Past and Future: The Survey of Consumer Payment Choice Scott Schuh

Past and Future: The Survey of
Consumer Payment Choice
Scott Schuh
Consumer Payments Research Center
Presented to Economics of Payments VII attendees
April 2-4, 2014
Noncash payment trends: FRPS
Number of US payments by all sectors (household, business, government)
Billions per year
60
SCPC
Starts
60
50
50
40
40
Checks
30
30
20
20
Credit
Debit
10
10
Electronic (ACH)
0
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
EBT cards
2000
2003
2006
2009
0
2012
Source: Federal Reserve Payment Study (FRPS)
2
Consumer payments data program
Year
Survey of CPC
(Boston Fed)
Diary of CPC
(3 Fed Banks)
Electronic
Transactions Data
2003
524 (Boston Fed employees)
--
--
2004
4,631 (Fed employees)
--
--
2005
--
--
--
2006
1,500*
--
--
2007
--
--
--
2008
1,010
--
--
2009
2,169
--
--
2010
2,102
353
--
2011
2,151
389
--
2012
3,176
2,547
--
2013
2,042 (est.)
--
--
* Sponsored by the AARP. Red indicates pilot studies. All samples are U.S. consumers except where noted.
3
Survey of Consumer Payment Choice
4
Money vs. payment instruments, v2.0
Asset or Liability
Basic Money
or Debt
Instrument
(derivative media)
Currency in circulation
Currency
Travelers check
Travelers check
Physical trait
Paper / metal
Check
Money order
Money
(M1)
Online banking bill pay
(OBBP)
Demand deposit
accounts
&
Bank account number
payment (BANP)
Other checkable
deposits
Debit card
Prepaid card
Credit
Electronic
Revolving credit
Credit card
5
Card
Consumer adoption of payments: 1989-2012
100
90
100
Cash
90
Checking Account
Percent of Consumers
80
70
80
BANP
Credit
70
60
50
60
Solid Line = SCPC
Dashed Line = SCF
50
OBBP
40
30
20
Prepaid
(new)
30
Prepaid
(old)
Debit
40
Money order
20
10
10
0
0
Source: Survey of Consumer Payment Choice;
Survey of Consumer Finance
6
Percentage of consumers
Most Consumers Hold 5 or 6 Instruments
30
30
25
25
20
20
15
15
10
10
5
5
0
0
1
2
3
4
5
6
Number of payment instruments adopted
7
8
9
0
2012 Survey of Consumer Payment Choice
7
Monthly payments per capita
Survey aggregation issues
85
85
SCPC v1.o
Number of payments per capita
80
80
75
75
70
70
65
65
60
60
55
Blue = SCPC
Red = Diary
55
50
50
45
45
40
40
35
35
SCPC v2.o
30
25
Q1/2003
Q1/2004
Q1/2005
30
25
Q1/2006 Q1/2007 Q1/2008 Q1/2009 Q1/2010
Q1/2011
Q1/2012
Notes: Payments is the number of times consumers made a payment for consumption and nonconsumption transactions.
8
Consumer payment use by instrument:
2003 – 2012, SCPC
50
50
Percentage share of monthly payments
45
45
Debit
40
40
Check
35
35
Credit
30
30
25
25
20
20
15
15
BANP
10
Online
10
5
5
Prepaid
0
2003
2004
2006
2008
2009
9
2010
2011
2012
0
Consumer payment use by transaction:
2008-2012
50
Share of Transactions
45
Red – Bills
40
35
30
Blue – Nonbills
25
20
15
10
5
0
2008
2009
2010
Automatic
By mail, in person, or by phone
Retail goods
Person to person
2011
Online
Online or electronic
Services
2012
2008-2012 Survey of Consumer Payment Choice
10
Cash Holdings
11
U.S. domestic currency in circulation
200
2700
2600
$147
2500
Consumer
Average Cash
Holdings
(Right Scale)
120
100
Total
Currency
per Capita
(Left Scale)
80
60
2100
40
2000
20
0
1900
Source: Federal Reserve Statistical Release, 2008-2012 Survey of Consumer Payment Choice (SCPC)
Note: Capita is defined as 18+ non-institutionalized civilians. Cash holdings exclude large values.
12
Dollars
Dollars
160
140
2400
2200
$158
$142
$132
2300
$174 180
Cash Withdrawals by Location
13
SCPC Questions on Assets and Liabilities
Checking
accounts
Saving
accounts
2003
2004
2006
2008
2009
2010
2011
2012
2013
Adoption
X
X
X
X
X
X
X
X
X
Value
--
--
--
--
--
--
--
--
--
Adoption
--
--
X
X
X
X
X
X
X
Value
--
--
--
--
--
--
--
--
--
Adoption
X
X
X
X
X
X
X
X
X
Value
--
--
--
X
X
X
X
X
X
Adoption
X
X
X
X
X
X
X
X
X
Value
--
--
--
--
X
X
X
X
--
Adoption
--
--
--
--
X
X
X
X
X
Value
--
--
--
--
--
--
--
--
--
Adoption
X
X
X
X
X
X
X
X
X
Value
(debt not
limit)
--
--
--
X
X
X
X
X
X
Cash
Prepaid
cards
Nonbank
online
services
Credit
cards
14
SCPC Panel
15
CPRC Website
16
Diary of Consumer Payment Choice
17
General information
2012 Survey
2012 Diary
Mode
Online
Paper diary with nightly
online survey
Number of
required logins
One
Nightly for three nights
Median time
burden
37.7 minutes
12 minutes online each night
• ??? per transaction in
paper diary
Cognitive
burden
Prompted recall
Recording activity
Administrative Self determined
burden
• 93.5% respond within 30
days of invite
Must start on assigned date
N
2468
2065
18
SCPC and DCPC Comparison
Feature
Survey
Diary
Financial responsibility
X
Characteristics of
payment instruments (PI)
X
Adoption of PI
X
X (implied)
Cash activity
X
X
Frequency of use of PI
X
X
7 (3 bills+4 other)
45 (linked to NAICS)
Payment (expend.) types
Dollar values of payment
activity
X
Miscellaneous
XS
XD
Demographics
X
X
19
DCPC Long-Form Memory Aid
20
DCPC Long-Form Memory Aid (cont.)
21
Consumer Expenditure Diary (BLS)
22
Diary participation 9/29-11/2
New
Total
300
Number of diarists
250
200
150
100
50
0
Source: 2012 Diary of Consumer Payment Choice (DCPC), preliminary results
23
Summary of 2012 Survey and Diary Results
SCPC (Number)
Cash
Check or
money order
DCPC (Number)
Payment
cards
Electronic
payments
Other
DCPC (Value)
A “game
changer…”
0%
20%
40%
60%
80%
100%
Source: 2012 Survey of Consumer Payment Choice;
2012 Diary of Consume Payment Choice
24
Consumer payment use by instrument:
2008 – 2012, SCPC and DCPC
50
SCPC
45
45
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
2008
2009
2010
50
2011
Cash
Check
Debit
Credit
Prepaid
OBBP
BANP
Money
order
Travelers
check
2012
Percentage share of monthly payments
Percentage share of monthly payments
50
45
50
DCPC
45
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
2010
2011
2012
Source: 2008-2012 Survey of Consumer Payment Choice
2010-2012 Diary of Consumer Payment Choice
25
Grocery Payments Then and Now
27
A fork in the road
A simple payment
instrument survey?
OR
28
A complete HH
consumption and ST
saving survey?
SCPC+DCPC ≈ SCF + CES ?
29
Survey of Consumer
Finances (Fed Board)
Consumer Expenditure
Survey (BLS)
 HH finance
 Consumption
 Income
expenditures
 Balance sheets
 Long run (lots)
 Short run (some)


Some payments
 Demographics

Detailed quantities
Price per unit
 Income
 Demographics
Expenditures and income
Expenditures = Income - Savings
Source
$ tr
Personal disposable income (NIPA, 2012 Q4)
Total
12.5
Excl. imputed rent and Medicare/aid
11.0
Personal savings
Adjusted personal disposable income (APDI)
0.8
DCPC
All expenditures
% of APDI
10.2
100
9.7
95
Table: Expenditures from different sources
Adjusted personal disposable income minus savings comes close to
the DCPC aggregate!
Is this the right way to think about DCPC expenditures?
30
Conceptual differences
… Consumption vs. expenditure NOT the same
… Expenditure that is not consumption: Credit card bills
… Consumption measured differently: Leasing a new car
… Real vs. imputed consumption (NIPA)
DCPC Expenditure Categories
Food and Personal Care Supplies

Auto and Vehicle Related

General Merchandise

Entertainment and Transportation

Housing

Medical, Education, Professional Services 
Financial, Professional, Miscellaneous

Govrnment and Nonprofit

Gift and Transfers to People

Table: DCPC main expenditure categories vs. NIPA definition
31
Comparison with various measure of
consumption
Source
$ tr
PCE Personal Cons. Expenditure (2012)
Total
11.1
Adjusted PCE
9.1
∗
% of adjusted
122
100
DCPC (2012)
Consumption only∗
8.1
89
Consumer Expenditure Survey (2012)
Total
Adjusted CEX
6.4
5.1
70
56
Hurd & Rohwedder (2011 Q4)
5.4
59
Excluding mortgage, financial services, insurance, taxes, P2P transfers
Table: Measures of aggregate consumption
32
EXTRA SLIDES
33
2010-2012 assets and liabilities
34
Mobile banking and payments
Survey aggregation issues
40
40
35
30
Percentage of consumers
35
Mobile banking adoption
(new definition)
30
25
25
20
15
Mobile banking use
(new definition)
Mobile banking adoption
(old definition)
15
Mobile payments
any type*
10
Mobile banking use
(old definition)
5
Mobile payments by
contactless
Mobile payments by
text
0
2008
2009
20
2010
35
10
5
0
2011
2012
Source: 2008-2012 Survey of Consumer Payment Choice;
*Consumers and Mobile Financial Services, Federal Reserve Board.
Adoption
Full and direct
measurement
Adoption implied
through use
Payment instruments
SCPC
DCPC
Bank accounts
SCPC
DCPC
Mobile payments
technology
SCPC
DCPC
Bank account access
methods
SCPC
DCPC
36
Payment instrument use
SCPC
DCPC
Purchases
X
X
Bills
X
X
Online payments
X
X
Person-to-person
X
X
Dollar values
X
Cash on hand when making payment
X
Number of transaction categories
37
7
45
Cash
SCPC
DCPC
Cash on hand
X
X
Payments
X
X
Withdrawals
X
X
Deposits
X
Cash-to-coin
X
Coin-to-cash
X
US-to-foreign
X
Foreign-to-US
X
Daily cash flow
X
38
Two survey instruments, two measurements
Observation: Different methods yield different results.
Monthly Number of Bill Payments, by
Transaction Type
Number of Payments
25.0
22.0
20.0
9.2
15.0
10.0
5.0
11.3
6.7
6.2
0.0
SCPC
Automatic
Online
8.2
2.9
2.1
3.1
DCPC
USPS*
By mail, in person, or by phone
Note: sub categories do not sum to total due to rounding
*USPS Data available for 2011
Source: 2012 Diary and Survey of Consumer Payment Choice [Preliminary]
39
DCPC capable of measuring more,
but is it more accurate?
DCPC
•
•
•
•
Dollar Amount
Merchant Type
Day of Week
Time of Day
SCPC
•
Number of Bills:

Transaction
 PI
Note: red indicates weekend
Source: 2012 Diary of Consumer Payment Choice [Preliminary]
40
Survey sampling units
SCPC
SCF
Individual consumer
Primary economic unit
• We do ask about some behaviors that • Near the end of the survey there are
are often shared or jointly owned
Q’s about other independent
within a HH, such as bills or bank
members of the household
accounts.
• We ask the financial responsibility
Q’s to get a sense of the R’s role in
the HH.
CONSIDERATIONS FOR SCPC RESPONDENTS:
• Some could find it difficult to answer Q’s about bills and bank accounts in
terms of the PEU, not as an individual.
• Hard to know all payment behavior of other HH members, especially cash.
• SCPC instructs R to only answer for his/herself, even on questions about
bills or bank accounts.
41
Income
SCPC
SCF
Total HH income category during past
12 months:
1. Less than $5000
to
17. $200,000 or more
Income $ value for PEU in last calendar
year, for each of 12 categories,
including:
• Wage and salary income
• Income/losses from business
• Interest & dividend income
• Investment & rental income
“Normal income” – was this salary
high/low/normal, and why?
Respondent’s income rank within HH
Salary vs inflation comparison
1. Past 5 years
2. Expectation for next year
42
Short term (liquid) assets
SCPC
Currency, U.S.
SCF
$
Currency, foreign
Currency, virtual/digital (private)
Travelers checks
A
Checking accounts (banks)
A
A,$
Savings accounts (banks)
A
A,$
Prepaid cards (bank and nonbank)
A,$
Nonbank checkable investment accounts
Nonbank online payment service (e.g.,
PayPal)
A,$
A
43
Payment instruments, by asset
SCPC
Cash (currency)
SCF
A, U(#), B($), W($)
Travelers check
A, U(#)
Checking accounts
A
•
Check
A, U(#)
•
Debit card
A, U(#)
•
Online banking bill payment
A, U(#)
•
Bank account number payment
A, U(#)
•
Cashier’s check
A
•
Certified check
A
•
Money order
A, B($)
X
A, U(#)
Prepaid cards (DDAs and other backing)
Direct deduction from income
A, U(#), B($)
A
Liabilities: Credit cards
A, U(#), D
44
A, U($), D($),
DL($)
Banking & payment practices
SCPC
SCF
Automatic bill payments
X
X
Credit card revolving/convenience use
X
X
Visits to bank teller
X
X
ATM use
X
X
Telephone banking
X
X
Online banking
X
X
Mobile banking
X
Mobile payments
X
Check cashing store use
X
Cash back at retail store
X
45