electronic payments research report 2007

What is the dollar volume for different types of electronic payments including debit cards, ACH, and credit cards? Useful research paper for companies examining their payment processing systems and how they might want to grow, expand, or change their current payment options to customers. This report details the methodology and findings of the 2007 Electronic Payments Study (2007 EP study) and includes the number and value of electronic payment transactions originating in the United States for the year 2006.

The 2007 EP study is part of an ongoing effort by the Federal Reserve System to measure and analyze trends in noncash payments in the United States. In 2001, the Federal Reserve System undertook the Retail Payments Research Project to estimate the annual number and value of retail payments in the United States.

Three studies were performed that year: the Electronic Payment Instruments Study (2001 EP study), the Depository Financial Institution Check Study (2001 DI study), and the Check Sample Study (2001 CS study). In 2004, the EP and DI studies were repeated in order to track shifts in payments numbers and values. The 2007 Federal Reserve Payments Study repeats the efforts of the 2001 and 2004 studies. As in 2001, the 2007 Federal Reserve Payments Study consists of three studies: the Electronic Payments Study (2007 EP study), the Depository Institutions Payments Study (2007 DI study), and the Check Sample Study (2007 CS study).
The 2007 EP study looked at “core” electronic payment instruments and at prepaid cards. The core study produced estimates of the transaction number and dollar value of the established payment types: debit cards, credit cards, Automated Clearing House (ACH), and electronic benefits transfers (EBTs). Like previous EP studies, it also looked at emerging payments.
The prepaid card study looked at prepaid cards. In the previous EP studies, prepaid cards were discussed as part of the emerging payments section. In the 2007 EP study, data on prepaid cards were formally collected, and estimates of the transaction number and dollar value were included in recognition of their growing importance. Responses, however, were relatively low.

2007 Electronic Payments Study (PDF download)

Despite 40 Percent Growth in 2007, PINless Debit Still Takes Small Share of Overall Transactions

New TowerGroup Research Examines Obstacles to Success of Alternate Payment

NEEDHAM, Mass., Sept. 11 /PRNewswire/ — In the mid-1990s, the electronic funds transfer (EFT) networks debuted PINless debit, or PINless bill payment, as a new, low-risk way for billers to collect payments from consumers. New research from TowerGroup estimates that PINless debit bill payment volume in 2007 will be at least 40 percent higher than in 2006. However, various obstacles to its adoption will cause PINless debit to remain a small percentage of overall bill payments (0.45 percent).

PINless debit allows consumers to pay bills through a remote channel by entering their debit card number without the personal identification number (PIN). Since its introduction, transaction volume has grown steadily as billers and their customers explore this alternative. However, adoption of PINless debit continues to face many challenges, including: inconsistency in industries eligible for participation; functionality; and card eligibility.

PINless debit offers benefits to billers that “split the difference” between credit cards and ACH debits. PINless debit, like credit cards, provides guaranteed funds. ACH does not. However, PINless debit does not have the higher fee structure associated with credit cards. PINless debit can be used to pay bills for which credit cards as a payment method are simply precluded, such as credit card invoices themselves. It is also an
additional method to increase overall adoption of electronic payments, a common goal for billers and suppliers in the bill payment value chain.

The new research report, titled “PINless Debit: Finally Taking Off or Headed for a Crash Landing,” by Jennifer Roth, a senior analyst in the Global Payments practice at TowerGroup, identifies the challenges related to PINless debit bill payment, the methods for overcoming these obstacles, and the durability of PINless debit as an alternate payment method.

At TowerGroup, Roth’s research focuses on electronic bill and invoice presentment and payment, including the Internet environment and otherchannels in which it can be delivered. She also examines consumer funds transfer, remittance processing, and the domestic electronic funds transfer networks supporting payment processing infrastructures.

About TowerGroup: TowerGroup is the leading research and advisory services firm focused exclusively on the financial services industry. A respected source for trusted information and advice, TowerGroup brings many of the world’s leading financial institutions, technology companies, and professional services firms a deeper understanding of the business and technology issues impacting their organizations. Headquartered near Boston in Needham, Massachusetts, and with offices in North America and Europe, TowerGroup serves a global client base.