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88 Fed. Res. Bull. 360 (2002)
The Use of Checks and Other Noncash Payment Instruments in the United States

handle is hein.journals/fedred88 and id is 962 raw text is: The Use of Checks and Other Noncash Payment Instruments in the United States Geoffrey R. Gerdes and Jack K. Walton Ii, of the Board's Division of Reserve Bank Operations and Payment Systems, prepared this article. Thomas Guerin and Amin Rokni provided research assistance. Over the past several decades, the payments industry has undergone significant change. New electronic payment instruments have been introduced, and the means for making electronic payments have become increasingly available for use in everyday commerce. Further, the adaptation of technology has driven down the costs of processing electronic payments relative to check payments. Partial statistics and anec- dotal evidence suggest that consumers and businesses are increasingly using electronic payments. Neverthe- less, the paper check continues to be the most com- monly used type of noncash payment instrument in the U.S. economy. Checks' share in noncash pay- ments has been declining, however, and recent evi- dence suggests that the total number of checks paid has been declining as well. To shed light on the use of checks and other noncash payment instruments in the United States, the Federal Reserve recently sponsored three related surveys collectively referred to as the Retail Pay- ments Research Project. The survey data were used to estimate the number and value of payments made in 2000 using checks and several types of electronic payment instruments as well as to study the character- istics of individual checks paid in 2000. The magni- tude and diversity of the samples also enabled a comparison of check use across type and size of depository institution and across geographic regions. In addition, the data provided a basis for looking at changes in noncash payments since 1979, when the Federal Reserve collected data on checks for an analysis of the check-clearing system, and since 1995, when the Federal Reserve collected data on checks for a report to the Congress on funds availabil- ity and check fraud. The surveys are described in detail in the appendix. NOTE. Danel Parke and Samuel Slowinski, of the Board's Division of Research and Statistics, provided valuable assistance with the production and interpretation of the statistical estimates. Taken together, the data show that an estimated 32.8 billion checks were paid in the United States in 1979, 49.5 billion in 1995, and 42.5 billion in 2000 (chart 1). The exact vear in which check use peaked is unknown, but it appears that the number paid began to decline sometime in the mid-1990s. By 2000, retail electronic payments had gained consider- able ground. Nonetheless, checks remained the pre- dominant type of retail noneash payment. Checks also continued to account for a large proportion of the total value of retail noncash payments in 2000, though the real value of total checks paid had declined since 1979. 4 ~ v 7 7 . In the United States. most noncash payments are made using checks, credit cards, debit cards, and the electronic payment system called the automated clearinghouse (ACH)-collectively referred to as retail noncash payments.) Consumers, businesses, 1. The term check refers to a dermand draft drawn on or payable through or at a depository institution or a federal, state, or local government entity, including cashiers and certified checks, travelers checks, money orders, and rebate checks. The ACH is an electronic payments network that enables the processing of credit and debit payments, such as payroll and prearranged bill payments, between depository itnstitutions >1. 2> K

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