Debit Cards overtake cash as the most popular payment type, according to Fed diarists

 

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The growing popularity of debit cards and the displacement of cash by card and electronic payment alternatives is nothing new, but a Federal Reserve banks’ report released Thursday shows debit cards for the first time have surpassed cash as the most-used payment type.

The findings come from the 2018 Diary of Consumer Payment Choice, the fifth in an annual survey overseen by the Federal Reserve banks of Atlanta, Boston, Richmond, Va., and San Francisco. The research draws on a nationally representative panel of consumers who record all their purchase and bill-pay transactions and amounts over several days. The year’s group included 2,873 participants who recorded transactions for at least four days in October.

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“The Deadly Trifecta” is among threats putting $88 billion in banks’ payments revenue at risk

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While fintechs and other nonbank payments providers continue to carve out more market share for themselves, banks could face losing up to $88 billion in payments revenue to them. That’s the assessment from Accenture, the consulting firm that on Wednesday released its latest report, “5 Big Bets in Retail Payments in North America.”

Of that $88 billion, $82 billion is attributable to U.S. banks and $6 billion to Canadian institutions.

Payments revenue among U.S. and Canadian banks is slowing. According to Accenture, retail-payments revenue will likely grow at a compound annual rate of 4% over the next six years, going from $322 billion in 2019 to $405 billion in 2025. To ensure getting a share of that growth, banks and other payment-industry incumbents need to shift strategies, Accenture says.

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