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NEWS RELEASE
CONTACT:
Michael Herd
mherd@nacha.org
Check Volume Decreases at Federal Reserve For Third
Consecutive Year, NACHA Review Shows
ACH Volume Continues to Rise
Herndon, Virginia, June 9, 2003 - The number of checks processed by the Federal Reserve in 2002 decreased for the third consecutive year. In
its annual report to Congress, the Federal Reserve System reported that it processed 16.59 billion checks in 2002, a 1.9 percent decline from 2001.
"The Federal Reserve's annual report is additional evidence that consumers and companies are turning from checks to electronic payments," said
William Nelson, Executive Vice President of NACHA – The Electronic Payments Association.
In contrast to check volume, the Fed's commercial Automated Clearing House (ACH) volume increased by 12.1 percent in 2002 to 4.99 billion items. ACH
payments include Direct Deposit of payroll, Direct Payment of consumer bills, business-to-business payments, and, increasingly, e-check payments. The Fed's commerical ACH volume has nearly doubled since 1997.
The Fed's annual report also demonstrates the continuing divergence in transaction processing costs for checks and ACH payments. The cost to
the Fed to process a check remained at 4.5 cents per item in 2002, whereas its cost to process an ACH payment decreased to 1.3 cents per item.
"This difference in processing costs is reflective of the cost savings that could be achieved nationwide by the increased use of ACH payments over
paper checks," said Nelson.
Long-term trends show a distinct improvement in the position of an ACH payment versus a check. As recently as 1995, the Federal Reserve's unit
costs for checks and ACH payments were virtually identical. Since then, the unit cost for an ACH transaction has decreased from 3.5 cents to 1.3 cents, while the unit cost for a check has increased from 3.6
cents to 4.5 cents.
These changes mirror the fees charged by the Federal Reserve Banks for financial institutions for payment services. According to the Fed, its
price index for ACH services for the Year 2003 fee schedule is down 61 percent from 1996, while fees for check services are up 31 percent during that period.
The data were gathered from the Federal Reserve System's annual reports to Congress on Reserve Bank operations. Unit costs are calculated by
dividing total system expenses by transaction volume. In 2002, the Fed incurred $751.2 million in check processing costs. ACH processing costs were $62.5 million.
The Federal Reserve's 89th Annual Report to Congress is available at
http://www.federalreserve.gov/boarddocs/rptcongress/annual02/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 12,000
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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