Post on 30-Sep-2020
Cash is King, or is it?Roger W. ReplogleExecutive Vice President and Cash Product ManagerFederal Reserve System September 26, 2019
Currency Use, and Trends
2
The U.S. Payment
System at a Glance
Payments Evolution in
the U.S.
Making “Cents” of the
Penny
Going Cashless: Emerging
Developments in the U.S.
Building Resiliency:
Lessons from the 2017
Hurricanes
The U.S. Payment
System at a Glance
Currency Use, and Trends
3
The U.S. Payment
System at a Glance
Payments Evolution in
the U.S.
Making “Cents” of the
Penny
Going Cashless: Emerging
Developments in the U.S.
Building Resiliency:
Lessons from the 2017
Hurricanes
The U.S. Payment
System at a Glance
Our Mission…
The mission of Federal Reserve Cash Services (FedCash® Services) is to supply currency and coin to meet both domestic and international demand, maintain the quality and integrity of currency and coin in circulation, and ensure depository institutions have ready access to Cash Services. Our primary goal in meeting our mission is to maintain confidence in U.S. currency through well-controlled operations with sufficient capacity to meet the needs of the marketplace on a daily basis and in times of stress.
4
Federal Reserve Cash Product Office
U.S. Payment System at a Glance
5
Currency Use, and Trends
6
The U.S. Payment
System at a Glance
Payments Evolution in
the U.S.
Making “Cents” of the
Penny
Going Cashless: Emerging
Developments in the U.S.
Building Resiliency:
Lessons from the 2017
Hurricanes
The U.S. Payment
System at a Glance
Federal Reserve Cash Product Office
Cash is the second most used payment instrument
• The share of cash payments declined 4 percentage points
• Debit accounts for 28 percent of payments
• Credit increased 5 percentage points since 2016
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Payment Instrument Usage by Year
2019 Diary of Consumer Payment Choice: Preliminary Findings and not for quotation
31% 30% 26%
7% 6% 6%
18% 21% 23%
27% 27% 28%
10% 10% 11%
0%
20%
40%
60%
80%
100%
2016 2017 2018
Cash Check Credit Debit PrePaid Electronic Other
Federal Reserve Cash Product Office
2019 Diary shows cash used 11 times per month
Cash’s decline in share is largely result of two factors:
1. Cash usage declined one payment per month
2. Combined, debit and credit increased by nearly three payments
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2019 Diary of Consumer Payment Choice: Preliminary Findings and not for quotation
14.112.4
11.2
8.3 8.69.9
12.4 10.7
12.0
0
2
4
6
8
10
12
14
16
18
2016 2017 2018
Avg.
Pay
men
ts/M
onth
Average Monthly Payments
Cash Credit Debit
Federal Reserve Cash Product Office
Largest change took place under $10
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2019 Diary of Consumer Payment Choice: Preliminary Findings and not for quotation
49%33%
18%25%
22% 32%
0%
20%
40%
60%
80%
100%
$0 to $9.99 $10 to $24.99
Payment Instrument Usage by Purchase Amount - 2018
Cash Check Credit Debit
PrePaid Electronic Other
55%32%
14%26%
22% 34%
0%
20%
40%
60%
80%
100%
$0 to $9.99 $10 to $24.99
Payment Instrument Usage by Purchase Amount - 2017
Cash Check Credit Debit
PrePaid Electronic Other
Federal Reserve Cash Product Office
Online shopping increase, mobile consistent
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2019 Diary of Consumer Payment Choice: Preliminary Findings and not for quotation
5.1%
6.7%
8.2%
0.9%1.6% 1.8%
0%1%2%3%4%5%6%7%8%9%
2016 2017 2018
Shar
e of
Pay
men
t Usin
g M
obile
Mobile Phone Usage
Total Mobile Phone ShareIn-Person Mobile Phone Share
92% 90% 88%
0%
20%
40%
60%
80%
100%
2016 2017 2018
Percent of Payments Made In-Person, by Year
Percentage of payments made in-person, excluding bills
Federal Reserve Cash Product Office
Cash and card value shares are consistent
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Share of the Value of Payments
2019 Diary of Consumer Payment Choice: Preliminary Findings and not for quotation
8%
9%
8%
22%
18%
19%
13%
16%
14%
15%
15%
16%
35%
32%
33%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2016
2017
2018
Cash Check Credit Debit PrePaid Electronic Other
Federal Reserve Cash Product Office
….and everyone continues to hold cash
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2019 Diary of Consumer Payment Choice: Preliminary Findings and not for quotation
8 7 9 13 14 166 11 118 10
11
8
1315 15 11
9
23
37
4548
45 48
0
10
20
30
40
50
60
Age Under25
Age 25 to34
Age 35 to44
Age 45 to54
Age 55 to64
Age 65 andOlder
Avg.
Num
ber o
f Pay
men
ts p
er M
onth
2018 Payment Instrument Usage by Age
Cash Check Credit Debit PrePaid Electronic Other
10 12 12 12 10 114
6 7 11 15 207
12 1515 14
1126
40 4451 52 54
0
10
20
30
40
50
60
Less than$25,000
$25,000 –$49,999
$50,000 –$74,999
$75,000 –$99,999
$100,000 –$124,999
Greaterthan
$125,000
Avg.
Num
ber o
f Pay
men
ts p
er M
onth
2018 Payment Instrument Use by Household Income
Cash Check Credit Debit PrePaid Electronic Other
Currency Use, and Trends
13
The U.S. Payment
System at a Glance
Payments Evolution in
the U.S.
Making “Cents” of the
Penny
Going Cashless: Emerging
Developments in the U.S.
Building Resiliency:
Lessons from the 2017
Hurricanes
The U.S. Payment
System at a Glance
Federal Reserve Cash Product Office 14
Cash is facing increasing competition
Federal Reserve Cash Product Office
Payments evolution in the U.S. & currency in circulation
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56
78
910
1113
1416
0
5
10
15
20
25
30
35
40
45
0
2
4
6
8
10
12
14
16
18
20
1939 1943 1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015
Billi
ons
of N
otes
Paym
ent O
ptio
ns
NIC $1s -$50s NIC
CashChecksMoney OrderTraveler's ChecksPrepaid paper (Closed loop)
Charge cardsCredit Cards
Debit CardsBank Act. Num.
Prepaid cards (closed loop)
Prepaid cards (open loop)
Online Banking Bill Pay
Virtual Currencies(closed loop)
Virtual Currencies(open loop)
As of July 2019, U.S. currency in circulation reached 1.70 trillion worldwide. A 5% Year over Year Increase
Currency Use, and Trends
16
The U.S. Payment
System at a Glance
Payments Evolution in
the U.S.
Making “Cents” of the
Penny
Going Cashless: Emerging
Developments in the U.S.
Building Resiliency:
Lessons from the 2017
Hurricanes
The U.S. Payment
System at a Glance
Making “Cents” of the Penny
17
Currency Use, and Trends
18
The U.S. Payment
System at a Glance
Payments Evolution in
the U.S.
Making “Cents” of the
Penny
Going Cashless: Emerging
Developments in the U.S.
Building Resiliency:
Lessons from the 2017
Hurricanes
The U.S. Payment
System at a Glance
Cash Me if you Can
19
Currency Use, and Trends
20
The U.S. Payment
System at a Glance
Payments Evolution in
the U.S.
Making “Cents” of the
Penny
Going Cashless: Emerging
Developments in the U.S.
Building Resiliency:
Lessons from the 2017
Hurricanes
The U.S. Payment
System at a Glance
Federal Reserve Cash Product Office 21
Timeline of events
Federal Reserve Cash Product Office
The Fed stayed open, but carriers weren’t able to get to us
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Houston Fed before and after Harvey
Federal Reserve Cash Product Office
Orders increased before and after Irma
0
10
20
30
40
50
60
Deposit
Order
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Miami and Jacksonville Federal Reserve Offices, thousands of bundles
Peak order volume for 2 days is 5 times greater than prior 30 day average
Irma
Land
fall
Federal Reserve Cash Product Office
Here is where you can learn more
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http://www.frbsf.org/cash/http://www.frbsf.org/cash/publications