Dear Diary: Why Did Payment Transactions Decline in October 2017?

Unless you’re talking about check-writing or cash usage, just about every measure of transactions and volumes in payments is up, up, up these days. But a new study from the Federal Reserve Bank of Atlanta says consumers actually made fewer payments in October 2017 than they did a year earlier.

The finding, which Claire Greene, a payments risk expert at the Atlanta Fed, says is statistically significant, comes from the bank’s recently released Diary of Consumer Payment Choice study. It says consumers each made an average of 41 payments in October of last year, a nearly 11% drop from the average of 45.9 payments in October 2016.

Fed researchers assembled a nationally representative sample of 2,871 U.S. adults in 2017 and 3,047 in 2016 to record how, and how much, they paid for purchases and bills. Respondents were asked to track usage of everything from cash and checks to credit, debit, and prepaid cards to online bill payments and account transfers.

How to explain this unusual decline? At the moment there is no explanation, nor a prediction on whether it will last, according to Greene, a co-author of the report with Joanna Stavins, a senior economist and policy adviser at the Federal Reserve Bank of Boston.

“It would take an economist to do more research on that,” she tells Digital Transactions News. “I can’t speculate on the future.”

Greene does offer that while reports from payments companies such as Visa and Mastercard show transactions usually rising, the diary research is different in that its data comes from consumers, the users of payment systems, rather than from the suppliers of those services.

“The difference in this reporting is the consumer is telling us about his or her own wallet, as opposed to data from the supply side,” Greene says. “You see the choices that are available.”

The average total value of the monthly payments also decreased—by $498, from $3,916 in October 2016 to $3,418 a year later—but the report says that change is not statistically significant.

For the most part, the latest diary found little change in consumer payment patterns. “We’re in a time of rapid change in terms of offerings for consumers, and still we see a lot of stability in the choices people are making,” says Greene.

In October 2017, consumers paid mostly with cash, accounting for 30.3% of payments; debit cards, 26.2%, and credit cards, 21%. Cash and cards accounted for three-fourths of payment transactions, but only about 40% percent of the total value.

The highest-value payments came from the biller-direct channel—online payments to billers at their Web sites—at $310 per transaction, with an average of just two transactions per month. Next were money orders, $275 per transaction and only 0.1 monthly transactions on average; online-banking bill payments, $256 and 1.7 transactions, and checks, $238 and 2.5 transactions.

In contrast, the average credit card payment was $61, but the 2017 diarists used their credit cards 8.6 times per month on average. Corresponding averages for debit cards are $47 and 10.7, and $23 and 12.4 for cash.

The 2017 diarists made only 0.3 mobile payments per month on average, but the average mobile payment was $24. The monthly average for PayPal also was 0.3, for an average payment amount of $37.