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U.S.: Payment Habits of the Financially Included

Categories : Cash is the first step of financial inclusion, Cash is the most widely used payment instrument, Costs of cash versus costs of electronic payment instruments
April 30, 2023
Tags : Access to cash, ATM, Bank branches, Digital payments, USA
According to the FDIC, 81.5% of U.S. households were banked in 2021. ATMs and bank branches remain essential for seniors, lower-income, less-educated, and rural families to access financial services.
Manuel A. Bautista-González

Ph.D. in U.S. History, Columbia University in the City of New York

Post-Doctoral Researcher in Global Correspondent Banking, 1870-2000 – Mexico and South America, University of Oxford

This post is also available in: Spanish

How the 81.5% Transact: The Banked Population

The U.S. Federal Deposit Insurance Corporation (FDIC) has conducted the National Survey of Unbanked and Underbanked Households with the U.S. Census Bureau since 2009. Per the latest FDIC survey published in November 2022, 107.9 million households (81.5%) were “fully banked” in 2021, meaning that the household was banked and did not use nonbank transactions and credit products or services.

Methods for Accessing Bank Accounts

In 2021 (FDIC 2022: 4), most banked households access their bank accounts through a mobile phone (43.5%), a computer or tablet, i.e. online banking (22%), an ATM or bank kiosk (16%), bank tellers (14.9%), and the telephone (2.9%). The increase in the use of mobile and online banking channels increases the risks for bank customers to fraud and crimes.

Chart 1. United States: Primary Method of Bank Account Access of Banked Households, 2017-2021 (Percent)

Source: FDIC (2022: 4).

The Covid-19 Pandemic

The survey took place in June 2021 (15 months after the Covid-19 pandemic began), evidencing changes in bank account ownership and methods to access bank accounts (FDIC 2022: 3-4):

Paying Bills and Receiving Income

In 2021, almost all banked households (97.1%) used their bank accounts to pay monthly bills or receive income from work, retirement, or a government agency (FDIC 2022: 47). Three in four (75.2%) exclusively used their bank accounts for paying bills and receiving income.

Chart 2. United States: Methods Banked Households Used to Pay Bills or Receive Income, by Primary Method of Bank Account Access, 2021 (Percent)

Source: FDIC (2022: 48).

The FDIC survey evidences the importance of preserving bank branches and ATMs for sizable sectors of the population who still access financial services in person.

Prepaid Cards and Payment Apps

In 2021, 6.9% of all households used prepaid cards all the time (FDIC 2022: 3-4). Unbanked households were more likely to use prepaid cards for paying bills, receiving income, saving, sending or receiving money, and making online purchases (see Graph 1).

Graph 1. United States: Use of Prepaid Cards and Nonbank Online Payment Services by Account Ownership, 2021 (Percent)

Source: FDIC (2022: 4).

Regarding mobile payments, almost half of all households (46.4%) used online payment services from nonbank providers such as PayPal, Venmo, and Ca$h App. Nearly three in four banked households with online payment services (74.1%) linked them to their bank accounts. (FDIC 2022: 3-4). These figures suggest the adoption of mobile payments is not as widespread as the digital payments lobby triumphally announces, even among U.S.-banked families.

Making In-Person and Online Purchases

Nine in ten banked households (89.6%) made purchases in person or online using bank accounts, online payment services, prepaid cards, and money orders (FDIC 2022: 50). The survey did not ask whether they used cash or credit cards.

Sending or Receiving Money

Nearly half of the banked households (48%) used bank accounts, online payment services, prepaid cards, money orders, and money transfer services to send or receive money from family and friends in the United States and abroad in 2021 (FDIC 2022: 51-52).

Saving or Keeping Money Safe

Five in six banked households (83.8%) used bank accounts, online payment services, or prepaid services to save or keep money in a safe place (FDIC 2022: 52, 55).

This post is also available in: Spanish