Non-Cash TransactionsMatt Dorf

What are Non-Cash Transactions?•Credit Card•Debit Card•Gift cards •Stored value•ACH•Online banking bill payment (OBBP)•Mobile payments•Virtual checks•Contactless

Some interesting facts

•Use of cash peaked in mid-90’s and has been declining since1

•Electronic forms of payment increased from 78% in 1995 to almost 92% in 20071

•Debit card use almost doubled between 1995 and 19981

•ATM/Debit Card Usage1

▫Under 30 Years Old – almost 86%▫Over 60 Years old – almost 50% (tripled

since 1995)

What happened to cash?

• From 1995 to 2003 the number of ATM’s in the US tripled, in 2006 the number dropped for the first time5

Where did all the checks go?• In 2003, electronic payments in US exceed

check payments3

• Check 21, 2003▫Image deposits or Substitute Checks

• ACH – Check conversion• Gov’t gave checks the ax as of March 2011

▫Social Security, Supplemental Security Income, Veterans, Railroad Retirement and Office of Personnel Management

• Some banks accepting photos of checks via scanner and iPhone

Who’s on board?• Public transportation systems

▫More than ½ of largest Public Transit • Social Security Payments – rolled out in 2008• U.S. Food Stamps• Airlines – no longer accepting cash• Non-profits accepting donations via text-mGive

▫From 9 p.m. on Tuesday to 10 a.m. on Thursday $3.4 million was raised just from text message donations

• Some supermarkets no longer accepting checks • Even Monopoly!

Online Payments

•Online Bill Pay10

▫Over 2 million U.S. households adopted online banking and bill payment during in 2009

▫69.7 million households (4 out of 5 households with Internet access) use online banking services

▫64.4 million households pay at least one bill online•e-Commerce sales (retail)4

▫Total retail sales grew 4% from 2006 to 2007▫E-Commerce sales grew 20% from 2006 to 2007

Additional Online Payments• Alternative Online Payments – account info not given to

merchant▫ Virtual card - debit or credit card number generated via

Internet to purchase online▫ Instant Credit – deferred billing▫ E-Wallet - online account with access to pay multiple web

merchants• Person to Person (P2P)

▫ Almost 50 percent of consumers expressed interest in using electronic P2P12 sending money to a child at college sending money out of the country splitting the cost of a gift with family members, co-workers or

friends▫ Offered by Pay Pal and various banks

What’s Next?• Contactless• Mobile

▫ iPhone - “bumping”• Send money via text message - OboPay• ShopSavvy

▫Allows you to take a picture of a barcode with your cell phone, tell you if it is being sold for less somewhere else, and if so, purchase it immediately via PayPal

• Pay medical bills online – MedPayOnline• Secure Vault Payment

Expanded Access

•Prepaid cards – no credit check▫Green Dot▫Sky Light

•Higher One*•Sallie Mae•The Minotaur Group - "Con Dios

Financial" ▫Aimed at unbanked Spanish population in CA▫Payroll deposited directly onto card which also has debit and ATM features

What’s Behind The Trend

•Post Office – eliminating mail days•Concerns about security is decreasing4

•Convenience •Environmentally friendly•More options available to choose from•Demands – Speed!•More people with access to technology

Sources• 1: http://www.philadelphiafed.org/research-and-data/publications/business-

review/2009/q3/brq309_changes-in-electronic-payment.pdf• 2: http://www.philadelphiafed.org/payment-cards-center/tools-for-researchers/

consumer-statistics/• 3: http://www.federalreserve.gov/pubs/bulletin/2008/pdf/payments08.pdf• 4:

http://www.frbatlanta.org/documents/news/conferences/09_emerging_rp_crowe.pdf

• 6:http://www.nytimes.com/2010/04/29/technology/29cashless.html?scp=1&sq=electronic%20payments&st=cse

• 7:http://www.philadelphiafed.org/payment-cards-center/publications/pcc-note/2009/pcc-note_credit-card-act-2009.pdf

• 8: http://www.bos.frb.org/economic/wp/wp2009/wp0901.pdf• 9: http://www.philadelphiafed.org/payment-cards-center/publications/discussion-

papers/2009/D2009AprilSEPTA.pdf• 10: http://investors.fiserv.com/releasedetail.cfm?ReleaseID=396336• 11:http://www.businesswire.com/portal/site/home/permalink/?

ndmViewId=news_view&newsId=20100426005597&newsLang=en