Cash in the 21 st Century Talk About Payments Webinar Federal - - PowerPoint PPT Presentation
Cash in the 21 st Century Talk About Payments Webinar Federal Reserve Bank of Atlanta October 10, 2019 The views expressed in this presentation are those of the speakers and do not necessarily represent the views of any Federal Reserve Bank or
The views expressed in this presentation are those of the speakers and do not necessarily represent the views of any Federal Reserve Bank or of the Federal Reserve System.
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Claire Greene Shaun O’Brien Oz Shy
Claire.Greene@atl.frb.org, Shaun.Obrien@sf.frb.org, Oz.Shy@atl.frb.org 3
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Shaun O’Brien Senior Policy Consultant FRB San Francisco Oz Shy Senior Policy Advisor & Economist FRB Atlanta Claire Greene Payments Risk Expert FRB Atlanta
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century BCE
Sweden, 1661
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As of April 2019, U.S. currency in circulation reached 1.68 trillion worldwide 5.4% increase over 2018
5 10 15 20 25 30 35 40 45 50 Billions of Notes
Number of Notes in Circulation by Denomination
$50 - $100 $10 - $20 $1 - $5
Source: Cash Product Office.
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11 0% 5% 10% 15% 20% 25% 30% 35% Cash Debit Credit Electronic Check PrePaid Other Shares of Payment Instrument Usage, volume, 2016–2018 (2018 shaded darkest)
Change in shares is combined effect of decrease in cash payments and increase in card payments (mostly credit)
Source: Diary of Consumer Payment Choice.
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55% 49% 32% 33% 36% 40% 60% 57% 2017 2018 2017 2018 $0.01-$9.99 $10-$24.99
Volume shares by dollar value
Cash Credit & Debit Other
Source: 2018 Diary of Consumer Payment Choice.
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15 54% 20% 20% 16% 52% 6% 11% 6% 50% Cash Preferred Debit Preferred Credit Preferred Payment use (volume shares) by stated preference
Cash Debit Credit Other
Source: 2018 Diary of Consumer Payment Choice.
16 26% 22% 22% 41% 42% 41% 27% 30% 30% 2016 2017 2018
Shares of consumers preferring each payment instrument
Cash Debit Credit Other
Source: 2018 Diary of Consumer Payment Choice.
17 100% 60% 55% 21% 25%
2016 2017 2018
Of consumers preferring cash in 2016, shares preferring cash in later years
Cash Debit Credit Other
Source: 2018 Diary of Consumer Payment Choice.
Bank account linked 56.7% Bank account linked 50.2% Cash 61.9% Cash 26.7% Cash 20.1% Money order 4.7% Prepaid card 17.2%
Unbanked Underbanked Fully banked Volume shares of payments, by banking status
Bank account linked Cash Money order Credit card Prepaid card Income deduction
Source: 2018 Diary of Consumer Payment Choice.
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38% 30% 27% 24% 19% 20% 15% 15% 16% 22% 29% 37% <$25k $25-<$50k $50k-<$75k $75k-<$100k $100k-<$125k $125k+
Volume shares of payments made by income, October 2018
Cash Credit Other
Source: 2018 Diary of Consumer Payment Choice.
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34% 18% 19% 27% 31% 33% Under 25 25 to 34 35 to 44 45 to 54 55 to 64 65 and Older Volume shares of payments made using cash, by age, October 2018 Cash Other payment instrument
Source: 2018 Diary of Consumer Payment Choice.
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29% 26% 24% 16% 23% 27% Rural Mixed Urban
Volume shares of payments made by community type, October 2018
Cash Credit Other
Source: 2018 Diary of Consumer Payment Choice.
22 35% 21% 13% 13% 9% 9%
Family or friend ATM Employer Cash back at a retail store Bank teller Other
Volume shares of instances of getting cash, 2017
Source: “How Consumers Get Cash: Evidence from a Diary Survey.”
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Source: “How Consumers Get Cash: Evidence from a Diary Survey.”
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Source: “How Consumers Get Cash: Evidence from a Diary Survey.”
72 74 75 18 14 10
2015 2016 2017
Shares of P2P payments by number
Cash Paper check Cards PayPal Account-to-account transfer Other
Source: Diary of Consumer Payment Choice.
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26 40% 39% 35% 30% 29% 30% 20% 23% 25% 9% 9% 9% 2016 2017 2018 Shares of in-person payments by number Cash Debit Credit Other
Source: Diary of Consumer Payment Choice.
27 5% 16% 17% 24% 34% 34% 36% 18% 49% 76% 52% 65% 66% 18% 77% 35% 6% 24% 45% Housing related Entertainment and transportation General merchandise Medical, education, personal services Food and personal care supplies Auto and vehicle related Government and nonprofit Payment instrument use by payee type (volume shares), 2018 Cash Card Other
Source: 2018 Diary of Consumer Payment Choice.
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Source: 2018 Diary of Consumer Payment Choice.
49% 33% 16% 10% 6% $0.01 - $9.99 $10 - $24.99 $25 - $49.99 $50 - $99.99 $100 +
Volume shares of payments by purchase amount, 2018
Cash Other
<$10 >$10 HHI>$110k HHI<$110k <$20 =$20 <$20 Age >$54 Age <54 >$20 Age <65 Age >65 HHI>$48k HHI<$48k
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Source: “How Currency Denomination and the ATM Affect the Way We Pay.”
Consumer likely to choose cash Consumer likely to choose credit Consumer likely to choose debit
When paying in person… choices differ with card ownership
Neither non-prepaid debit nor credit 9/10 purchases in cash Both non-prepaid debit and credit 1/3 purchases in cash
30 Grocery, convenienc e, pharmacies 27% Fast-food restaurants, coffee shops, etc. 22% General merchandis e 20% Gas stations 17% Sit-down restaurants & bars 10% General services 4%
At left, share of cash payments (volume) by merchant type Source: “Cashless Stores and Cash Users.”
Access
“I don't think we will ever be entirely cashless, maybe in large part because I don't know if we will ever be in a world that every person has a smartphone or a mobile device.”
Legislative action
1978
2019
Proposed
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PayPal CEO, WSJ, 2/20/2018
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References
“2019 Findings from the Diary of Consumer Payment Choice” by Raynil Kumar and Shaun O’Brien, Federal Reserve Bank
“Cash Me If You Can: The impacts of cashless businesses on retailers, consumers, and cash use” by Claire Wang, Federal Reserve Bank of San Francisco, August 2019. “Cashless Stores and Cash Users” by Oz Shy. Federal Reserve Bank of Atlanta Working Paper 2019-11, May 2019. “Changes in U.S. Consumer Payments” by Shaun O’Brien. Federal Reserve Bank of San Francisco, forthcoming. “How Consumers Get Cash: Evidence from a Diary Survey” by Claire Greene and Oz Shy, Federal Reserve Bank of Atlanta Research Data report 19-01. “How the ATM Affects the Way We Pay,” by Oz Shy Federal Reserve Bank of Atlanta Working Paper 2019-02, February 2019. “Payment Instrument Adoption and Use in the United States, 2009-2013,” by Consumers' Demographic Characteristics” by Sean Connolly and Joanna Stavins Federal Reserve Bank of Boston Research Data Report 15-6. Kurz, Christopher, Geng Li, and Daniel J. Vine (2018). “Are Millennials Different?,” Finance and Economics Discussion Series 2018-080. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2018.080. Judson, Ruth (2012). "Crisis and Calm: Demand for U.S. Currency at Home and Abroad from the Fall of the Berlin Wall to 2011," International Finance Discussion Papers 1058. Board of Governors of the Federal Reserve System (U.S.).
Fed consumer surveys
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