Fed: Cash Still King In Payments
BOSTON-American consumers cut back on their use of credit cards and relied more on cash for routine purchases and bill payments during the depths of the recession, according to the latest comprehensive study of payment preferences by the Federal Reserve Bank of Boston's Consumer Payments Research Center (CPRC).
In addition to the weak economy, new government policies and banking business practices, along with an environment of low interest rates, may have influenced consumer payment preferences during that time period.
The average consumer made 64.5 payments per month in 2009, down slightly from the 67.4 monthly payments noted in the 2008 survey. Debit cards remained the most commonly used instrument at 19.0 payments per month, with cash second at 18.4. But the gap between the two narrowed considerably.
In 2008, consumers reported 21.2 debit card transactions per month and 14.5 cash transactions. The average consumer also kept more cash on hand in 2009: $291 per person compared with $230 in the 2008 survey.
"It appears the business cycle and payments-related public policies had a notable impact on the composition of consumer payment use in 2009," said Scott Schuh, director at the CPRC. "For many years, consumers had been migrating away from paper instruments toward cards and electronics. In 2009, consumers reversed that trend and moved back to more reliance on cash."
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How Top CUs Use Address Verification
BOSTON-Credit unions have varying levels of address verification, which a new study says impacts their performance.
Experian QAS, a part of Experian Marketing Services and a provider of address verification software and services, said its "quality benchmark report" on the top 100 credit unions enables CUs to compare their address validation practices to those of industry leaders and to better understand the business impact of those practices.
"By utilizing point-of-capture address validation, credit unions can improve member service and reduce operational costs," said Thomas Schutz, SVP and general manager of Experian QAS. "Credit unions are in constant competition with each other, but also with major banking institutions. By ensuring they collect member information correctly, credit unions can communicate with members in a timely manner and increase up-sell and cross-sell opportunities."
