Non-Cash Transactions Matt Dorf

What are Non-Cash Transactions? Credit Card Debit Card Gift cards Stored value ACH Online banking bill payment (OBBP) Mobile payments Virtual checks Contactless

Some interesting facts Use of cash peaked in mid-90’s and has been declining since 1 Electronic forms of payment increased from 78% in 1995 to almost 92% in Debit card use almost doubled between 1995 and ATM/Debit Card Usage 1 ▫Under 30 Years Old – almost 86% ▫Over 60 Years old – almost 50% (tripled since 1995)

What happened to cash? From 1995 to 2003 the number of ATM’s in the US tripled, in 2006 the number dropped for the first time 5

Where did all the checks go? In 2003, electronic payments in US exceed check payments 3 Check 21, 2003 ▫Image deposits or Substitute Checks ACH – Check conversion Gov’t gave checks the ax as of March 2011 ▫Social Security, Supplemental Security Income, Veterans, Railroad Retirement and Office of Personnel Management Some banks accepting photos of checks via scanner and iPhone

Who’s on board? Public transportation systems ▫More than ½ of largest Public Transit Social Security Payments – rolled out in 2008 U.S. Food Stamps Airlines – no longer accepting cash Non-profits accepting donations via text-mGive ▫From 9 p.m. on Tuesday to 10 a.m. on Thursday $3.4 million was raised just from text message donations Some supermarkets no longer accepting checks Even Monopoly!

Online Payments Online Bill Pay 10 ▫Over 2 million U.S. households adopted online banking and bill payment during in 2009 ▫69.7 million households (4 out of 5 households with Internet access) use online banking services ▫64.4 million households pay at least one bill online e-Commerce sales (retail) 4 ▫Total retail sales grew 4% from 2006 to 2007 ▫E-Commerce sales grew 20% from 2006 to 2007

Additional Online Payments Alternative Online Payments – account info not given to merchant ▫Virtual card - debit or credit card number generated via Internet to purchase online ▫Instant Credit – deferred billing ▫E-Wallet - online account with access to pay multiple web merchants Person to Person (P2P) ▫Almost 50 percent of consumers expressed interest in using electronic P2P 12  sending money to a child at college  sending money out of the country  splitting the cost of a gift with family members, co-workers or friends ▫Offered by Pay Pal and various banks

What’s Next? Contactless Mobile ▫iPhone - “bumping” Send money via text message - OboPay ShopSavvy ▫Allows you to take a picture of a barcode with your cell phone, tell you if it is being sold for less somewhere else, and if so, purchase it immediately via PayPal Pay medical bills online – MedPayOnline Secure Vault Payment

Expanded Access Prepaid cards – no credit check ▫Green Dot ▫Sky Light Higher One* Sallie Mae The Minotaur Group - "Con Dios Financial" ▫Aimed at unbanked Spanish population in CA ▫Payroll deposited directly onto card which also has debit and ATM features

What’s Behind The Trend Post Office – eliminating mail days Concerns about security is decreasing 4 Convenience Environmentally friendly More options available to choose from Demands – Speed! More people with access to technology

Sources 1: review/2009/q3/brq309_changes-in-electronic-payment.pdf 2: researchers/consumer-statistics/ 3: 4: 6: c%20payments&st=cse 7: note/2009/pcc-note_credit-card-act-2009.pdf 8: 9: papers/2009/D2009AprilSEPTA.pdf 10: 11: newsId= &newsLang=en