Credit/Debit Payments Rise; Check Usage Falls

Jan 07, 2014

The 2013 edition of the Federal Reserve Bank Services’ Payment Study confirms that credit card payments are continuing to rise while checks continue to plummet. Over the last 10 years the study, conducted every three years, shows that the usage of checks has decreased by over 50% from its prior rates. Meanwhile, credit card usage continues to rise as the non-cash payment method of choice.

The study is a collaboration of data compiled from the Depository and Financial Institutions Payments Survey, the Network, Processors, and Issuers Payment Survey, and the Check Sample Survey. Conclusions regarding non-cash payment trends are made based on the results in comparison to prior studies.

Active participation in the surveys by the payment industry is responsible for the accurate data compiled by the Fed.

In total, consumers made 122.8 billion non-cash payments marking a 4.4% growth rate during 2009-2012, excluding wire transfers. The value of these non-cash payments over the same time period is placed from $72.2 trillion in 2009 to $79 trillion in 2012 marking a $6.8 trillion increase.

Credit and debit card transactions grew at a rate of 7.7% and 7.6% respectively over the same 2009-2012 time period. The number of ACH payments however decreased in rate down from 10.9% growth over the previous 10 years to just 5.1% annual growth.

In addition to the sharp decline in check usage, the survey revealed that nearly 17% of all checks deposited at banks are now images. The 2010 edition of the study only had 10% of all checks as images reflecting a growing change in the way checks are handled and processed to couple with their plummeting usage numbers. The number of checks used 10 years ago, 37.3 billion, has fallen to just 18.3 billion-less half of the original volume.

The 2013 payments study tells business owners that credit card and debit card transactions are on the rise and look to continue rising. This underscores the importance of efficient and economical credit/debit card payment processing on the part of the merchant to avoid losing customers to the competition and to minimize the impact of fees and processing charges for your business. As the emphasis is continuing to be placed on card transactions, businesses need to adjust accordingly to the Federal Reserve Bank Services’ study.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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