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NEWS RELEASE
CONTACT:
Michael Herd
mherd@nacha.org
Check Volume Decreases at Federal Reserve For Fourth
Consecutive Year
NACHA Review of Federal Reserve Data Reveals
Divergence in Check and ACH Processing Costs
Herndon, Virginia, May 18, 2004 - The number of
checks processed by the Federal Reserve decreased
for the fourth consecutive year in 2003. In its 90th
Annual Report to Congress, the Federal Reserve
System reported that it processed 15.81 billion
checks in 2003, a 4.7 percent decline from 2002.
Significantly, the 2003 rate of decline was the
steepest of the past four years, more than doubling
the 2002 rate of decline of 1.9 percent.
“The decline in the number of checks going through
the Federal Reserve system is representative of the
changes taking place in the U.S. payments system,”
said William Nelson, Executive Vice President of
NACHA – The Electronic Payments Association.
“Consumers and companies are turning from checks to
electronic payments.”
In contrast to check volume, the Federal Reserve’s
commercial Automated Clearing House (ACH) volume
increased by 12.1 percent in 2003 to 5.59 billion
payments. Commerical ACH payments include Direct
Deposit of payroll, Direct Payment of consumer
bills, business-to-business payments, and e-check
payments such as online bill payments and accounts
receivable check conversion.
The Federal Reserve’s annual report also
demonstrates the divergence in transaction
processing costs for checks and ACH payments. The
unit cost to the Fed to process a check in 2003
increased by 13.3 percent, from 4.5 cents in 2002 to
5.1 cents in 2003. The Fed’s unit cost to process an
ACH payment decreased by 15.4 percent, from 1.3
cents in 2002 to 1.1 cents in 2003. In 1995, the
Fed’s unit costs for checks and ACH payments were
virtually identical, but now the unit cost for a
check is nearly 5 times as much as for an ACH
payment. Unit costs are calculated by dividing the
Fed’s total expenses for a particular payment
service by the transaction volume of that payment
type.
NACHA’s analysis was performed on data were gathered
from the Federal Reserve System’s annual reports to
Congress on Reserve Bank operations. The Federal
Reserve’s 90th Annual Report to Congress is
available online at
http://www.federalreserve.gov/boarddocs/rptcongress/annual03/default.htm.
About NACHA - The Electronic Payments Association
NACHA is the leading organization in developing
electronic solutions to improve the payments system.
NACHA represents more than 11,500 financial
institutions through direct memberships and a
network of regional payments associations, and 650
organizations through its industry councils. NACHA
develops operating rules and business practices for
the Automated Clearing House (ACH) Network and for
electronic payments in the areas of Internet
commerce, electronic bill and invoice presentment
and payment (EBPP, EIPP), e-checks, financial
electronic data interchange (EDI), international
payments, and electronic benefits transfer (EBT).
Visit NACHA on the Internet at
www.nacha.org.
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