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The Federal Reserve Banks recently announced changes to their check operations as consumers and businesses continue to shift away from using paper checks and toward electronic payments. As part of a longer-range strategy, the Federal Reserve Banks have selected Philadelphia, Cleveland, Atlanta, and Dallas as regional check processing sites that are expected to provide the full range of check processing services through at least mid-2011. Other remaining sites will have their operations scaled back. The scaled-back sites will all print substitute checks, but some will also capture paper checks. The regional sites will provide a full range of check processing services and receive processing volumes from the other sites in a phased transition.
The Federal Reserve Banks recently announced changes to their check operations as consumers and businesses continue to shift away from using paper checks and toward electronic payments.
As part of a longer-range strategy, the Federal Reserve Banks have selected Philadelphia, Cleveland, Atlanta, and Dallas as regional check processing sites that are expected to provide the full range of check processing services through at least mid-2011. Other remaining sites will have their operations scaled back.
The scaled-back sites will all print substitute checks, but some will also capture paper checks. The regional sites will provide a full range of check processing services and receive processing volumes from the other sites in a phased transition.
The changes are expected to begin in 2008, and the Reserve Banks will continue to review this check infrastructure annually to respond to further change within the nation's payments system and to meet statutory requirements for long-term cost recovery.
The Federal Reserve Banks' long-term check processing strategy is to reduce costs and restructure their check processing operations in line with declining check volumes while encouraging the greater use of electronics in the collection of checks.
"These changes will enable the Reserve Banks to continue to provide high-quality check processing services to depository institutions throughout the country well into the future while further encouraging the use of electronics within the nation's check collection system," said Gary Stern, chairman of the Reserve Banks' Financial Services Policy Committee and president of the Federal Reserve Bank of Minneapolis.
"At the same time, these changes will facilitate ongoing efficiency improvements for the Reserve Banks' check processing operations in line with the continuing shift in consumer and business preferences for electronic payments," Stern said. "In addition, these changes support our long-term business strategy to use the authority provided by Check 21 to collect more checks electronically, reducing the reliance on the physical transportation of checks."
The announcement "sends a clear message to financial institutions of all sizes and types that now is the time to implement check image clearing," said Camden Fine, president and CEO of the Independent Community Bankers of America (ICBA). "Procrastination will yield only increased item processing fees, exorbitant transportation fees, and compressed cash letter delivery and pickup schedules."
Copyright Aspen Publishers, Inc. Sep 2007