Remote payments drive surge in credit card activity
The value of remote payments represented over two-fifths of all general-purpose card payments in 2016.
The number of credit card transactions in the US increased between 2015 and 2016, according to the latest national payments data, spurred higher by an amplification of remote payments, compared to those in person.
The Federal Reserve’s Financial Services Policy Committee released a new study late last month, citing a 10.2% year-on-year rise in the number of credit card payments in 2016. There were 37.6 billion transactions totaling $3.27 trillion. Comparatively, the annual rate of increased credit card payments from 2012-2015 was 8.1%.
Growth in credit card payments exceeded growth for other card types in 2016, such as debit and prepaid cards.
Remote general-purpose credit card payments, including online shopping and bills, increased 16.6% in 2016. These remote payments accounted for over one fifth (22.2%) of all general-purpose credit and prepaid debit payments. This figure was slightly higher (up 1.5%) than the estimated 20.7% recorded one year earlier in 2015.
The value of remote payments represented over two-fifths (44%) of all general-purpose card payments in 2016.
There were 111.1 billion US card payments made in 2016, marginally more (up 7.4%) than in 2015 and totaling a slightly higher (up 5.8%) value of $5.98 trillion. However, these figures were down on 2012-2015 annual rates.
Debit card payments growth frequency and value was lower in 2015-2016 compared with 2012-2015.
Technology is at the forefront of payments, as supported by the increase in online and remote payments. Additionally, the use of chip cards for in-person general-purpose payments rose dramatically, rising in frequency from 2% in 2015 to 19.1% in 2016 and advancing in value from just 3.4% in 2015 to 26.9% in 2016.
The report noted greater use of chip cards, rather than magnetic stripes, helped reduce counterfeit card fraud.
There was also a shift in the value of credit card payments fraud from in person use (53.8%) in 2015 to predominantly remote use (58.5%) in 2016.
American consumers’ average credit card debt, total permitted credit line, number of accounts and enrollment in online services have all grown post-recession, according to the CFPB’s biennial financial market report.
The popularity of secured credit cards – cards that require a cash security deposit – have also enjoyed gains. The CFPB says secured cards are frequently used to build credit history. For mass market issuers, the number of new secured cards rose 7% year-on-year in 2016, driven by consumers with severely poor or no credit score.
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