The Federal Reserve on Wednesday issued an update to the Federal Reserve Payments Study (FRPS) to include findings from recent survey data. The findings highlight changes in card payments and increased adoption of innovative payment methods following the emergence of COVID-19.
For example, the recent data show that the number and value of both in-person and remote (e.g., online, over the phone) card payments grew in 2019, broadly in line with recent trends. The year 2020, by contrast, saw an unprecedented decline of 11.7 billion, or almost 13 percent, in the number of in-person card payments accompanied by a similarly unprecedented surge of 8.7 billion, or almost 24 percent, in the number of remote card payments.
Despite the resulting decline in the total number of card payments, the total value of card payments increased once again in 2020, suggesting consumers consolidated their card spending into fewer, higher-value purchases. Reflecting the shift away from in-person card payments toward remote card payments, the total value of remote card payments exceeded that of in-person card payments in 2020 for the first time. The increase in remote card payments in 2020 was driven primarily by a surge in e commerce, and quarterly data show that the greatest shift to remote card payments occurred in the second quarter of 2020.
In addition, the pace of adoption of new payment technologies increased in 2019 and 2020, with the share of in-person card payments initiated with contactless technologies increasing many times over. Card payments initiated with digital wallets, which securely store payments information on mobile devices or online, saw similar growth in recent years, including accelerated adoption in the second half of 2020. Finally, adoption of person-to-person payments between bank accounts also exhibited growth in 2020 with a surge in first-time use in the second quarter.
