U.S. financial transactions—checks, debit, credit and automatic transactions—will top 100 billion by the end of the year as consumer spending has stagnated, according to Moebs Services, a research firm.
Moebs, which crunches Federal Reserve data, says paper checks usage has dropped from 85 percent of all transactions to 25 percent. Credit card usage is down, but debit transactions are up.
Here’s the breakdown of transactions:
- Debit card transactions: 33 percent
- Paper checks: 24 percent
- Credit card transactions: 23 percent
- Automatic Payments (ACH): 20 percent
Here's the Press Release:
LAKE BLUFF, Ill.-- For the first time in US history, the number of checks and electronic
transactions for debit cards, credit cards and automatic payments will exceed
100 billion by the end of 2009, according to Moebs Services, an economic
research firm in Lake Bluff, Ill. This volume represents all transactions from
consumers and businesses and is based on research and projections conducted by
Moebs $ervices using information from the Federal Reserve for 1979 to 2006.
"Based on current transactions, our projections show that debit cards and
automatic payments are taking over at an increasingly rapid rate from the
traditional checking account for most Americans," says Mike Moebs, CEO. "Over
the past 30 years, paper check usage has dropped from 85 percent of all
transactions to less than 25 percent this year." Credit card usage while
increasing in an absolute sense is falling as a percentage of total transactions
after rising for 25 years, added Moebs.
According to Moebs Services, transactions in 2009 will break down as follows:
* Debit card transactions, 33 percent
* Paper checks, 24 percent
* Credit card transactions, 23 percent
* Automatic Payments (ACH), 20 percent
Type of 100B Transactions in 2009:
Debit Card Transactions 33%
Paper Checks 24%
Credit Card Transactions 23%
ACH (automatic payments) 20%
"What is noteworthy about the projected 100 billion transactions is that they do
not represent an increase in US consumer spending, which began declining in 2008
and is still not back on track as we approach year-end," said Moebs. "This
research indicates that consumers are doing significantly more transactions for
significantly fewer dollars than in the past. This may be due to easy electronic
payment methods replacing cash."
Implications for Financial Institutions and Consumers
Moebs believes there are four implications for financial institutions and
consumers:
* Financial institutions will see reduced overdraft revenue as consumers use
fewer paper checks and opt out of overdrafts for their debit card accounts.
* Consumers` reliance on electronic payments systems for goods and services will
require improved online security to prevent fraud and financial institution
losses.
* Consumers will require faster, more frequent, and more complete and
transparent communications from financial institutions in order to manage the
volume of their transactions and avoid frequent errors.
* Automated systems seamlessly process transactions in real time will benefit
both the customer and financial institutions. Institutions which accelerate
their use of such technologies will enjoy dramatically reduced transaction unit
costs.
"Our research suggests banks, credit unions, brokerage and investment houses
should accelerate their planning for electronic payment use because we believe
there will be implications to the bottom line of financial institutions in
pricing, fee structure and service delivery," concluded Moebs.
The Federal Reserve studies on the payment system have acted as the frame work
for the analysis and projections by Moebs $ervices along with proprietary data
of Moebs $ervices and other secondary sources.
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For Moebs Services
Kim Kellogg, 510-635-4150
Cell: 510-325-3195
