Fewer Checks Being Written

For the first time, Americans’ use of credit cards, debit cards and other electronic bill paying has eclipsed paper checks.

The number of electronic payment transactions last year totaled 44.5 billion -- exceeding the number of checks paid, 36.7 billion -- according to Federal Reserve studies released Monday.

That’s a first, the Fed said.

“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 banks’ product manager for retail payments.

In 2000, according to the Fed, the number of consumer and business checks paid came to 41.9 billion, and the number of credit card, debit card and other electronic payments totaled 30.6 billion.

The shift seen in 2003 toward more electronic payments reflects the expanding role of technology in the retail, financial and banking businesses, private economists said. It also reflects industry’s efforts to make electronic payments more convenient for customers.

“It’s all about convenience. No longer do consumers want to write checks with two forms of identification. It’s just too cumbersome,” said Richard Yamarone, economist at Argus Research. “It’s so much easier to swipe and sign.”

Yamarone also suggested that incentives linked to credit cards and other electronic payments were a factor behind their increasing use. “You don’t get any air miles for writing checks,” he said.

Federal Reserve Chairman Alan Greenspan has said the number of checks written in this country began to decline in the mid-1990s, while electronic payments have grown substantially.

The Fed study said the 36.7 billion checks paid in 2003 had a value of about $39.3 trillion.

The 44.5 billion electronic payments in 2003 had a value of $27.4 trillion.

Other findings of the Fed surveys:

* The number of credit card payments totaled 19 billion in 2003, with a value of $1.7 trillion. The number of debit card transactions totaled 15.6 billion, with a value of $600 billion.

* There were 6.1 billion automated teller machine withdrawals in 2003, with a total value of $520 billion. Commercial bank customers accounted for 64.7% of ATM withdrawals.