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Fed study charts decline of cheques in favour of automated payments

10 December 2007  |  7817 views  |  0 cheque

The US Federal Reserve's annual study of noncash payments reveals that in 2006 more than two-thirds of all US noncash payments were made electronically.

From 2003 to 2006, the period covered by the study, all types of electronic payments grew while cheques payments decreased. The Federal Reserve's 2004 Payments Study found that the number of electronic payments and cheque payments were roughly equal in 2003.

About 19 billion more electronic payments were made in 2006 than in 2003. In contrast, the number of chequess paid fell by about 7 billion over the same period. Of the 93 billion noncash payments in 2006, about 63 billion were electronic and around 30 billion were cheques.

Among the three main types of electronic payments, the annual use of debit cards increased by about 10 billion payments over the survey period to 25.3 billion payments in 2006. Debit cards now surpass credit cards as the most frequently used electronic payment type. Over the same period, automated clearinghouse (ACH) payments grew to 14.6 billion, an increase of almost 6 billion payments. Credit cards grew by almost 3 billion payments to 21.7 billion in 2006.

The highest rate of growth from 2003 to 2006 was in ACH payments, which grew about 19% per year, followed closely by debit card payments at almost 18%. Meanwhile, cheques declined by an average of 6.4% per year since 2003, indicating the pace at which cheque payments has been decreasing since the mid-1990s has picked up in recent years.

Another trend picked up by the survey was the electronification of cheque payments as they pass along the settlement chain. At the time of the survey, about 40% of all interbank cheques paid were replaced with electronic information at some point in the collection process.

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