. The Same Day ACH limit will increase from the current $100,000 to $1 million in March, which is expected to increase adoption.”
ACH Highlights from the Federal Reserve Payments Study update:
- ACH was the only one of the three core payment systems (ACH, cards and checks) to grow by number from 2019 to 2020.
- The ACH Network was the only payment system among the three to grow in share by number in both the 2018 to 2019 and 2019 to 2020 periods. In fact, the share of ACH transactions grew more by number and value from 2019 to 2020 (during the pandemic) than from 2018 to 2019 (before the pandemic.
- The rise of ACH share by number, most of which occurred from 2019 to 2020, is due partly to consumers and businesses making more ACH payments directly and partly to more use of ACH as a settlement vehicle for a variety of payment types of relatively small value (for example, through popular apps widely installed on smartphones).