Friday, December 17, 2004
Copyright © Las Vegas Review-Journal

Electronic payment methods gain on checks

Statistics show strong growth in debit-card purchases, increasing 23.5 percent to 15.6 billion transactions in 2003

Whether buying groceries or making settlement payments with a business partner, electronic payments are catching on with the buying public.

In 2003 there were 44.5 billion electronic payment transactions compared with 36.8 billion checks payments, according to a recent Federal Reserve Bank study. The study suggested that consumers have reversed their payment methods from 2000 when they wrote more checks, 41.9 billion, compared with 30.6 billion electronic payments.

"The balance has shifted from check writing to electronic payments, and we expect this trend to continue," said Richard Oliver, senior vice president of the Federal Reserve Bank of Atlanta and the Federal Reserve Banks' product manager for retail payments. "Indeed, at current growth rates, credit cards and debit cards will both surpass checks in terms of total annual transactions in 2007."

Debit card purchases increased 23.5 percent to 15.6 billion transactions in 2003, compared with 8.3 billion in 2000. Debit-card purchases represented the largest growth sector of all electronic payments.

Visa, which offers debit cards through 14,000 banks in the United States, concurred that debit cards are the payment method of choice for many U.S. consumers.

Spending patterns in Nevada are following the same trend, too. Data gathered by Visa show Nevada ranked No. 26 among states in terms of debit transactions. Debit-card purchases in Nevada also racked up a total $3.1 billion in sales from Oct. 1, 2003, to Sept. 30.

Over this year's holiday season, from Nov. 1 to Dec. 10, the Western region of the United States, which includes Nevada, had an increase in debit-card use of 30 percent compared with the same period last year.

Visa reported national spending from Nov. 1 to Dec. 10 showed debit spending increased 29.3 percent while credit-card spending increased 7 percent compared with the same period a year ago.

Visa saw a 15.2 percent increase in national debit-card use from September 2003 to September 2004, and saw a 9 percent increase in credit-card use within that same period. Kenny Thomas, a spokesman for Visa USA said 55 percent of Visa-monitored transactions are debits and 45 percent are credit purchases.

Thomas said the convenience and security of debit purchases drive consumers to use debit cards.

"It's much easier to manage your money when you get a monthly statement that outlines exactly where it goes, opposed to spending cash," Thomas said. "You also have protection if the card is lost, stolen or used without your permission. We call it zero liability. If you lose cash it's just too bad, even checks are risky."