WASHINGTON - Electronic payments are continuing to displace paper checks, outnumbering them two-to-one as of last year, with automatic deposits and withdrawals and debit card transactions showing the fastest growth, a Federal Reserve study showed yesterday.
The study of noncash payments showed the number of paper checks fell 7 billion between 2003 and the end of 2006, to 30.6 billion, while electronic payments grew about 19 billion over the same period, to 62.7 billion.
Despite the 6.4 percent annual decline in the number of paper checks since 2003, they still maintained a higher overall value than electronic payments, which showed a 12.4 percent annual numerical increase.
The survey showed $41.7 trillion worth of checks written in 2006 versus $34.1 trillion worth of electronic transactions.
The Federal Reserve is drastically reducing its check-processing staff and facilities to adapt to the rise in electronic payments. The latest survey will help further assess its needs.
"Like the rest of the electronic payments industry, we will use this information to feed into business decisions going forward," said David Fettig, a spokesman for the Federal Reserve banks' Financial Services Policy Committee, in Minneapolis.
The Fed said in June it would cut 1,740 jobs from its 3,300-strong unit, whose main task is to help banks clear checks. It disclosed plans to maintain just four regional full-service check processing sites and three "print only" sites to dispatch substitute checks by 2011, down from about 21 sites currently.
Debit card transactions showed the second-fastest growth, increasing 17.5 percent annually to 25.3 billion for a total value of $1.0 trillion.
The number of debit card transactions outstripped credit card transactions, which grew 4.6 percent annually to 21.7 billion in 2006. But the value of credit card transactions was higher than debit cards, at $2.1 trillion in 2006.
The study showed automated clearinghouse transactions, which comprise direct payroll deposits, automated debits, and other prearranged payments, with the fastest growth among electronic transfers. They grew 18.6 percent annually from 2003 through 2006 to 14.6 billion in 2006 for a total value of $31.0 trillion.
The shift toward electronic transactions also reduced cash withdrawals from automated teller machines. The number of ATM withdrawals fell at an annual rate of 0.4 percent to 5.8 billion in 2006, for a total value of $600 billion, according to the Fed survey.