Check Volume Decreases at Federal Reserve For Fourth Consecutive Year

In contrast to check volume, the Federal Reserves commercial Automated Clearing House (ACH) volume increased by 12.1 percent in 2003 to 5.59 billion payments. Commerical ACH payments include Direct Deposit of payroll, Direct Payment of consumer bills, business-to-business payments, and e-check payments such as online bill payments and accounts receivable check conversion. The Federal Reserves annual report also demonstrates the divergence in transaction processing costs for checks and ACH payments. The unit cost to the Fed to process a check in 2003 increased by 13.3 percent, from 4.5 cents in 2002 to 5.1 cents in 2003. The Feds unit cost to process an ACH payment decreased by 15.4 percent, from 1.3 cents in 2002 to 1.1 cents in 2003. In 1995, the Feds unit costs for checks and ACH payments were virtually identical, but now the unit cost for a check is nearly 5 times as much as for an ACH payment. Unit costs are calculated by dividing the Feds total expenses for a particular payment service by the transaction volume of that payment type. NACHAs analysis was performed on data gathered from the Federal Reserve Systems annual reports to Congress on Reserve Bank operations.