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Banking

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

credit cardEvery three years, the Federal Reserve payments study presents a snapshot of the rapidly evolving U.S. payments system. The latest issue of the Atlanta Fed's EconSouth magazine 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. "As check writing continued to decline, the number of checks that could be converted declined as well," the story notes. 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 Fed's fifth in a series of triennial studies.

April 28, 2014