CLEVELAND -

As buy-here, pay-here dealers continue to find new and improved ways to keep customers paying on their contracts, the Federal Reserve's Retail Payments Office recently announced plans to conduct a new study to determine the current volume and composition of electronic and check payments in the United States.

The 2013 Federal Reserve Payments Study consists of three survey efforts commissioned to estimate the annual number, dollar value and composition of retail noncash payments in the U.S.

Together, officials said the survey efforts will provide aggregate estimates and current trends in the use of payment instruments by U.S. consumers and businesses.

The Fed indicated previous studies have revealed significant changes in the U.S. payments system over time, including a continuing decline in the use of checks and growing use of electronic payments, such as automated clearinghouse, electronic banking transactions, credit cards, debit cards and stored value cards.

This triennial study continues the research conducted by the Federal Reserve in 2001, 2004, 2007 and 2010. The RPO is located at the Federal Reserve Bank in Atlanta.

"While the Federal Reserve's 2013 Payments Study will continue to build upon trend information gathered in previous studies, this year's study casts a broader net across the evolving payments landscape," said Jim McKee, RPO senior vice president and the study's executive sponsor.

"The 2013 study will provide additional data on electronic payment methods, cash deposit and withdrawal information and, for the first time, limited third-party fraud information, in an effort to provide the industry with further insight on emerging trends," McKee continued.

In the BHPH dealer world, one of the emerging trends is stores finding ways to keep payments coming without customers necessarily having to come to the dealership or related finance company office to hand in weekly, biweekly or monthly installments.

In a commentary written last summer, Ken Shilson, the founder of the National Alliance of Buy-Here, Pay-Here Dealers, pointed out, "Buy-here, pay-here was founded on the concept of customers paying directly at the dealership. Theoretically, this was intended to build a stronger 'bond' between the customer and the dealer after the vehicle was sold.

"It also allowed the dealer an opportunity to physically inspect the collateral (the vehicle sold) periodically over the entire term of the contract. Hence, BHPH was rightfully named, ‘buy here, pay here' because the majority of repayments were made in person by the customer," he continued.

"Payment procedures have changed dramatically over the last few years given a much different economic environment and the evolution of new technology. Today, operators must be particularly diligent in their collection procedures as today's BHPH customers are short on liquidity and long on expenses," Shilson went on to say in a commentary titled, "Why The Business Now Could Be Called ‘Buy Here, Pay There'"

Shilson's entire analysis can be found here.

Meanwhile the Federal Reserve said it will work with the global concepts office of McKinsey & Co. and Blueflame Consulting to conduct its newest research study on payment usage. McKee noted preliminary results should be released by late this year.

"The industry-wide participation in past studies has been extensive, appreciated and necessary in allowing us to continue to offer meaningful results," McKee said. "We hope to continue to garner robust industry support in this mutually beneficial effort."

More information about Federal Reserve Financial Services can be found at www.frbservices.org. This site also contains links to the four previous payments studies.

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