Fed banks to study shift to electronic payments

WASHINGTON, Jan 16 (Reuters) - The Federal Reserve Banks on Tuesday said they plan another round of studies on the shift of retail payments away from traditional paper checks to electronic transactions to help financial institutions better invest in future payments technology.

The studies, to be conducted in the first half of 2007, follow similar surveys conducted in 2001 and 2004. One study will quantify the number and value of checks being written in the United States, while another study will quantify the number and value of electronic payments.

The check study will attempt to determine the primary uses for check writing, something that was researched in 2001, but not in 2004, the Fed Reserve banks said.

The previous studies captured the dramatic shift in payments away from paper-based checks and toward electronic payments, such as debit cards, credit cards and automated clearing house transactions.

According to the 2001 research, the number of checks paid exceeded the number of electronic transactions by 41.9 billion to 30.6 billion. By 2004, the number of electronic transactions exceeded checks paid by 44.5 billion to 36.7 billion.

These changes represented a 4.3 percent annual decline in checks and a 13.2 percent annual increase in electronic transactions over the 2001-2004 period.

"As the nation continues its migration from paper-based to electronic payments, we believe these studies will provide additional insight to help industry participants plan for the future," said Richard Oliver, an executive vice president with the Federal Reserve Bank of Atlanta and the Federal Reserve System's product manager for retail payments.

The decline of paper check volumes also has prompted the Fed reserve banks to close a number of check-processing operations in recent years, eliminating hundreds of jobs, with the number of centers set to decline to about 18 by the second half of 2008 from 45 in 2003.