The changing nature of payments
When buying items at a store or eating at a restaurant, have you noticed an increase in the use of debit and credit cards for buying merchandise? Have you or your students made the switch to electronic payments?
According to the Federal Reserve's 2007 study of noncash retail payments, Americans are increasingly moving away from writing checks and toward electronic methods for making payments. The study showed that in 2006 more than two-thirds of all noncash retail payments were made electronically. This shift represented a dramatic change from three years earlier, when a similar Federal Reserve study showed that checks and electronic payments each accounted for half of noncash payments.
Debit cards and ACH pull ahead
Check usage declines
Even the processing of paper checks has moved toward the electronic age. The Check 21 Act, which took effect in 2004, allows banks to send digital electronic images instead of paper checks through the check processing system. By the time of the 2007 survey, about 40 percent of all interbank paper checks had been replaced with electronic information at some point in the collection process.
In addition to the 30 billion checks paid using paper in 2006, almost 3 billion consumer checks that started out as paper were converted and cleared as ACH payments. This conversion represented an eightfold increase since 2003.
By Ed English, staff writer