The payments system in the United States has undergone rapid evolution since 2003, when the US Congress passed the Check Clearing for the 21st Century Act. This Act facilitated the development of widespread electronic check processing and clearing. Prior to the introduction of the Act, paper cheque payments typically required physical processing and transporting. Since its introduction, however, these processes have been replaced by significantly more efficient electronic means and alternative payment methods.
Payments have become increasingly card-based. According to data published by the Federal Reserve Board, the number of debit cards increased between 2009 and 2012 by more than any other payment type.
It is estimated that there were $122.8 billion non-cash payments in 2012, excluding large-value funds transfer systems such as CHIPS, totalling $79 trillion in value.
Trends in non-cash payments are influenced by a variety of factors, such as the business cycle, financial and technological innovations, population growth, changes in consumer preferences and business financial behaviour, the composition of economic activity, and regulatory developments.
From 2009 to 2012, the number of non-cash payments in the United States increased at an annual compound rate of 4.4%. This represents a modest decline when compared to the annual compound rate of 4.7% over the 10-year period from 2003 through to 2012.
Around 2004 the number of debit card payments in the US overtook the number of credit card payments. By 2012, there were 47 billion debit card payments. By way of comparison, the number of credit card payments in the same year was 26.2 billion.
Prepaid cards represent a type of debit card, but also a unique category of non-cash payments that ought to be considered separately from credit cards, regular debit cards, ACH, and cheques. In comparison to other payment channels, prepaid cards - including general-purpose and private-label - rose at 15.8% per year, the fastest rate in the period between 2009 and 2012, reaching a total of 9.2 billion transactions in 2012. The number of prepaid card transactions increased by 3.3 billion over the same period.
Among signature debit and credit card payments in 2012, card-not-present fraud rates were estimated to be over 3 times as high as card-present fraud rates. Card-not-present fraud rates by value were not, however, dramatically different from card-present fraud rates.
For more information on the United States debit card market, see the latest research: United States Debit Card Market
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