Debit cards top payments, Fed says

Dive Brief:

In the latest triennial Federal Reserve Payments Study, debit cards dominated, once again accounting for the bulk of all noncash payments, but the rise in those transactions to 120.6 billion for 2024 constituted the slowest growth rate over a three-year period since the report on noncash payments began in 2000.
By contrast, credit card transactions climbed the most by number, outstripping the growth of debit cards for the first time during a three-year period since 2000, essentially since the study began, given the first report was issued in 2001. The study tracks noncash payment types, including debit cards, credit cards and ACH debit transfers, with the latest update released July 1.
ACH transfers via the automated clearing house continued to account for the biggest value of payments, generating $104 trillion in payments, but that growth slowed relative to prior periods, the study summary said. Nonetheless, those ACH payments still accounted for a larger portion in the latest study, 74%, compared to 72% in the previous study. The ACH growth rate was 3.5% by value and 3.3% by transactions.

Dive Insight:

Overall, noncash payments surged over the three-year period, according to the report, which is a joint effort of the Federal Reserve and the Federal Reserve Bank of Atlanta, based on surveys of financial institutions, card networks, and payment processors.

Table of Contents

Noncash payments grew at the highest rate since the study began, an increase of 15% to 236.6 billion transactions in 2024 compared to 2021. The value of those payments rose 8% to $140 trillion. The increase was mainly driven by an increase in card payments, which accounted for about four-fifths of all noncash transactions in 2024.

Since 2000, consumers and businesses have increasingly relied on noncash payments, with the total number of noncash payments tripling between 2000 and 2024, according to the Fed.

Non-prepaid debit cards were used more often than prepaid cards, for nearly 100 billion transactions, while prepaid debit cards accounted for only 21 billion transactions, the study said.

Amid the rise of card and ACH payments, cash payments and ATM cash withdrawals fell in value and volume, the Fed found.

Previous research from the Fed suggests that consumers are using cash less, but they haven’t abandoned the payment method just yet. The share of consumers who had used cash dipped from 87% in October 2023 to 83% the following year, according to a report last year from the Federal Reserve Bank of Atlanta.

About a fifth (16%) of consumers cited cash as their third most-preferred payment option, falling behind credit and debit cards, according to that 2024 Survey and Diary of Consumer Payment Choice.