Busted: Bankers and The Global Economy

March 27, 2008

Fed Study Detects Expansion of Digital World

Filed under: banking, credit, federal reserve, money — Tags: , , , , , , — digitaleconomy @ 12:00 am

The results of a 2007 Federal Reserve study released on Tuesday reveals that more than two-thirds of non-cash payments are now electronic as electronic banking gains wider acceptance by consumers. Visa and Mastercard should be proud. Checks that were tracked under this program examine consumer activity only. Ineligible checks for the Fed’s tracking program include checks such as those with missing or no signature, checks greater than $25,000, and checks from businesses and the government.

The study found that the highest percentage of check writers were consumers at 58 percent, while the highest percentage of check receivers were businesses at 72 percent. The check purpose with the highest percentage was remittance payments (payments to business and government payees that do not occur at the point of sale) at 49 percent. The number of checks drafted by consumers increased from 2003 levels. Now we know that just under 50% of checks written are for bill payment as some of America holds on to traditional methods of payment.

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The study shows that the number of non-cash payments was 93.3 billion in 2006 totaling $75.8 trillion.

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Debit card payments now exceed the credit card payments. Card payments alone amounted to more than 50% of all non-cash transactions. More checks are being processed electronically through ACH. There was no comparison between electronic and cash transactions in this study.

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