Electronic payments exceed check payments for the first time.

• Position: News & Numbers

Surveys conducted by the Federal Reserve confirm that electronic payment transactions in the United States have exceeded check payments for the first time. The number of electronic payment transactions totaled 44.5 billion in 2003, while the number of checks paid totaled 36.7 billion, according to recent surveys of U.S. depository financial institutions and electronic payments organizations. Electronic payments consist of such payment methods as credit cards, debit cards, and automated clearinghouse transactions such as direct debit.

"The balance has shifted from check writing to electronic payments, and we expect this trend to continue," said Richard Oliver, senior vice president of the Federal Reserve Bank of Atlanta and the Federal Reserve Bank's product manager for retail payments. "Indeed, at current growth rates, credit cards and debit cards will both surpass checks in terms of total annual transactions in 2007. Such rapid change presents opportunities and challenges for an industry traditionally geared toward paper-based payments. The value of these surveys is that they quantify this shift and provide important insight for all industry participants."

The 2004 Federal Reserve Payments Study consists of two research efforts commissioned to estimate the annual number, dollar value, and makeup of payments in the U.S., and to estimate the annual volume of electronic payments. The first survey included responses from more than 1,500 depository financial institutions (commercial banks, savings institutions, and credit unions), while the second survey included responses from 68 organizations involved in originating, switching, or processing electronic payments.

"The Fed's 2004 payments study is part of an ongoing effort by the Federal Reserve system to...