During the last ten years, the volume of ACH transactions grew at an average annual rate of 15 percent. Credit and debit cards provide consumers with a convenient method for purchasing a variety of goods and services. When a bank issues a credit card, it grants the cardholder a line of credit, enabling the cardholder to make purchases or to draw cash up to a prearranged amount. Purchases made on credit cards are billed at the end of a payment cycle and accrue interest charges if not paid in full by a specified date, while cash withdrawals generally accrue interest immediately upon withdrawal. Purchases made using a debit card are deducted directly from the cardholder's account at the issuing bank.
Purchases are limited to the amount of funds in the cardholder's account.
Over the past five years credit card use has been growing at an annual rate of about 7 percent. Debit cards use has been growing at a more rapid annual rate of about 48 percent, albeit from a relatively small volume base. The volume of large-value funds transfers has grown at an average annual rate of almost 6 percent over the last decade. During 1996, the Federal Reserve processed about 13.1 million book-entry securities transfers, which have grown at an average annual rate of nearly 5 percent over the last ten years. Payment Processing Systems Work Payment processing encompasses the systems and procedures that are used to authenticate a payment instruction and to effect the transfer of funds from the bank account of the person making a payment to the bank account of the receiver.