Paper Check Use Is Falling

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The Federal Reserve, which processes the vast majority of checks in the country, said the number of paper checks it processed last year declined for the third year in a row.

The Fed said it processed 16.6 billion checks in 2002, down 1.9% from 2001, which was down 5% from 2000. At the same time, the Fed's commercial Automated Clearing House (ACH) volume rose by 12.1% last year to five billion transactions, indicating the continuing switch to electronic payments, like credit and debit cards.

The Fed's commercial ACH volume has almost doubled since 1997. Long-term trends show a distinct improvement in the position of an ACH payment versus a check.

In 1995, the Fed's unit costs for checks and ACH payments were virtually identical.

Since then, the unit cost for an ACH transaction has decreased from 3.5 cents to 1.3 cents, while the unit cost for a check has increased from 3.6 cents to 4.5 cents.

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