Debit Cards, ACH Payments Gain Ground

A Federal Reserve study found that electronic payments, which include debit and credit card, automated clearing house and electronic benefits transfer payments, exceeded two-thirds of the 93.3 billion noncash payments made in 2006. All types of electronic payments grew in popularity and use, while check payments decreased, between 2003 and 2006.

The highest rate of growth over the three-year period was in ACH payments, including direct deposits, e-checks, direct payment of consumer bills and tax refunds, which grew 19% per year. Over the same period, debit card payments increased almost 18% per year; they now surpass credit cards as the most frequently used electronic payment type.

While check payments are becoming less popular—with an annual rate of decrease in transactions of 6.4%—they’re not likely to disappear overnight. Of the 93 billion noncash payments in 2006, 30.6 billion were checks. One of the most significant changes has been the proportion of checks processed electronically; during 2006, almost 3 billion checks were converted and processed as ACH payments instead of check payments.

Source: 2007 Federal Reserve Payments Study, www.frbservices.org/Retail/pdf/2007_payments_study.pdf .