Consumer Payment Trends Favor Plastic Payment Methods

As check volume drops off, what method of payment are consumers now using to make their payments?


The era of the check may be coming to an end. As we entered the new millennium, checks accounted for an astounding 49% of all U.S. consumer payment volume (the trends in this article represent consumer payment trends and do not include business and commercial spending, a previous article has already detailed that information). In 1999, checks posted more than double the volume of the next most prevalent payment method, credit cards. However, in recent years the check has begun to fall off. Five years later, in 2004 checks accounted for only 33% of payment volume. To carry this trend forward another five years, forecasts show check volume falling even further to 18% as of 2009.

Card Usage Increases as Total Volume Also Grows
As check volume drops off, what method of payment are consumers now using to make their payments? Cash has remained a relatively constant component of payment volume, accounting for 19% in 1999 and forecast to stay at 20% in 2009. Credit card usage has been increasing over the last decade. Credit cards accounted for 23% of payment volume in 1999, and are forecast to grow to 28% in 2009. However, this growth is not enough to account for the major declines experienced in check volume by itself.

Sources: CSCU, The Nilson Report, VISA

The real growth in this area has been debit transactions. Accounting for a mere 5% of payment volume in 1999, debit transactions more than tripled in the last decade, accounting for an estimated 17% in 2009. These growth figures are even more impressive when you look at the total volume of transactions, which has grown from $4.8 trillion in 1999 to an estimated $8.2 trillion in 2009. Not only do debit cards account for a larger percentage of the total volume than they did previously, but total volume has also seen a large increase over the past decade. Another key category that has seen growth is the grouped category that includes ACH transactions and prepaid cards, which experienced growth similar to debit cards.  

"Electronic" Payments Continue to Grow
These trends seem to indicate that convenience is becoming even more important for consumers. As fewer individuals carry and utilize checkbooks, we see an increase in individuals turning to plastic in the form of debit, credit, and prepaid cards.  In 1999, "electronic" payments in the form of debit cards, credit cards, and ACH payments accounted for 32%, or approximately one third, of payment volume. In 2009, these three forms are forecast to account for 62% of payment volume, nearly doubling their percentage composition a decade prior. While these trends are similar to those experienced when business and commercial transactions are also included, it is extremely important for credit unions to track these trends on the individual consumer level, as that is much more indicative of what credit unions will experience with their membership base.




Oct. 27, 2008


  • Article presented one side very well. The other side:

    99% of US households earning $60,000 or more have a checking account.

    68% of Americans report that they feel more confortable paying by check than any other method because of the increased vulnerability to identy theft linked with debit/credit card usage.

    59% of all consumers would rather shop where checks are accepted.

    50% 0f point of sale purchases are made by check.

    The majority of consumers believe checks are a more responsible form of payment compared to credit cards.

    The value of checks written is more than five times greater than the value of all debit/credit card transactions combined.

    ACH electronic payments are in fact check transactions not plastic and are treated as such.

    Source for this data: Federal Reserve Payments Study; Federal Reserve Survey of Consumer Finances; The Gallup Organization; The Credit Union Journal and The Check Payment Systems Association.

    Checks will be around for a long, long time as consumers will demand alternatives to their payment options. In fact there is strong evidence that the payment pendulum is swining back towards increased check usage due to card max out and totaly unrealistic card fees (even the government is stepping in to regulate the plastic greed and gouge.
    Dr. Bill Chapman