The automated clearing house has proven itself when it comes to handling payroll disbursements and is making solid though slower gains in automatic bill payments, a Federal Reserve survey has found.

Fifty-five percent of private-sector workers get paid by direct deposit, said William Nelson, executive vice president of the Herndon, Va.-based National Automated Clearing House Association.

And 37% of U.S. households participate in direct payment programs, preauthorizing debits from checking accounts to pay regular bills, insurance premiums, and the like.

Of the 4.5 billion automated clearing house transactions last year, 1.9 billion were for direct deposits of payroll and one billion were for direct bill payments. Most of the estimated 20 billion consumer bill payments annually in the United States are made by paper check.

These volumes far exceed the estimated 268 million transactions made through home banking or telephone bill payment services, according to studies by Coopers & Lybrand. But many observers view the ACH volumes as disappointing, considering that the network has been at it for more than 20 years.

Yet even the low volumes through personal computers and telephone-based banking services are seen as having an adverse effect on the automated clearing house, which is oriented toward recurring payments like insurance premiums, subscriptions, and mortgages.

Consumers prefer to control exactly when their payments go out, the Fed study found, and PC- and phone-banking programs afford that.

Billers, meanwhile, may be hesitant to offer direct payment options, for fear of adding to their operating costs. Only 13% of companies offer direct payment options, according to the study.

The St. Louis Fed led the study as part of an effort to promote the use of automated clearing houses, as was called for in a recent payment system report by a committee led by Fed Vice Chairman Alice Rivlin.

The survey of 1,300 consumers and 850 businesses of all sizes was conducted by Shugoll Research, Bethesda, Md., and Vantis International, San Ramon, Calif.

The Fed, Nacha, the Social Security Administration, and the Treasury have committed a total of about $10 million this year and next to market the paperless payment network.

"Our message has always been one of convenience," said Mr. Nelson, who consulted with the Fed during its study. "We have to develop a different message, and it has to be that it is safe, secure, and reliable."

Mr. Nelson said banks are doing their share in trying to promote electronic payments, but it is a tough sell. Many consumers do not understand how direct payments work.

The term "direct payment" itself may need a name change.

While direct deposit is generally understood in the salary context, direct payment-also known as automated bill payment or "easy pay," is not understood by half of nonusers and a quarter of users.

"People who have direct payment can't explain it well enough to a friend," said Kathleen O'Neill Paese, assistant vice president of business development at the Federal Reserve Bank of St. Louis.

With respect to direct deposit, the Fed will concentrate on marketing to smaller corporations, Ms. Paese said. Sixty-eight percent of businesses do not offer direct deposit.

"The main drawback was the lack of availability from employers," Mr. Nelson said. "Small businesses have been slow to catch on."

Ms. Paese said the automated clearing house's system of aggregating and processing payments in batches is inflexible when it comes to employees paid by the hour. She indicated the Fed would attempt to address that problem with forthcoming changes to automated clearing house processing schedules.

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