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Discussion Paper
Clearing and settlement of interbank card transactions: a MasterCard tutorial for Federal Reserve payments analysts
The Payment Cards Center organized a meeting at which senior officials from MasterCard shared information with Federal Reserve System payments analysts about the clearing and settlement functions that MasterCard performs for its client banks. These functions involve the transfer of information pertaining to card-based transactions (clearing) and the exchange of monetary value (settlement) that takes place between the banks whose customers are cardholders and those banks whose customers are card-accepting. This document summarizes some of the key points from that meeting.
Discussion Paper
Government use of the payment card system: issuance, acceptance, and regulation
The U.S. General Services Administration?s SmartPay program is the world?s largest commercial card portfolio. Nearly every state uses payment cards to electronically distribute unemployment insurance, child support, Temporary Assistance to Needy Families, or other funds. Federal, state, and local governments, as well as universities and other public-sector organizations, accept payments made with debit, credit, and prepaid cards. Recognizing the significant use of the payment card system by state and federal agencies, the Payment Cards Center hosted a conference on July 11 and 12, 2011 to ...
Discussion Paper
Trends and preferences in consumer payments: updates from the visa payment panel study
Michael Marx, senior director, Visa Research Insights, conducted a workshop in 2009 at the Payment Cards Center (PCC) as the economy was emerging from a recession. At that time, it appeared that the recession had affected consumer payment preferences, especially those related to cash and credit cards. To get an update on consumers? use of the various payment methods, the PCC invited Marx to facilitate another workshop in 2014. More recent findings from the Visa Payment Panel Study reveal declines in cash use ? a return to the long-term trend ? and increases in credit card use, perhaps ...
Discussion Paper
Millennials with money: a new look at who uses GPR prepaid cards
Phoenix Marketing International is a top 40 Honomichl market research company that annually fields an omnibus financial services survey that collects information from a representative sample of American households. Beginning in 2012, the survey added a series of questions designed to gather data on ownership and use of general-purpose reloadable (GPR) prepaid cards. This paper reports on those findings, including the discovery of a "power user" segment of the market composed of young and mid- to upper-income consumers who own and use GPR cards at rates well above the market average. Younger ...
Discussion Paper
Future Potential versus Past Performance: MPOWER Financing’s Innovation in Student Loan Underwriting
The Payment Cards Center hosted a February 2016 workshop featuring MPOWER Financing, a start-up public benefit corporation created to be a source of student loans for high-potential scholars who either do not qualify for federal aid or who face a gap between federal aid maximums and the full cost of their educations. MPOWER has taken a unique approach to loan underwriting that is based on future potential rather than past credit experience and has developed a scoring model that helps predict loan repayment for young adults who have yet to establish a credit history. This paper summarizes ...
Discussion Paper
Maintaining a safe environment for payment cards: Examining evolving threats posed by fraud
On April 23 and 24, 2008, the Payment Cards Center of the Federal Reserve Bank of Philadelphia and the Electronic Funds Transfer Association jointly hosted "Maintaining a Safe Environment for Payment Cards: Examining Evolving Threats Posed by Fraud." The conference included panels representing four key constituencies: issuers, consumers, merchants/acquirers, and networks. The panelists addressed the nature of payment card fraud in the 21st century. This paper summarizes the highlights from the presentations and the discussions that ensued.
Discussion Paper
Small business use of credit cards in the U.S. market
America?s small businesses have adopted credit cards as both a payment method and a borrowing vehicle. The segment also uses other payment card products, including debit, charge, and prepaid cards. The dollar volume of spending with cards designed for small businesses increased by 230 percent over the five-year period from 2003-2008. But the recession of 2007-2009 and contemporaneous changes in the regulatory environment had effects on both the supply to and demand of small businesses with respect to credit cards. To obtain an update on these issues, the Payment Cards Center hosted a workshop ...
Discussion Paper
Driving positive behavior change through education and motivation: summary of a PayPerks workshop
Start-up firm PayPerks has developed a financial capability and rewards platform that combines online education with sweepstakes-based incentives. PayPerks? initial emphasis has been on improving the understanding and use of prepaid cards among individuals with little prior experience using payment cards. Participants can earn points in a variety of ways, including taking short, self-directed tutorials on prepaid card use. Every month, those points become chances to win cash prizes in sweepstakes drawings. PayPerks co-founders facilitated a Payment Cards Center workshop where they ...
Discussion Paper
Credit Card Landscape Update
This recap of a January 2017 Payment Cards Center workshop conducted by Frank Martien of First Annapolis Consulting, Inc. (since acquired by and now part of Accenture) adds to the literature on conditions in the markets for consumer and commercial credit cards, and credit and debit cards use by small businesses, at a point some years after the 2007?2009 recession. Some insights are provided as to how the supply and demand sides for these products are operating after this major economic disruption and the enactment of two pieces of legislation affecting payment cards. The Credit Card ...
Discussion Paper
Millennials with money revisited: updates from the 2014 Consumer Payments Monitor
Overall growth in general purpose reloadable prepaid card ownership was not as robust between 2013 and 2014 as it was between 2012 and 2013 except in one notable segment: high-income Millennials. This same demographic group also exhibited a strong propensity to use alternative financial services along with traditional bank products. This paper further explores this group of ?hybrid? financial services consumers. It also examines the broader use of financial services by young adults and reports on ways in which their choices differ from those of older consumers, along with evidence that ...