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Federal Reserve Study Finds Effects of the Pandemic on U.S. Payments

The following article originally appeared on December 27th on AtlandaFed.org.

A new report from the Federal Reserve Payments Study reports quarterly data related to the effects of the COVID-19 pandemic on U.S. payments.

Developments in Noncash Payments for 2019 and 2020: Findings from the Federal Reserve Payments Study includes new information about core noncash payments and some evolving areas of payments:

  • While data from 2019 largely show a continuation of past payment trends, with card and ACH both gaining share at the expense of check, 2020 data show that payment behavior changed sharply with the COVID-19 pandemic, with ACH gaining substantially as a share of noncash payments by both number and value.
  • The share estimates combined with other information imply that ACH was the only one of the three core payment systems to grow by number in 2020.
  • The total number of card payments declined in 2020, driven by a marked decline of in-person card payments. This was the first annual decline in the number of card payments recorded by the payments study.
  • As in-person card payments dropped in spring 2020, remote card payments took up much of the slack. Later in the year, in-person card payments recovered somewhat.
  • The pandemic may have helped spur growth of innovative payment methods, such as in-person contactless card, digital wallet and person-to-person (P2P) payments.
    • First-time use of bank-sponsored P2P payments spiked in the second quarter of 2020, a time of business closures and stay-at-home orders.
    • First-time use of digital wallets was highest in the third quarter, when some restrictions on in-person shopping were lifted. When used with a mobile device, a digital wallet provides a low-touch option for in-person card payments.

The report covers card (credit, non-prepaid debit and prepaid debit), ACH and check payments.

To view the full study, click here.

Source: AtlandaFed.org