The Federal Reserve’s view on Paper Payment vs. Electronic Payments

by Erin McCune on January 14, 2006

in Payments News, Treasury & Cash Management

The 2004 Federal Reserve Payment Study stated that for the first time ever electronic payment transactions were higher then check transactions.

What does this mean for the Federal Reserve and commercial bankers?

Anthony Santomero, the President of Federal Reserve Bank of Philadelphia, writes a interesting article discussing where payments began and where they are going.  The article does a great job of providing information and insight to industry trends.


The Transformation Taking Place:  Society has gone from cash and checks, to a variety of payment structures – Annual Clearing House (ACH). credit cards, debit cards, and payroll cards are options available, with plenty more to come.  All of these causing the check to move further down the list.

Where the Payment Evolution is going:  Electronic payment is accelerating and will continue to do so.  The increase in competition among card providers will move paper payment out of the game even faster.  However, society payment habits change gradually and slowly depending on the comfort level.

The Federal Reserves Future:  The Fed is working hard to develop and promote check truncation and electronification.  There are two Acts in place that will make the Federal Reserve position itself for a future in the electronic payment world.

Why Read

This article gives great insight into an industry that is going through many changes and challenges.  Our nation's payment system is changing and we need to understand how these changes will affect U.S. businesses and their consumers.

"The Evolution of Payments in the U.S.:  Paper vs. Electronic"  by Anthony M. Santomero

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