Cash is King, or is it?...Cash is King, or is it? Roger W. Replogle Executive Vice President and...

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


3

The U.S. Payment

System at a Glance


the U.S.


Penny





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


6

The U.S. Payment

System at a Glance


the U.S.


Penny





Hurricanes

The U.S. Payment

System at a Glance


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


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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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


Largest change took place under $10

9


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


Online shopping increase, mobile consistent

10


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


Cash and card value shares are consistent

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Share of the Value of Payments


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



….and everyone continues to hold cash

12


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


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



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The U.S. Payment

System at a Glance


the U.S.


Penny





Hurricanes

The U.S. Payment

System at a Glance

Federal Reserve Cash Product Office 14

Cash is facing increasing competition


Payments evolution in the U.S. & currency in circulation

15

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


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The U.S. Payment

System at a Glance


the U.S.


Penny





Hurricanes

The U.S. Payment

System at a Glance

Making “Cents” of the Penny

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The U.S. Payment

System at a Glance


the U.S.


Penny





Hurricanes

The U.S. Payment

System at a Glance

Cash Me if you Can

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20

The U.S. Payment

System at a Glance


the U.S.


Penny





Hurricanes

The U.S. Payment

System at a Glance

Federal Reserve Cash Product Office 21

Timeline of events


The Fed stayed open, but carriers weren’t able to get to us

22

Houston Fed before and after Harvey


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


Here is where you can learn more

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Cash is King, or is it?...Cash is King, or is it? Roger W. Replogle Executive Vice President and...

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