Getting rid of paper: savings from Check 21
The authors estimate the cost savings to the U.S. payment system resulting from implementing Check 21. This legislation initially permitted a paper substitute digital image of a check, and later an electronic digital image of a check, to be processed and presented for payment on a same-day basis. Check 21 has effectively eliminated the processing and presentment of original paper checks over multiple days. By shifting to electronic collection and presentment, the Federal Reserve reduced its per item check processing costs by over 70 percent, reducing estimated overall payment system costs by $1.16 billion in 2010. In addition, payment collection times and associated float fell dramatically for collecting banks and payees with consequent additional savings in firm working capital costs of perhaps $1.37 billion and consumer benefits of $0.64 billion.
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- McAndrews, James & Roberds, William, 1999.
"A General Equilibrium Analysis of Check Float,"
Journal of Financial Intermediation,
Elsevier, vol. 8(4), pages 353-377, October.
- James McAndrews & William Roberds, 1999. "A general equilibrium analysis of check float," Staff Reports 84, Federal Reserve Bank of New York.
- James McAndrews & William Roberds, 1997. "A general equilibrium analysis of check float," FRB Atlanta Working Paper No. 97-4, Federal Reserve Bank of Atlanta.
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- Bolt Wilko & Humphrey David, 2007.
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Review of Network Economics,
De Gruyter, vol. 6(4), pages 1-21, December.
- Wilko Bolt & David Humphrey, 2007. "Payment network scale economies, SEPA, and cash replacement," Working Papers 07-32, Federal Reserve Bank of Philadelphia.
- Garcia-Swartz Daniel D. & Hahn Robert W. & Layne-Farrar Anne, 2006. "The Move Toward a Cashless Society: A Closer Look at Payment Instrument Economics," Review of Network Economics, De Gruyter, vol. 5(2), pages 1-24, June.
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