Central to providing payment services to financial institutions

The St. Louis Fed’s role in our nation’s payments system continues to evolve. Earlier this decade, St. Louis processed about 1.6 million commercial paper checks every day. By the end of 2008, that number had dropped to less than 100,000.

As the numbers clearly indicate, the public has not only accepted, but embraced, electronic payments. In 2003, electronic payments—options that include credit cards, debit cards and automated clearinghouse (ACH) transactions like direct debit—outnumbered checks for the first time. The number of electronic payments grew 12 percent per year between 2003 and 2006. By 2006, electronic payments made up two-thirds of all noncash payments. The volume of paper-check processing at the Fed has declined in large part because of Check 21 legislation, which went into effect in 2004. Check 21 allows the recipient of a paper check to create a digital version for processing. This eliminates the need for further handling of the physical document.

Responding to this decline in check volume, the Bank in 2008 consolidated its Memphis Branch check operation to the Atlanta Fed and announced that the St. Louis paper check operation would be consolidated in the first quarter of 2009. However, the St. Louis Fed will continue to be the nation’s central processing site for Treasury checks and U.S. Postal Money Orders.

The St. Louis Fed’s Cash area remains vibrant. The Bank receives deposits and fills customer orders from approximately 1,200 financial institutions.