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Industry Perspective

Industry Perspective

Survey provides snapshot of consumers’ payments choices

February 2010

The Federal Reserve Bank of Boston recently released Public Policy Discussion Paper No. 09-10 (Off-site Link) summarizing the results of the 2008 Survey of Consumer Payment Choice (SCPC). This nationally representative survey was developed by the Consumer Payments Research Center (CPRC), a team of economists and payments experts at the Federal Reserve Bank of Boston who research consumer payment behavior. It was implemented by the RAND Corporation (Off-site Link) with its American Life Panel.

The survey fills a gap in knowledge about the role of consumers by providing a broad-based assessment of U.S. consumers’ adoption and use of the nine payment instruments shown below:

  • Paper
    • Cash
    • Check
    • Money order
    • Travelers checks
  • Payments cards
    • Debit
    • Credit
    • Prepaid
  • Electronic instruments
    • Online banking bill payment
    • Electronic bank account deductions

Security and ease of use are the characteristics of payment instruments that consumers rate as the most important.

In 2008, U.S. consumers had more payment instruments to choose from than ever before. Survey results indicate that the average consumer had 5.1 of the nine instruments in 2008, and used 4.2 in a typical month. Consumers made 53 percent of their monthly payments with a payment card (credit, debit and prepaid). However, paper instruments were still popular, accounting for 37 percent of consumer payments. Most consumers had used newer electronic payments, such as online banking bill payment, but they accounted for only 10 percent of consumer payments in 2008.

The 2008 SCPC measured:

  • Consumers’ adoption of payment instruments
  • Various consumer banking and other payments practices
  • Use of payment instruments by incidence (the percentage of consumers who use them)
  • Frequency (the number of payments made by consumers)

More consumers now have debit cards than credit cards, and consumers use debit cards more often than cash, credit cards or checks, individually.

Because consumers use their payment instruments for various types of transactions, the 2008 SCPC focused on the seven types of payment transactions shown below:

  • Bill payments
    • Automatic
    • Online
    • In person or by mail
  • Non-bill online payments
  • Retail goods payments
    • Essential
    • Nonessential

Conclusion

The 2008 SCPC provides a snapshot of U.S. consumers’ payment choices, showing that consumers had, and used, a wide variety of payment instruments. They relied less on traditional paper instruments, such as cash and checks, than in the past.

The data collected can be used for at least two purposes:

  1. To create aggregate time-series data that can be used to characterize and analyze trends in payment markets pertaining to U.S. consumers.
  2. To create a longitudinal panel of data that can be used to study consumer payment behavior and evaluate public policies that pertains to the U.S. payments system.

More detailed results (Off-site Link) of the 2008 SCPC are available online.

The CPRC is involved in two main areas of work:

  1. Development of the annual Survey of Consumer Payment Choice (SCPC) and other consumer payments data in order to conduct research and help formulate public policy for the U.S. payments system.
  2. Filling a knowledge gap by becoming a leader in research and policy analysis on the demand-side of money and payments, and by focusing on consumer payment behavior that includes the behavior of individuals, households, firms and government.

More information is available on the Consumer Payments Research Center Web site (Off-site Link).

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