A Preference for Plastic

By Monica C. Meinert

It’s a fairly well-known fact that consumers in the U.S. are increasingly choosing to make cashless payments. Gallup reports that just under a quarter of people (24 percent) make some or all of their purchases with cash, down from 36 percent five years ago.

As noncash payments continue to dominate—totaling almost $178 trillion in 2015—the Federal Reserve recently released its triennial Payments Survey, which examines trends among various noncash payment types, including debit and credit cards, ACH and checks.

Debit Cards. When it comes to making payments, Americans are reaching for their debit cards most frequently, the survey found. Of the noncash payment types examined, debit cards (which include payments made with prepaid cards) notched the highest number of total transactions—69.5 billion in 2015, up from 56.5 billion from the previous survey conducted in 2012. The total value of debit transactions also rose by $0.46 trillion in that timeframe to total $2.56 trillion.

Credit Cards. Credit cards were the second most popular payment method by volume, the Federal Reserve said. The number of credit card transactions grew faster than debit, ACH or checks between 2012 and 2015, increasing at a rate of 8 percent and totaling 33.8 billion. Credit and debit cards together accounted for more than two-thirds of all noncash payments made by consumers in the U.S, highlighting consumers’ strong preference for paying with plastic.

Checks. Checks have seen their popularity steadily decrease over the last decade, but that decline is beginning to taper off, the survey noted. The rate of decline in check payments slowed during the last survey period to 4.4 percent, compared to an average 6.2 percent rate observed during the period from 2000 to 2012.

ACH. While ACH payments had a lower volume than credit or debit cards (ACH credits and debits combined totaled 23.5 billion), they accounted for the vast majority of the total noncash transaction value due to their use in payroll and business-to-business payments. ACH payments totaled $145 trillion, an increase of $16.29 trillion since 2012.