This document summarizes a report on consumer payment trends in the US. It finds that while checks remain the most popular form of bill payment, debit cards are leading for non-cash transactions. Cash is still preferred by over half of adults for purchases. The economic downturn reduced consumers' financial security and changed payment preferences, with the financially insecure now preferring money orders and debit over credit cards and checks. Emerging payment methods like contactless, mobile and online payments are growing but have not replaced traditional methods yet.

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Consumer Payment Trends in the U.S.
April 1, 2010
Businesses routinely seek to appeal to consumers by understanding which goods or
services they want to buy. But understanding how shoppers prefer to buy—that is,
which forms of payments they favor, and why—is also critically important. Marketers,
retailers, card associations and other product and service providers hope to make
transactions easy and convenient for consumers, but they must also balance these
requirements against their own needs. Meanwhile, in the post-recession U.S.
marketplace the world of payments keeps evolving as consumers back away from credit
cards, debit cards move toward saturation, online payment options proliferate, and
contactless payments and mobile payments move closer on the horizon.
This all-new report from Packaged Facts examines consumer payment forms of all
kinds, including credit cards, debit cards, gift/prepaid cards, cash, checks, online
payment and emerging forms, with a focus on how consumer preferences have
changed during the past five years and vis-à-vis the economic downturn and recovery. It
includes:
• Analysis of how Americans’ financial outlook influences their spending and
payment preferences.
• Demographic and psychographic profiling by payment form and consumer age,
gender, race, geographic region, income, educational level, etc.
• Focus chapter on cash, whose straightforwardness and immediacy makes it the
payment choice of more than half of U.S. adults.
• Focus chapter on checks, which despite declining usage remain popular for bill
paying and are getting new legs via “digital reinvention.”
• Focus chapter on credit cards, which have reached saturation and face other
challenges including more restrictive legislation and declining usage among
consumers looking to reduce their debt.
• Focus chapter on debit cards, which continue to win followers but whose rise
may be diverted by laws restricting overdraft fees.
• Coverage of gift cards and other prepaid debit cards, which are creating a fast-
growing “second-tier” banking system for those without access to traditional
banks.

2. • Focus chapter on new payment methods, including contactless, cell phone and
Internet-based, all of which are jockeying for position in the next wave of
payment forms.
Myriad data sources include primary data compiled by Experian Simmons and cross-
tabulated by Packaged Facts to create customized profiles of those consumers shaping
the U.S. payments industry now and into the future.
Table of Contents
Consumer Payment Trends in the U.S.
Chapter 1: Executive Summary
Scope of Report
Methodology
Check Remains Most Popular Form of Bill Payment
Table 1-1: Mode of Bill Payment, 2009 (percent of U.S. adults and number in
millions)
Debit Cards Lead in Non-Cash Transactions
Electronic Payment Share at 63%
Government Study Confirms Market Directions
Cash: Still Preferred by Over Half of Adults Making Purchases
Checks: Also Still in Use by Over Half of Americans
Credit Cards: Over Half of Americans Are Regular Users
Debit Cards: Popularity Still Rising, But at Slower Rate
Gift Cards, Prepaid Debit Cards, and Money Orders
Online Payments
Figure 1-1: Percentage of U.S. Adults Who Used Online Banking in Last 30
Days, 2004-2009
Spending Attitudes and Economic Sentiment
A Stuttering Recovery
Economic Downturn Dampens Americans’ Sense of Financial Security
Table 1-2: Percentage of U.S. Adults Who Agree or Disagree with the Statement:
“I Feel Secure Financially,” 2004-2009

3. Attitudes Toward Economy and Individual Financial Situation
Financially Secure Big on Credit, Checks
Figure 1-2: Payment Preferences Among the Financially Secure, 2009 (index)
Financially Insecure Lean Toward Money Orders, Debit
Chapter 2: Market Overview
Introduction
Scope of Report
Methodology
Payment Trend Overview
Check Remains Most Popular Form of Bill Payment
Table 2-1: Payment Preferences in the U.S., 2009 (percent of U.S. adults and
number in millions)
Table 2-2: Mode of Bill Payment, 2009 (percent of U.S. adults and number in
millions)
Debit Cards Lead in Non-Cash Transactions
Figure 2-1: Percentage of U.S. Non-Cash Payment Transactions: By Type, 2009
BAI/Hitachi Study Places Electronic Payment Share at 63%
Government Study Confirms Market Directions
Figure 2-2: Percentage Share of Non-Cash Payments: By Type, 2003 vs. 2006
Cash: Still Preferred by Over Half of Adults Making Purchases
Table 2-3: Percentage of U.S. Adults Who Agree with the Statement: “I Often
Prefer to Pay Cash for the Things I Buy,” 2004-2009
Checks: Also Still in Use by Over Half of Americans
Figure 2-3: Percentage of U.S. Adults Who Have a Checking (Interest or Non-
Interest) or Check Guarantee Card, 2004-2009
Credit Cards: Over Half of Americans Are Regular Users
Table 2-4: Credit Card Ownership and Usage: By Frequency, 2004- 2009
(percent)
Debit Cards: Popularity Still Rising, But at Slower Rate
Table 2-5: Debit Card Ownership and Usage, 2004-2009 (percent)

4. Gift Cards, Prepaid Debit Cards, and Money Orders
Figure 2-4: Percentage of Debit Card Users: Banked vs. Unbanked, 2009
Figure 2-5: Percentage of U.S. Adults Who Have Sent Money Within
the U.S. in the Last 12 Months, 2004-2009
Online Payments
Figure 2-6: Percentage of U.S. Adults Who Used Online Banking in Last 30
Days, 2004-2009
Spending Attitudes and Economic Sentiment
The Villains of the Crisis
A Stuttering Recovery
Economic Downturn Dampens Americans’ Sense of Financial Security
Table 2-6: Percentage of U.S. Adults Who Agree or Disagree with the Statement:
“I Feel Secure Financially,” 2004-2009
Figure 2-7: Percentage of U.S. Adults Who Agree with the Statement: “I Don’t
Like the Idea of Being in Debt,” 2004-2009
Attitudes Toward Economy and Individual Financial Situation
Figure 2-8: Expected Forms of Consumer Payment During Holiday Season, 2009
(percent)
Financial Situation Sentiments by Demographics
Figure 2-9: Percentage of U.S. Adults Who Feel Better or Worse Off
Financially Compared with 12 Months Ago, 2009
Age
Race
Income Levels
Education
Geographic Region
Marital Status and Children in Household
Impulse Shoppers and Informed Consumers
Consumer Financial Outlook Impact on Payment Preferences

5. Financially Secure Big on Credit, Checks
Figure 2-10: Payment Preferences Among the Financially Secure, 2009 (index)
Financially Insecure Lean Toward Money Orders, Debit
Figure 2-11: Payment Preferences Among the Financially Insecure, 2009 (index)
Responsible Spenders
Figure 2-12: Payment Preferences Among Responsible Spenders, 2009 (index)
Poor Savers and Careless Spenders
Figure 2-13: Payment Preferences Among Careless Spenders, 2009 (index)
Confident Consumers
Table 2-7: Payment Forms by Level of Consumer Confidence: Low vs. High,
2009 (index)
Payment Preferences by Demographics
Age
Table 2-8: Likelihood of Preferring Payment Forms: By Type and Age Group,
2009
Young Adults and Teens Picking Up Plastic
Gender
Race
Table 2-9: Likelihood of Preferring Payment Forms: By Type and Race/Ethnicity,
2009
Geography
Education
Table 2-10: Likelihood of Preferring Payment Forms: By Type and Level of
Educational Attainment, 2009
Income
Table 2-11: Likelihood of Preferring Payment Forms: By Type and Household
Annual Income, 2009
Chapter 3: Cash
Introduction
Cash Is Elemental

6. Almost $800 Billion of U.S. Cash in Circulation
Older and Less Wealthy Americans Prefer Cash
Table 3-1: Cash Usage for Purchases or Bill Payment by Demographic, 2009
(index)
Cash Preferred by Both Financially Secure and Insecure
Table 3-2: Cash Usage for Purchases or Bill Payment by Level of
Financial Security, 2009 (index)
Cash’s Popularity Difficult to Gauge
ATM Transactions Declining
Figure 3-1: Monthly Number of ATM Transactions Per ATM in the U.S., 1996-
2008
Figure 3-2: Total Number of U.S. ATM Transactions, 1996-2008 (in billions)
Figure 3-3: Number of ATM Machines in the U.S., 1996-2008
Blame It on Debit Cards
Traveling Away from Cash
“Cash Only” Signs and Cash Discounts
A Second Coming of Cash
Turning to Cash in Hard Times
Calls to Redesign the Dollar
Chapter 4: Checks
Paper Checks Holding Out in Digital Age
Table 4-1: Number and Value of Checks Collected by Federal Reserve Banks,
1920-2003 (in millions of dollars and numbers)
The Fed’s Role in Check Processing
Figure 4-1: Number of Checks Paid in the United States: 2001, 2003 and 2006
(number in billions)
Electronic Checking Through ACH
Table 4-2: Percentage Share Distribution of Non-Cash Payments: By Type, 2003
vs. 2006
The Demographics of Check Writers

7. Table 4-3: Check Usage by Demographic, 2009 (index)
Responsible Spenders Use Checks
Table 4-4: Likelihood of Check Usage by Financial Attitudes, 2009 (index)
Checks Rare in the Retail Environment
Figure 4-2: Checks’ Share of Consumers’ Holiday Payment Methods, 2007-2009
(percent)
Overdrawn Checking Accounts a Cash Cow for Banks
Figure 4-3: Growth in Average NSF Charges, Fall 1998-Fall 2009
The Unbanked Rely on Check-Cashing Outlets
Looking Ahead: Digitalizing Deposits
Chapter 5: Credit Cards
The Rise of the Credit Card
Figure 5-1: Share of U.S. General-Purpose Debit, Credit and Charge Card
Purchase Volume, 2008 (percent)
Figure 5-2: Share of U.S. General-Purpose Credit and Charge Card Purchase
Volume, 2008 (percent)
Plastic Is Prevalent
Cards Cram the Wallet
Credit Cards for Everyone
Top Credit Card Demographics
One-Quarter of Americans Use Credit Cards for Bill Paying
Table 5-1: Credit Card Ownership, Usage in Past 30 Days, and Usage for Bill
Payment: By Demographic, 2009 (index)
Cardholders Consider Themselves Financially Astute
Table 5-2: Likelihood of Credit Card Usage by Financial Attitudes, 2009 (index)
Carrying a Balance
Figure 5-3: Consumer Credit Card Balances: Paid-Off Monthly vs. Balance
Carried, 2009 (percent)
Credit Trumps Debit for Pricey Items

8. Table 5-3: Preferred Payment Form by Spending Category: Credit Card vs. Debit
Card, 2009 (percent)
Table 5-4: Purchasing and Spending Expectations Among Credit Card Owners:
Overall and Users in Past 30 Days, 2009 (index)
Reward Cards Approaching 100%
Figure 5-4: Percentage Share of Credit Card Market: U.S. Rewards- Based
Cards vs. General-Purpose Cards Without Rewards, 2003, 2007 and 2011
But Rewards Less Rewarding for Issuers and Consumers
The Shift Away from Credit
Table 5-5: Percentage Share Distribution of Non-Cash Payments: By Type, 2003
vs. 2006
Table 5-6: Revolving Consumer Debt: 2004-2009 (in billions of dollars)
Behind the Disenchantment with Credit
“Evil, Thieving Bastards”
Punctured Profitability
Table 5-7: Return on Assets: Large U.S. Credit Card Banks, 1986- 2008
(percent)
New Legislation Will Restrict Credit Card Industry
Table 5-8: Key Provisions of the Credit Card: Accountability, Responsibility and
Disclosure (CARD) Act of 2009
Income from Interchange
Table 5-9: Changes in Visa and MasterCard Domestic Credit Card Interchange
Fee Rates, Numbers, and Average Rates, 1991-2009
Interchange Under Attack
Security a Concern
Looking Ahead
End of Excess
Returning to Charge Roots
Shifting Fees, Diluted Rewards
Chapter 6: Debit Cards, Gift Cards and Prepaid Debit Cards

9. Debit Cards
Debit Cards Push Out in Front
Table 6-1: Percentage Share Distribution of Non-Cash Payments: By Type, 2003
vs. 2006
Recession Driving Even More Americans to Debit
Visa Dominates Debit
Debit Disadvantages for Consumers
Rise in Debit Card Ownership
Table 6-2: ATM/Debit Card Ownership and Frequency of Usage, 2004-2009
(percent)
Debit Card Demographics
Table 6-3: Likelihood of Debit Card Usage by Demographic, 2009 (index)
Heavy Debit Users Feel Financially Insecure
Table 6-4: Likelihood of ATM/Debit Card Ownership and Usage by Financial
Attitudes, 2009 (index)
Rewards Programs Expected to Grow
The Tug-of-War Between PIN and Signature Debit
Consumers’ Stance on PIN and Signature Debit
Figure 6-1: Ranking of Payment Methods When Making a Purchase at a Grocery
Store, 2008 (On a scale of 1 to 7, 1 being most preferred)
Cascading Overdraft Fees
Table 6-5: Percentage of Consumers Preferring That Debit Card Be Declined If
Account Overdrawn: By Transaction Amount, 2008
Clamping Down on Overdraft
Gift Cards
Growth of the Gift Card
Size of Gift Card Market
Gift Cards Have Fallen from Their High
Table 6-6: Gift Card Purchasing in Last 12 Months: Overall and by Type and
Brand, 2009 (percent)

10. But Gift Cards Still Advancing
Figure 6-2: Percentage of U.S. Shoppers Hoping to Receive Gift Cards During
the Holiday Season, 2004-2009
Gift Card Drawbacks
Overspending or Not Spending at All
Prepaid Debit Cards
Prepaid Lifts Off
Table 6-7: Prepaid Card (Not Gift Card) Purchasing in Last 12 Months: Overall
and by Brand, 2009 (percent)
The Plusses of Prepaid
Table 6-8: Very Important Reasons Consumers Choose Prepaid Debit, 2009
(percent)
The Prepaid Population
Figure 6-3: Ownership and Awareness of Prepaid Cards Among Check-Cashing
Store Customers, 2009 (percent)
Funded by Fees
Secondary Banking System
Prepaid in the Public and Private Sectors
Payroll Cards
Looking Ahead
Debit on a Roll
Prepaid Well-Positioned
Decoupled Debit Looking for Traction
Chapter 7: Online, Alternative and Emerging Payment Forms
Online and Alternative Payments
Introduction
Online Bill Pay Catches on Quickly
Demographics of Online Bill Pay Users
Table 7-1: Online Bill Pay Usage by Demographic, 2009 (index and number in
millions)

11. Alternative Payments Butt Heads with Cards
Table 7-2: Percentage of Transaction Volume: By Internet Payment Vehicle,
2005 vs. 2008 (in billions of dollars and percentage of transaction volume)
PayPal
Google Checkout
Amazon Payments
Bill Me Later
eBillMe
Zong, Boku, and Kwedit
RevolutionCard
Contactless Cards and Mobile Payments
Payments Without Contact
Contactless Not Connecting
Trends in Mobile Payments
Security Worries
Growing Interest
Awaiting a Breakthrough
Mobility Versatility
Peer-to-Peer Payments Going After Cash
Obopay
Eyes on the iPhone
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