Rent-to-own News

Rent-to-own News - Debit card payments up 21 percent in Federal Reserve Study

April 3, 2008

Between 2003 and 2006, American's overall use of electronic payment methods jumped 12 percent according to a new study by the federal reserve system.

The study, released late last month, also shows exponential growth in the pre-paid card sector which includes open-loop cards that are not limited to specific merchants, are often re-loadable and are part of a list of electronic payment options available to rent-to-own customers.

According to the study, electronic payment transactions grew from 44 billion transactions in 2003 to 62.7 billion transactions in 2006. This increase -- which includes general credit and debit cards -- equates to around $34 trillion worth of electronic transactions in 2006.

 

Chris Bolin of Bolin Rental Purchase

A relatively new payment option, open-loop transactions, which, according to the study, typically appeal to the "underbanked and unbanked segment of the population", accounted for 322 million transactions representing approximately $13 billion worth of total electronic transactions in 2006. No comparable data was available for open-loop transactions for 2003.

 

The study shows the use of "signature" debit card transactions -- 16 billion were processed in 2006 -- as the most commonly used form of electronic payment, second only to credit cards.



But the use of PIN debit card transactions increased most sharply with a whopping 21 percent increase from 5.3 billion transactions in 2003 to 9.3 billion transactions in 2006. "Signature" card use went up 16 percent during the study period, from 10.2 billion transactions in 2003 to 16 billion transactions in 2006.

 

But those trends are no news to Chris Bolin.

 

Bolin, who owns two Bolin Rental Purchase stores -- one in Kentucky and one in Tennessee --  does not accept checks and says nearly 50 percent of his business is done through electronic payments.

 

"We've been doing that since we've opened," Bolin says. "There's a huge volume in those kind of transactions, especially in debit card transactions, we've seen an increase in those over the last few years."

 

David Shelleny of Moneris Solutions

The Fed study also shows double digit growth in the use of ACH transactions, or automated clearinghouse transactions. These transactions, which are most often in the form of direct deposits and automated payments, saw an 18 percent increase in use over the three year period from 2003-2006.

The 2007 Electronic Payments Study is part of a larger Federal Reserve Payments Study designed to measure and analyze trends in non-cash payments in the United States. The overall analysis consists of three individual studies: The Check Sample Study, the Depository Institutions Payments Study and the Electronic Payments Study mentioned here.

The numbers illustrate a continuing trend toward paperless transactions that will continue in the future,  says David Shelleny, marketing manager with Moneris Solutions, an electronic transaction processor.

"It is important to note that the payments landscape is changing," Shelleny says. "Debit cards, ACH and pre-paid card transactions are continuing to grow at an alarming pace and will most definitely replace the use of paper checks. For businesses that take both customer present transactions, and recurring payments, like RTO businesses, it is important to make sure that all payment methods are available."

To view or download all three Federal Reserve studies click here.

Any APRO member that signs up for electronic payment processing with Moneris Solutions receives a $50.00 rebate on processing fees. Click here for terms and conditions.







 

About APRO
The Association of Progressive Rental Organizations is the official voice of the rent-to-own industry and the most accurate and trustworthy source of rent-to-own news in the industry. Founded in 1980, APRO is the national, nonprofit trade association advocating and representing the rent-to-own industry before the U.S. Congress, state legislatures, courts, media and the public.

For more information, visit www.rtohq.org.




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