Debit Overtakes Credit - ACH Rapidly on the Rise

The Federal Reserve put out its 2007 Payments Study on December 10th that studied the composition of non-cash payments between the years of 2003 and 2006. In it, the primary bombshell was that the number of Debit Card transactions has, for the first time surpassed the number of Credit Card transactions in the United States.



Shifting Composition of Non-Cash Payments

The Fed reported that the number of checks paid decreased by -6.4% per year for a total decrease of 6.7 billion checks over the three year period. Lest the picture for checks be painted to bleakly, checks still comprised 55% of the value of non-cash payments in the United States.

Some of that decline in check writing has shifted to Electronic checks in the form of ACH payments which demonstrated a compound annual growth rate (CAGR) of 18.6% between the years of 2003 and 2006. By 2006, 15.6% of non-cash payments were ACH payments, with an absolute increase of 5.8 billion payments. Further, ACH accounted of $31.0 trillion in 2006, or almost 91% of all electronic payments.

On the card front, debits have now overtaken credit cards. Debit card payments exhibited a CAGR of 17.5% per year over the three year period with growth in PIN debits topping 20.6%. Again, these users must beware of the fees charged for those transactions discussed in this blog here.

Credit cards grew at the slowest rate of all electronic transactions at 4.6%, which was the same rate of growth of all payments.



Implications for Mpayy

Mpayy will utilize ACH payments to facilitate Person-to-Person money transfers and shop online. NACHA reports that Web, Point of Purchases and telephone ACH payments are significantly on the rise with a 26.6% year over year growth in Web ACH payments on a year over year basis in the 3rd quarter. All of this points to the buying public's desire for efficient and secure payment solutions that are exactly what Mpayy will deliver.

Mpayy's payment processing application is nearing completion, and you can now see our account details described here.. Personal accounts that allow users to securely shop online from your checking account with Cash Back. Mobile Merchant accounts that allow salespeople to take their business on the road with a free Point of Sale solution are described here. Our Retailer Pro account will allow eCommerce businesses to streamline their online checkout process with 100% fraud protection.