Fed Data: Checks Continue Decline; ACH & Card Payments Surge

For the first time, the number of ACH debit transfers has exceeded the number of check payments, according to a new Federal Reserve study. 

The data, released this month, showed that there were 16.6 billion ACH debit transfers in 2018 but only 14.5 billion check payments. Back in 2000, the story was much different: the year’s 2.1 billion ACH debit transfers paled in comparison to its 42.6 billion check payments. 

However, the number of check payments has declined rapidly, falling 7.2% per year from 2015 to 2018. That rate was in line with drops between 2003 and 2012, but it was more than twice the 2.8% annual drop recorded over the prior three years.

“The growth of payments using debit and credit cards and the automated clearinghouse (ACH) system continued to accelerate from 2015 to 2018, while check payments continued their long-run decline,” the Federal Reserve noted in a press release.

The 2019 study included consumer, business, nonprofit and government payments in 2018 from U.S. domestic deposit accounts, prepaid debit cards, and credit cards, as well as cash withdrawals and deposits at depository institutions. 

Noncash growth rate accelerating

The study also found that noncash payments including debit card, credit card, ACH and check payments rose 6.7% per year between 2015 and 2018. The growth in debit and credit card payments accelerated too, rising 8.9% per year between 2015 and 2018, compared to a 6.8% annual growth rate between 2012 and 2015. Debit cards were used almost twice as much as credit cards in 2018, according to the data. ACH credit and debit transfers also grew faster, rising by 6% a year between 2015 and 2018, compared to 4.9% per year between 2012 and 2015.

“These core noncash payment types have retained their ability to be used in traditional ways even while they increasingly function as the means of settlement for innovative types of alternative payment methods and services, such as smartphone and internet-based services,” the Federal Reserve noted. 

Remote payments rivaling in-person

The Federal Reserve’s data also chronicled the rise of remote payments, which likely reflected continued changes in consumer shopping and financial management habits. 

“For general-purpose (network-branded) cards overall, the value of remote payments in 2018 nearly equaled in-person payments, driven in part by growing e-commerce card payments and the use of cards for recurring bill payments. More than half of in-person general-purpose card payments were chip authenticated in 2018, compared to 2.0% in 2015,” the Federal Reserve noted. 

Fewer ATM withdrawals but more cash coming out

ATM visits continued to decrease, according to the data. The Federal Reserve reported 5.1 billion withdrawals in 2018, which was a 0.1 billion decrease from 2015.

“The rate of decline for ATM cash withdrawals slowed compared with the previous three years, falling 0.9% per year from 2015 to 2018. The decline in the number, combined with an increase in value, resulted in average ATM cash withdrawals of $156 in 2018, compared to $146 in 2015,” it said.