November 24, 2013

Most Popular Forms of Payment - Are Checks Dead?

I saw someone comment recently to ask 'who still writes checks?'     I don't write many checks any more but there are still certain services that don't take credit that we write checks for.   Otherwise our spending is mostly via credit cards so that we can get cash rewards.  I'd say about 90% of our spending is via credit card and the other 10% a mix of cash, ACH and checks.   

I got the data from 3 different Federal Reserve papers : The 2010 Federal Reserve Payments Study  and The 200 9 Survey of Consumer Payment Choice Discussion Paper  and the How Consumers Pay : Adoption and Use of Payments  All three are using the  Survey of Consumer Payment Choice.  Its only got the numbers up to 2009 so its not really that recent.  

 First the average number of transactions per consumer in 2009 :

You can see that payment methods are pretty mixed.    Cash, Debit and Credit are most of them and the top 3 choices.   Checks come in at #4 with an average of 8.2 checks per consumer each month. 

Payment choice differs based on demographics.   Younger people use different options than older people and low income differs from high income.   Here's those comparisons for the extremes :

Younger people use a lot more cash and debit and older people use checks and credit a lot more.

Low income people use cash and debit a lot more.  Higher income folks use credit a lot more.

If we compare 2006 and 2009 then we can see the trend there.  I'd assume that trend has continued with fewer checks being written, less credit card use and more debit, prepaid and ACH.

The one thing I'm a bit surprised is how much prepaid is used.  I wouldn't have guest it is that much.   5% isn't a ton but its more use than I'd have thought.


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