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.
|Date of creation:||2012|
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- Bolt Wilko & Humphrey David, 2007.
"Payment Network Scale Economies, SEPA, and Cash Replacement,"
Review of Network Economics,
De Gruyter, vol. 6(4), pages 1-21, December.
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- 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.
- James J. McAndrews & William Roberds, 1997.
"A general equilibrium analysis of check float,"
FRB Atlanta Working Paper
97-4, Federal Reserve Bank of Atlanta.
- Paul W. Bauer & Geoffrey R. Gerdes, 2009. "The check is dead! Long live the check! A Check 21 update," Economic Commentary, Federal Reserve Bank of Cleveland, issue Jun.
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