The use of checks and other noncash payment instruments in the United States

Statistical estimates indicate that the use of checks in the United States has been declining since the mid-1990s, even as the population and the level of economic activity have been increasing. In contrast, the use of electronic payments has been growing at high and accelerating rates. Nonetheless, the paper check remains the predominant means of making retail payments and will likely continue to play a significant role in the U.S. payment system for the foreseeable future. The number and value of checks paid varies across depository institutions according to type, size, and location, in part a result of differences in the use of checks and electronic payments by households, businesses, and governments. Overall, household's share of total checks written has increased relative to that of businesses and governments.Payment systems ; Electronic funds transfers

Trends in the use of payment instruments in the United States

In 2003, for the first time, the number of electronic payments in the United States exceeded the number of check payments--a result of substantial growth in electronic payments (especially by debit card) and a decline in check payments. The shift toward electronic payments suggests that, as with other large economies, many payments formerly made by check are now being made with electronic payment instruments. As in past years, however, the value of checks far exceeded the value of commonly used electronic payments. ; Comparisons among groups of depository institutions of different types and sizes suggest that the distribution of payments of different types is linked in part to the types of customers those institutions tend to serve. For example, at credit unions, which generally serve individuals rather than businesses, checks accounted for a smaller proportion of account debits, and debit card payments and ATM withdrawals accounted for a larger proportion, than at institutions of other types. ; Overall, "on us" check payments, those for which the payer and payee used the same institution, declined slightly. The rate at which checks are returned also declined, while the rate of returned ACH payments--almost twice that of checks--increased, in part because of new types of ACH payments, including ACH transactions initiated with a check. ; Data gathered in 2004 also reveal some differences among geographic regions. Debit card use was substantially greater, and check use substantially lower, in the West than in other regions. In contrast, debit card use was considerably less common in the Northeast, and the decline in check payments since 2000 was less pronounced in that region. ; Indirect evidence--data on ATM withdrawals and cash back from debit card payments--suggests that cash remains a popular means of making payments. Industry data showing increases in ATMs and ATM transactions appear to reflect a shift toward greater use of ATMs and less use of checks to obtain cash, and do not necessarily indicate an increase in the use of cash.Payment systems ; Checks