Category Archives: Technology

It seems we’re always hearing some pundit or other forecast of the demise of a familiar piece of our lives as a result of a “new technology.” These forecasts are sometimes extremely shortsighted and never come to fruition (think Radio) or so much on target that we wonder why it took us so long to realize the truth (think 8-Track tapes). So how do you know what to believe? Think about it this way: if a new technology is demonstrated to meet current needs better than an old technology, and if it makes business sense for all parties involved, then it has a very good chance of taking hold, and displacing an older way of doing things. This is the case with paper checks. Paper checks cost money to print, cost time and money for businesses to manually deposit and record, cost time and money for the individual banks that process them, and also generate significant costs for the regional Federal Reserve Banks that serve as a clearinghouse for all checks. Additionally, as occurred on 9/11, an infrastructure interruption can cause delays in processing of hundreds of thousands of checks – impacting billions of dollars of consumer and business transactions. Eliminating the submission of actual paper checks for processing, in favor of ACH and other types of electronic payment processing, not only streamlines processes for businesses, it also saves money for banks and for the … Continue reading…

The Federal Reserve released Monday their 2007 Payments Study which covers 2003 to 2006 and found that all types of electronic payments grew while paper check payments decreased. The annual use of debit cards increased by about 10 billion payments, surpassing credit cards as the most frequently used payment type. The number of Automated Clearinghouse (ACH) payments increased by 6 billion and credit card payments grew by 3 billion. Even as the most common types of electronic payments increased, another noteworthy increase was in the number of checks being processed electronically. Almost 3 billion consumer checks that were written to billers were converted and cleared as ACH payments rather than check payments. The 2007 Federal Reserve Payments Study’s major findings include: From 2003 to 2006, electronic payments grew 12.4 percent per year, now making up over two-thirds of all non-cash payments. Payments made by debit, credit, or EBT cards constituted over half of all non-cash payments in 2006. The number of debit card payments now exceeds the number of credit card payments. (With lower rates, that’s great news for business!) ACH payments increased 18.6 percent per year from 2003 to 2006, 38.4 percent of which were checks converted to ACH. Read the full executive summary of the 2007 Federal Reserve Payments Study

According to the 2007 AFP Electronic Payments Survey, underwritten by the Electronic Payments Network (EPN), checks are becoming a decreasingly dominant form of business-to-business payment. In 2004, businesses on average made 81 percent of their B2B payments by check. Whereas now, the average has dropped to 74 percent and businesses are increasingly adopting ACH, wire transfers, and card services. The purpose of the survey was to identify U.S. business payment trends, the benefits gained from change, and the drivers and barriers to change. Among the barriers named by respondents, the top three were constraints of automatic information remittance , integration limitations, and customer resistance to electronic payments. However, the benefits listed included lower transaction costs, better cash-flow predictability, and increased efficiencies with accounting systems. And with 43 percent of respondents saying that their organizations will likely adopt electronic payments within the next three years, the trend shows that the barriers to electronic payment implementation are being overcome.