Cost Savings from Check 21 Electronic Payment Legislation




  • Comments and assistance by Patrick Dyer, Geoffrey Gerdes, Bill Lang, James McKee, Richard Oliver, Sharon Pepples, Scott Schuh, David Walker, the Editor, and an anonymous referee are gratefully acknowledged. The authors are responsible for any errors and the views expressed are not necessarily those of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.


Electronic payment legislation permitted an initially paper substitute digital image of a check, and later the electronic digital image of a check, to be processed and presented for payment on a same-day basis. By shifting to electronic collection and presentment, Federal Reserve per item check processing costs fell by over 70%, reducing estimated overall U.S. payment system costs by $1.16 billion in 2010. 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 indebted consumer benefits of $0.64 billion.