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The payments landscape 2019:

What's real, what's not

By Brandes Elitch But when there is a high-dollar ticket, over $1,000, the
CrossCheck Inc. merchant will tell you to take out your checkbook instead
of a card. The gross margin for car dealers, for example,
attend several conferences each year and meet peo- is less than 2 percent. They won't pay an interchange
ple with diverse perspectives on payments: bank- fee greater than that just to let customers accrue points
ers, bank core processors, card processors, software on their cards. Also, check guarantee costs a fraction of
I developers and, of course, the people who make it interchange, makes sales happen immediately and gives
all happen: ISOs and merchant level salespeople (MLSs). consumers more time to come up with the money without
Today, the ground is shifting under their feet, and they applying for credit or paying interest. So payments from
are working overtime to process new developments. They checking accounts will be around for a long time.
often speak with me about check guarantee services, typi- What consumers grapple with
cally stating:
• Who uses checks anymore, who takes checks – and Most American consumers are living paycheck to
why? paycheck with limited cash on hand. A study by Springleaf
• Everybody is using mobile payments now – that's the Financial indicated nearly 25 percent of consumers have
less than $250 in the bank on a given payday. Twenty
future. percent of those making over $200,000 annually stated
• Soon, we will have real-time payments for everybody. they save rarely or not at all. About 25 percent of people
That will change everything. with graduate degrees said they could not miss a month
• Cash is going away – and quickly too. of pay without needing to borrow money or sell assets.
A new poll by CreditCards.com found that 41 percent of
What the numbers say adults don't know when they will be able to pay off their
debt; 25 percent expect to carry debt to the grave. The most
Of course, none of these statements is true. Now, let's look common debt is mortgage (54 percent) followed by credit
at the numbers by dollar amount and transaction type for card (53 percent) and auto loan (47 percent).
the different payment types and see what's real. The data
is from The Federal Reserve Payments Study 2016. It doesn't Of consumers in households that make $30,000 to $50,000,
include online payments and monthly payments to pay 71 percent owe credit card debt, compared with an
bills. These numbers are from retail sales, where most ISO average 53 percent across all income brackets. One study
efforts are focused. (ValuePenguin) shows average debt per household at
$5,700 and average debt for balance-carrying households
Payment type Transaction Value at $9,333. These consumers do not want to get stuck in debt
volume traps where they revolve balances at 26 percent because
they didn't pay the full amount owed within six months
Debit card 69.5 billion $2.56 trillion of purchase.
transactions
Credit card 33.8 billion $3.16 trillion Second, people use debit cards for small dollar transactions
transactions and credit cards for higher dollar transactions. The
number of debit card transactions is over twice those of
Checks 17.3 billion $26.83 trillion credit cards, although total dollars spent with debit cards
transactions is about 81 percent of total credit card spend.
ACH debit 13.6 billion $54.76 trillion Third, the 2016 Federal Reserve study stated, "Data from
transfers transactions the Federal Reserve's Diary of Consumer Payment Choice
ACH credit 9.9 billion $90.54 trillion shows that cash remains the most frequently used payment
transfers transactions instrument, accounting for 31 percent of all consumer
transactions." So much for the comment that cash is going
Now, what do the numbers show? First, more than 17 away quickly.
billion checks were written in 2016. So much for the notion
that checks are going away. Small merchants now take Fourth, regarding mobile payments, it would be more
debit cards instead of checks, which makes sense, as the closely reflect reality to say nobody is using mobile
average debit card transaction is less than $50, and one payments yet, rather than assert that everybody is using
third are less than $10. mobile payments. A study last year by JPMorgan Chase
showed only about 36 percent of merchants accept digital
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