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Economic Research

EconSouth masthead
Volume 16, Number 1
January–April 2014


How We Pay: Results from the Federal Reserve's Latest Payments Study

check markEvery three years, the Federal Reserve Payment Study presents a snapshot of the rapidly evolving United States payments system. In the latest issue of EconSouth, managing editor Tom Heintjes highlights the preliminary results of the 2013 study.

Since 2003, when Congress passed the Check Clearing for the 21st Century Act (commonly known as Check 21), the U.S. payments system has shifted dramatically. For instance, paper checks, which once comprised nearly half of noncash payments, accounted for only 15 percent in 2012. Checks are down, but not out, however. Although they made up a smaller share of the payments pie, they are declining from a dominant position, Heintjes wrote. "As check writing continued to decline, the number of checks that could be converted declined as well," he added. As a result, automated clearinghouse (ACH) transactions—many of which originate from the conversion of paper checks to ACH— decelerated, growing just 5.1 percent from 2009 to 2012, compared to 10.9 percent growth during the 2003 to 2012 period.

Meanwhile, payment cards continued to grow, accounting for two-thirds of consumer and business noncash payments in 2012. With annual growth of 15.8 percent, prepaid card payments grew the fastest of all noncash payments.

The 2013 study the fifth in series of triennial studies. To learn more about key trends in the U.S. payments system, be sure to read the full article in the first 2014 issue of EconSouth.