November 2006

Key Messages:

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Paper checks are being transitioned to electronic images of checks at a pace that is unprecedented.  Check images are currently collected in two forms, as substitute checks and as check images.

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Substitute checks assist in evolving traditional paper check clearing to image-based clearing.  As a precursor to full check image exchange, the number of substitute checks is a positive indication of the acceptance of image exchange.

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Only 2 years after the effective date of Check 21, check payments totaling almost $8 trillion per year have already moved from the traditional paper-based clearing process to improved image-based processes.  Based on the 2004 Federal Reserve Payments Study, that amount is much greater than the sum of all debit card payments ($.6 trillion) and all credit card payments ($1.7 trillion). 

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The number of images received by paying banks exceeded the number of substitutes for the first time in the month of September 2006.  The rate of growth in images is accelerating.

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The number of institutions participating in image-based clearing totals more than 5,500 (approximately 34% of all institutions) and many more can be expected to implement check image enhancements in the near future .

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This Federal Reserve / ECCHO industry image clearing data reflects transactions settled through the Federal Reserve, NCHA and SVPCO and does not include duplicate counting.

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