TECHNOLOGY
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ELECTRONIC PAYMENTS

Over the past quarter-century, electronic alternatives to the traditional way of paying bills by check have revolutionized payments infrastructure. While credit cards continue to contribute the largest share, newer choices such as PIN and signature debit and Automated Clearing House (ACH) payments have grown rapidly. Debit cards have become increasingly popular in large part because of the availability of more secure forms of signature.

ACH payments were launched in the early 1970s as a reliable and efficient alternative to the check. The ACH electronic funds transfer system continues to expand, with larger volumes transacted each year and new types of payments transacted. In fact, ACH payment can now be initiated by telephone or on the Web. Electronic Benefits Transfers give consumers more flexible access to Social Security, Veterans’ Pensions and other benefits disbursed by the federal government.
TOTAL ESTIMATED VOLUME AND DOLLAR VALUE OF ELECTRONIC PAYMENTS, 2000


Electronic payment instruments

Transaction volume (millions)

Dollar volume
($ millions)

Average payment value
General purpose credit cards12,300.2$1,072,555$87.20
Private label credit cards2,748.6162,81959.24
Offline debit (signature-based) (1)5,268.6209,98039.85
Online debit (PIN-based)3,010.4138,15145.89
Automated Clearing House (ACH) (2)5,622.05,674,8511,009.40
Electronic Benefits Transfer (EBT) (3)537.713,74425.56
Total29,487.5$7,272,100 $246.62
(1) Debit card transactions that require the customer's signature as a means of authentication.
(2) Allows credits and debits to be processed between financial institutions.
(3) Allows a recipient to authorize transfer of government benefits from a federal account to a retailer account to pay for products received.

Source: Board of Governors of the Federal Reserve System.
ELECTRONIC PAYMENTS VALUE BY PAYMENT INSTRUMENT, 2000



(1) Debit card transactions that require the customer's signature as a means of authentication.
(2) Allows credits and debits to be processed between financial institutions.
(3) Allows a recipient to authorize transfer of government benefits from a federal account to a retailer account to pay for products received.

Source: Board of Governors of the Federal Reserve System.



Online banking and e-payments have gained tremendous ground in recent years, reaching 15.5 million middle-income users in 2000. Rates of adoption have been fairly well distributed across low-, mid- and high-end income households, with volumes rising within each income range.
U.S. HOUSEHOLDS USING ONLINE BANKING AND/OR E-PAYMENTS, 1995-2010 (1)

(millions, end of year)


 

Mid-range

Low-end

High-end

Year

Number

Percent change from prior year

Number

Percent change from prior year

Number

Percent change from prior year
19950.6140%0.5150%0.8150%
19962.53202.33502.8270
19974.5804.0785.082
19987.0566.5637.550
199910.5509.54611.553
200015.54814.55317.048
Projected      
200122.04220.03825.047
200227.02323.01531.024
200330.01125.0935.013
200433.01027.0840.014
200536.0929.0744.010
201045.0535.0455.05
(1) Households which have done one or more of the following within the past 90 days: registered for online access to checking, credit card, or loan/mortgage accounts; signed up to pay bill(s) online; paid a monthly fee for online banking or bill pay; accessed balance or transaction data online for a checking account, credit card, or loan/mortgage; authorized a bill payment online at any bank, nonbank, portal, or biller site; or sent money over the Internet using e-mail payments (e.g., PayPal, c2it).

Source: Online Banking Report.