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,.,
AUTOMATIC
BANK TELLER
FEDERAL RESERVE BANK OF NEW YORK
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
THIS IS ONI: OF THE MOST VALUABLE PIECES
OF PAPER IN THE WORLD •• • A CHECK. WE
USE CHECKS TO PAY MOST OF OUR BILLS. AN
EFFICIENT PAYMENTS 5Y5Tf;M /5 VITAL TO A
DYNAMIC f:CONOMY, AND THAT'6 WHY CHECK~
ARE: SO IMPORTANT. BUT CHECKS AREN'T THE
ONLY WAY W~ MAKE PAYMENTS. IN RECENT YEARS,
ELECTRONIC MONEY HAS PLAYED A GROWING
ROLE=. LET'S LOOK AT 1-lOW CHECl<5 AND
ELECTRONIC PAYMENTS EVOLVED, f.lOW THEY
WORK AND WHAT THE FUTURE HOLDS.
pUBLfSHEO BY THE PUBLIC INFORMATION PEPAR.7MENT, FEDERAL RESERV~ BANK OF NEW YORK,
ORIGINALLY PUBL/Sl{EO AS 71(£ S70l{Y OF CHECKS FROM 1958 TO /979.
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Federal Reserve Bank of St. Louis
2.
•
THE HENO!:RSONS, LIKE MANY AMERICANS, HAVE
A CHECKING ACCOUNT. AT TH£ MOMl:NT, MRS. HENO€RSON
IS FACING A SITUATION WE CIW All APPRECIATE••.
OH MY.' I DON'T HAVE
MRS. HENDERGON? I HAVE
THE:: CASH ••• WAIT A MINUTE,
A C.O.D. PACKAGE FROM
I'LL WRITE A ~ECK.'
FITZHUGH'5 DEPARTMENT
,_,_ __
F"""""=~-,....510RE FOR $24.95-
BY FILLING IN THE BLANKS ON A CHECK, Mia$.
HENOERSON SPENOS $24. 95 AS EA5llY AS IF
IT WERE CURRENCY AND COIN. , - - - - - - t
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Federal Reserve Bank of St. Louis
LIKE MR!>. HENDERSON,
MOST OF US AGREE THAT
CHECK'3 ARE CONVENIENT.
BUT WE GIVE LITTLE THOUGHT
TO HOW THEY DO iHEIR
JOB. EACH DAY, BILLIONS
OF DOLLARS CRISS-CROSS THE
NATION IN A COMPLEX PATTERN
TO SETTLE MILLIONS OF
PAYMENTS l-lKE MRS.
HENDERSON'S. CHECKS ALSO
SETTLE BILLIONS OF DOLLA~
OF GOVERNMENT AND
BUSINESS PAYMENT5.
l:XPERTS AREN'T SURE.. , BUT SOME SAY THE
RONIANS tNVENTEO THI: CHECK ABWT 3f2 B.C.
DURING THI: LATE 1600s IN l:NGLANO, PEOPl.i Bl=GAN
0£POSITIN6 CASH WITH GDLDSMITHS ••.
I HOPE YOU WON'T
REGARD MY FEE A5
"HIGHWAY ROBBERY.''
, .. IN EXCHANGE FOR "GOL05MITH NOTES," THESE 51MPl£
PEN-AND-INK RECEIPTS WERE WRITTeJ PROMISES 7V
~y THE CUSTOMER OR SOMeONE £L5e.,
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Federal Reserve Bank of St. Louis
R<QM GOl.t>SMITH NOTES, IT BECAME INCONVENIENT FOR PEOPLE RECEIVING
CHECKS 70 RUN AROlWO TO OfFFERENT BANKS TO GET THEIR MONEY. 50 THE JOB WAS LEFT
70 BANKS, WHICH USED MESSENGERS•••
AS CHECKS EVOLVED
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Federal Reserve Bank of St. Louis
5
THEY 01:C/OED TO SHOl?TEN THEIR 7l?IPS BY EX-
CHANGING THEIR BUNOlES OF CHECKS THERE.
• •• BUT LATER REAL/ZS ITS
VAI.UE. Tot>AY, Tl-(€ U>CAl "CLEARING HOUSE" 15 AN INTEGRAL PART
OF THE CHECI<. COLLECTION
oPERATION.
CLEARING HOUSES OPf:RATE MUCH AS THE ORIGINAL COffliE HOI.JSE GA~INGS.
EACH BANK SENc>S A &JEJ.JVERY CLERK
ANP A 5ET7UNG CLEllK 70 THE CLEARING
HOUSE WITH BUNOLES OF CHECKS. EACH
SUNOLE CONTAINS CHECKS OF THE 07HER
BAWKS ANO INCLUl>ES A LIST();; THE
AMOUNTS OUE THEIR BANK FROM EACH
OTHER BANK.
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Federal Reserve Bank of St. Louis
AT THE CLEARING HOUSE:, THE CLERKS HAND
OVER THE C/.IECKS DRAWN ON THE OTHER BANKS,
RECEIVE THE CHECKS ORAWN ON Tf/EIR.
BANI<, ANO SETTLE NET OfFFERENCE5 AMON6
THEMSELVES.
6
A BOOKKEEPING RECORD
OF A NET SETTLEMENT
MIGHT LOOK SOMETHING
LIKE THIS.
A
GETS
200
FROMC
400
FROM8
600
PAYS
300
T08
100
TOC
400
8
CLEARING
HOUSE
C
GETS
GETS
300
TOTAL
100
~ ·A
5 00
~c
+
+
Flt(Ml.8
J09
'
Flt~A
8 00
HgQO
PAYS
F"A'/S
◄00
200
100
500
TO A
TO
roe
ttOO
=
2200
TOTAL
A
708
+
~
:
2200
NET
SETTLEMENT
+200
BANK A
GETS $200.
BANKS
OWES$~00.
BANK C
GE15$/00.
NET SETTLEMENT IS IIO LONGER MADE IN CASH. IT IS NOW MAC>E
LARGELY BY ELECTRONIC MES&46$ IN l?EPOSIT BALANCES Ar
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Federal Reserve Bank of St. Louis
FE/:>ERAL RESERVE SANKS.
MORE CHECKS ARE USED IN
THE UNITED STATES TODAY THAN IN
ANY OTHER COUNTRY. THEIR HISTORY
HERE BEGAN IN 1681 WITH A FAMOUS
l=)<PERIMENT CALI.£0 "THE FUND /q BOSTO>J
IN NEW ENGLAND.,; TO OFFSET A SHORTAGE
OF HARD CASH FOR TRADE, BOSTON BU51NES5MEN MORTGAGED THEIR LAND AND
WARE5 TO THE: FUND. IN 'TURN, THEY
RECEIVED A CREDIT AGAINST WHICH
THEY COULD DRAW CHECKS.
7
THE FUNO HOPED
THE COI.ON/515 WOULD -At:>OpT THE USE OF
CHECKS.CHECKBOOK
MONEY, HOWEVER, WAS
SOON REPLACEO BY
,:tqPER CURRENCY
WHICH SETT~ SU/TEO
THE NE/EDS OF THE
TIME.
CHECKS 0/0N'T COME INTO WIOESPREAO USE UNTIL OEPOSIT BANKING BECAME ES7ABL.ISJIE£)
AFTER THE Ri=VOLI./TION. BY THE TIMIE OF THE CIVIL WAR, WITH THIE GROWTH OF C/7fES,
lMPROVEO TRANSPORTATION ANO CHEAP, UNIFORM POSTAL RATES, CHECKBOOI< MOIIE'I HAO
SURPA55EO CURRENCY IN VOLUME'.
IN THE YEARS AFTER THE CIVIL WAR,
THE COUNTRY /.ACl<ED A CENTRAL CHECK
CLEARING Mf:OHANISM, BUT BANKS
THAT DEALT FREQUENTLY SET UP
ACCOUNTS WITH EACH OTHER ,
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Federal Reserve Bank of St. Louis
HOWEVER., SOME BANK5 MAI)€ PRESENTING OUT·
OF-TOWN BAA/KS PAY AN "&CHANGE CHA~"
THESE CHARGES MAl2E_ CHECKS ORAWN ON
CHICAGO BANKS, FOR EXAMPLE, LOSE VALUE
WHEN CA5HEO IN NEW YORK OR HARTFORO.
e
EXCHANGE CHARGES, BANKS WOULO SEND OUT-OF-TOWN CHECKS 70
CORR£5PON0£NT BANKS RATHER THAN BY THE MOST PIRECT ROUTE. CORRESPONOEN"/S WOULC>
IN TURN 5i=NO THE CHECKS TO THEIR CORRESPONOEN"/5 ••• THE R£5ULT-- CHECKG SOMETIMES
TOOK A LONG TIM£ TO BE COLL£CTED ANO WENT A ROUNDABOUT WAY. ••
To AVOID THE
..
-..
\\ \
______
r
FOR cXAMPLE, A BIRMINGIIAM
BANK COLLECTING A CHECK ON
A BANK f=OUR MILES AWAY,
LAUNCHEL> A CIIECK ON A 2,250
MILE, 7-f)AY JOURNf=Y.
I
W/.-IEN PRES/PENT WILSON SIGNED THE. FEO£RAL RE5£RV~ ACT IN 19/31 A NEW ERA
IN THE. STORY OF CHECKS BEGAN IN TH£ UNITED STATES. THE ACT ESTABLISH£!) FEOERAL
RESERVE BANKS ANO THEIR BRANCHES AS CHECK CLEARING AND COLLECTING CENTERS
FOR TH£ BANKS THAT BELONGED TO TH£ FEOERAL RESERVE SYSTEM.
5 NEW NATIONWIO
CLEARING FAC/L/T
A LONG WAY iOW.
ING LENGTHY ROUT
D E:XCHANGE CHAR
ON C ECKS.
~
WOODROW WILSON
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
?
9
DURING 1980, THE
FEDERAL RESERVE SYSTEM
HANDLED /!(;. 7 BILLION CHECK5 WITl-4
A TOTAL VALUE OF$8 TRILLION. OF
COUR5E, THAT WAS ONLY PART OF THE:.
NATION'S TOTAL CHECK VOLUME. OTHER
CHECK5 WERE COLLECTED BY
CORRESPQNDENT BANK5, LOCAL
CLEARINGHOUSES OR DIRl:CTLY
BETWEEN BANK'S.
.
THE FEDERAL RESERVE SYSTEM
PUERTO RICO AND THE
VIRGIN ISLANDS
@)
•
-
FEDERAL RESERVE BANK CITIES
BOUNDARIES OF FEDERAL RESERVE DISTRICTS
0
BOARD OF GOVERNORS OF THI= FEDE:RAL RESERVE SYSTEM
CJ C:
c,o
,;;,
IN t980, CONGRl:56 5/GNEO LEG/S/..AT/ON GIVING 7/-IRIFT INS TITUTIONS--SAVINoS BANKS,
5,4.V/NGS AND t.OAN ASSOCIATIONS AND CR€DIT UNIONS-- THE POWER 70 OFFER C/-IECK/NG
ACCOUNT 7YPE SERVICES. BUT OU/: TO !NCR£A5EO USE OF ELECTRONIC PAYMENTS, TOTAL
CHE=CI< VOLUME IS NOT EXPECT@ TO INCR!:ASE SU85T/WTIALLY IN THE YEARS AHEAI?.
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Federal Reserve Bank of St. Louis
10
THE FEDERAL RESERVES
ELECTRONIC COMMUNICAilONS
NETWORK l-lNKG iHE RESERVE
BANKS WliH EACH OTHER AND
WITH THE INTERDISTRICT SEiTLEMENT l=UND IN WASHINGTON, WHERE
NET BALANCES ARE SETTLED
FOR CHECl<5 SENT BETWEl=N
DISTRICTS.
SAN ~RANCISCO
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Federal Reserve Bank of St. Louis
r,r
TO MOVf= MONEY
BY CHECK, YOU NEED A
DOLLAR SWITCHING
MECHANIGM--A 5ET OF
ACCOUNT eool<S--WHER~
Al'l'l)UNTS CAN BE
SUBTRACTED FROM ONE
I- - - - ',
ACCOUNT AND ADDED
TO At-JOTHER.
I
CEi~'TeR
HOW THE PAYMENTS SYSTEM WORKS
PEOPLE ANO ORGANIZ4TIONS MOVE MOM=Y M10NG 71/Elt'l5ELVES BY USING DEPOSITORY INSTITUTIONS SUCH AS C0\1MERCIAL BANKS, SAVIA-GS ANO LOAN ,45SOCIATIONS, SAVINGS BANKS ANO
Cl?c()IT UNIONS A5 THEIR SWITCHING MEChl4NISM.
OEP05/70RY IN5TITU7/0NS, IN Tl/RN, U5E CLEAR/Ne HOIJSES, CORRE5PONOENT BANKG
OP. FEOERAL RESERVE BANK5 A5 THEIR 5WfrcHING MECYfAN$M.
~
'.'.
I
'
!
'•,
I
'
FEDERAL.. RE5ERVE 8ANl<S USE THE INTERl)ISTRICT SETTLEMENT Fl/NO IN WASHING10N,
&>. C. A5 THEIR SW/WHING MECHANISM. THE FUNO SETTI.ES NET AMOUNTS OUE
BETWEEN RESERVE BAN>S DAILY.
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Federal Reserve Bank of St. Louis
12
LET'S TRACE A CHECK THROU6H THE
FEDERAL RESERVE SYSTEM'S CLEARINGAND COLLECTION FACILITIES TO SEE HOW
THE FED LINKS THE PAYMENTS 5Y5TEM.
SUPPOSE //'.RS. HENl)f=RSON, t./VING IN ALBANY, N!:W )'ORK, BUYS A
PAINTING FROM AN ART 01:ALER IN SACRAMENTO, CAJ./FORN/A
SHE
SENDS HER
CHECK
THE OEALER OEPOSITS
7HE CHECK'IN HIS ACCDUNT
AT A !iACRAME/1110 BANI<..
Federal
Reserve
Baxk of
Stt11 Francisco
THE 5AN FRANCISCO FEO
APt:>5 THE AMOUNT TO
SACRAMENTO BANK's
ACCOUNT ANO THE ART
OEALER's ACCOUNT IS
INCREA5EO.
THE SACRAMENTO BANK
OEPOSl75 THE CHECK FOR
CREDIT IN /"TS ACCOUNT
AT THE FEDERAL Rl=SERVE
BANK OF SAN FRANCISCO.
THE NEW YQRK FEP PAYS
SAM FRANCISCO FEO FROM
ITS SHARE IN TH!: INTER0/STR/CT SETTUEMENT
FUNO.
THE SAN
FRANCISCO
FEC>SENP5
THE CHECK
70 THl=NEW
YORK Fl=D
J/!.6t11t!f
FOR.
Bank
COLLECT/ON.
Federal
Reserve
Baxk of
Sax Francisco
THE.ALBANY
BANK TELLS THE
NEW YORK Fl=P
TO OEOUCT THE
AMOUNT OF TH£
CHECK FROM
ITS ACCOUNT.
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Federal Reserve Bank of St. Louis
7HE /JEW YORK FEO
SENl)S MRS. HENDERSON'S CHECK 70 Tl-If;
ALBANY BANK WHICH
OcOUCTS THI= AMOUNT
.cROM HER ACCOUNT.
13
Feaerat
£eservt
lJaxk o1
.Hew Yont.
OUR/NG 1980 AMERICANS WROTE OVER. 34 81/.1../0N CHECKS, TRANSFERRING ABOUT
30 TR/I.LIONS OF CHECKBOOK OO/.lAR5 AROUNC> THE NATION. ASSUMING NONE OF
THE CHECKS WERE WRITTEN ON WEEKENOS OR HO/.IC>AY'5, THAT'S MORE THAN
/35 MILLION C/.IECKS EACH BUSINESS OAY. COLLECT/NG THESE CHECK5 QUICKLY
IS A VERY BIG J08-·IWO IMPORTANT 70 THE EFFICIENCY OF OUR ECONOMIC SYSTEM.
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Federal Reserve Bank of St. Louis
LET'S LOOK AT THE FLOW OF CHECKS THROUGH ONE
OF THE BUSIEST CHECK-PROCESSING OPERATIONS IN
THE NATION AT THE FEDERAL RESERVE BANK OF
NEW YORK •••
.
IN 1980, THE BANl<--INCt.UOING ITS 8UFFAt.O
BRANCH ANO REGIONAL. CHECK PROCESSING
CENTERG IN JERICHO ANO UTICA, N.Y. ANO IN
CRANFORO,NGW J£RSEY-·HANOI.EO ABOUT...
LlSE-25o/o
., ..
··.
:' :::'.:
OTHER CLEARING-ASSOCIATIONS-8%
~
·~-
lili!a
OTHER FEDERAL RESERVE
BANKS-
4%
LJ. 5 . TREASURY · S
THAT15 ABOUT 12 PERCENT OF
ALI- CHECKS PROCE55!:.D BY THE
FEDERAL RESERVE SYSTEM. EACH DAY,
THE NEW YORK FED SE:.TTLES SOME
$4.3 BILLION WORTH OF CHECKS
THROUGH Tl-lE INTERDISTRICT
5ETTL!:MENT FUND.
%
CHECKS ARRIVE AT THE
NEW YORK FEO IN BUNDLES.
ATTACHED TO f:ACH BUNDLE
IS A TAPIE L..ISTING THE=
AMOUNT OF f=ACH CH£CK.
EACH BANK ALSO SENDS A
"CASH LETTER" WHICH 8£AR5
THE TOTAL OF AU THE
PACKAG€5. TH£ Fl=OERAL
R£5ERV£ 8ANK VERIFIES THIS
AMOUNT ANO AOPS IT TO
THE= OEPOSITING BANI<.
Cl./£CK PROCESSING 15 AUTOMATE{), HIGH-SPEED ELECTRONIC MACHINES 50RT CHECK5 8Y ':t?EAO·
ING" TH£ 50RTING IN57RUCTION5 PRINTED IN MAGNETIC INK CHARACTERS ALONG TH£ BOTTOM OF
CHECK5... AT A SPEF:D APPROACHING /00,000 CHECK5 AN HOUR •
. BLANK BANK
ANYPLACE , N.Y. 00055
CHECK ROUTING SYMBOL:
THE F!R~T 7WO OIGITS SHOW
BLANK BANK'S F£0ERA/....
RESERVE DISTRICT. THE THIRD
DIGIT IOENTll=IE5 THE FEDERA/....
R£~£RV£ OFFICE (HEAD
OFFIC£ OR BRANCH) OR A
SPECIAL COLLECTION ARRANGE·
MENT. THE FOURTH DIGIT
5/.IOWS BLANK BANK'S STATE
OR A SPECIAL COlLECTION
ARRANGEMENT.
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Federal Reserve Bank of St. Louis
DOLi.AR AMOUNT
CHECK.
NUMBER
THE.5£ FOUR
DIGITS AR£
BLANK BANK's
INSTITUTIONAL
/{)£NTIFIER .
PRINT£0 BY
THERRST
BANK RECl=IVING
THE CHECK.
CHECK DIGIT:
THIS NUMBER, COMBINED
WIT/./ THI= FIRST EIGI-IT DIGl7S,
V£Rl!=l£5 THE ROUTING NUMBER'S
AC.CURACY IN COMPUTER
PROCE"55ING.
TH!= ROUTING NUMBER 15
R£PEATEO IN A DIFFERENT
FORMAT IN 71-1£ UPPER RIGHT
/./AND CORNf=R OF TH£
Ct-lECK. TH/£ NUMBER 15 USED
IN MANUAL PROCESSING.
TH~ CHECKS ARE FED INTO MACHINES THAT. ..
•e&INDOISI
ANP SORT......
•••THE CHECKS
INTO
COMPARTMENTS
REPRESENTING
EITHER SINGt.E
BANKS OR
GROUPS OF
BANKS.
WHEN THE WHOLE PROCESS IS COMPLETED, THE MACHINE~ TA/3ULA7!0N MUST
EQUAL 7HE "CASH LETTER" 707AL..
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Federal Reserve Bank of St. Louis
16
AFTER. V~IFICAT/ON, THE CHECKS ARE PACKAGED ANO SENT ON THEIR WAY BY ROAO, RAil.
AND AIR. FASTER TRANSPORTATION HAS SPEEOEO UP Cf/ECK COLLECTION.
Bur ScwtE CHECKS CANN07' COMPLETE
7HIE/R IN,ENl)ED TASKS•••
ABOVT ONE OUT OF l=Vl:RY
95 CHECK5 PASSING
7H/?OUGH THE SECOND
DISTRICT CLEARING
OPERATIONS IS
IM17/llNED 7D 7ffE
OEP051TING BANK.
MOST OF
TH€5/E CHl:CKS
ARE IMPROPERLY
ENDORSED OR
ARE ORAWN ON
ACCOUNTS WITH
INSUFFICIENT
FUNDS.
0
SOME AR€
FORGERIIES··
A CRIMINAL
OFFENGE
0
A FEWARE
WRITTEN ON NON· .
EXISTS,/T ACCOUNTS.
0
PAYMENT IIAS B ~
STOPPED ON OTHERS.
0
SOME ARE IMPROPERLY
OATEO.
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Federal Reserve Bank of St. Louis
70 M'll<t ()(JR PAYMENTS S)'STEM MORE S::RCIENT, THE F@ERAL RESERVE OPERATES 46 RE610NAL
CHECK PROCESSING CENTERS (RCPCs) TIIRO(JGff()(JT THE NATION 70 PROCESS PAP£R C/.IECK5
QUICKLY ANO OFTEN OVERNIGHT.
---
NfW YORK
VT.
N.H.
MASS.
UTICA
NORTHEASTERN N~
RCPC
THERIE ARE FOUR REGIONAL.
CHECK PROCESSING CENTERS
IN Tfff; NEW YORK
l){SrR/CT.
THROUGHOVT THE 1970s, CJ/ECK VOWME HA5 GROWN BY ABOUT 6% EAOH YE4R. IIOWEVER, IT 15
EXPECTEO THAT IT WILL. BeGfN 70 SLOW TO AEJOl./7 2% A YEAR BY THE Mlt>-l980s, WITH
/NCREA5ING RELIANCE ON ELECTRONIC A4YMENTS.
SIU.IONS
50--------------------.
40t--- ------- ------- -2ii
30 t-------- ------,~ ~-----.-:
20t------- --1
10~~~-~
0
EVEN wn-H THE VOWME
INCREASE SI.OWING DOWN
we CAN ANTICIPATE OVER
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Federal Reserve Bank of St. Louis
tf}(@
'LJ
011l
'"W ""1~W\..:,
"urrv~
DII. I~
O'ANNIIALI.Y w!!W@f
18
OlJR PAYMENTS SYSTEM HAS Al.SO 8ENEFITEO WITH TIIE DEVELOPMENT OFlflJTOMATS} CtEARING
AW AClf OPERATES TH€ SAME WAY A5 A TRAOITIONAL Ci.EARIN6 HOUSE, li)(CEPr 71/AT
N0tJSGS {ACffs).
IN57EAO Or EXCHANGING PAPER CHECK5, MEMBERS EXCIIANGE ELECTRONIC BOOl<KEEPIAIG ENTRIES.
THERE AmE 38 ACIIS NATIONWIDE OF WHICH THE FEOERAL RESERVE OPERATES 37; THEAC/1 IN NEW ~K
CITY IS PRIVATElY OWNEO.
FOR EXAMPU=, A CC>RPORATION WITH A lARt6E PAY•
ROLL
CAN PREPARE. A OOMPtJTER TAPE LISTING AU.
OF Tl{E AMOIJNTS 70 BE PAI°' EMPLOYEES' NAME'S ANO
THEIR BANK ACCOI.JN'T NUMBERS.
AT 7/.IE ACII, A COMPUTER IS INSTRUCTED TD DE·
OUCT THE AMOUNT OF- EACH PAYMENT FROM THE
CORPORATION'S ACCOI.JNT ANO A()() THE 5AME
THE FEDERAL GCMERNMENT IS USING THE AClf
sYSTEM 70 PAY SOCIA/. SECI.JRITY ANO RAILROAD
RETIREMENT BENEFITS, A5 WELL AS THE ARMEO
FORCE5 AND CIVIL SERVICE PAYROLLS. - - -
AMOUNT TO EMPLOYEES' ACCOUNTS AT THEIR
INONIOUAL BANKS.
IN SOME A ~ ACII$ ARE AtsO /.IEI.Pf/t/G 70 REOUCE THE PAPER PROBLEM BY "TRtlNCA71NG" OR
SHORTENING THE FLOW OF Cf(ECl,S. INFORMATION APPEARING ON A PAPER CHECK 15 COPIEl> E/..EC-~ICALLY ONTO A MAGNETIC 7'APE WHICH IS THEN PROCESS@ THROUGH AN Alli/ COMPUTER.
IN51f!AD OF GETTING BACK CANCELI.EP CHECKS, THP. CHECK WRITER. RECEIVES A COMPi.J1ER
PRINTOUT SHOWING CHECK$ WRITTEN ANO OEPOSITS MAOE.
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Federal Reserve Bank of St. Louis
19
THc FEPE:RAL RcSEl?VE SYSTE"M'S ELECTRONIC COMMUNICATIONS NETWORK IS PLAYING AN INCRi:A9INGLY IMPORTANT ROlE IN PROCESSING PAYMENTS BETWEEN FEDERAL RESERVE l)(STRICTS.
TRANSACTION ENTERED
CHICAGO ........ ......
SAN FRANCISCO ••• i.-
IN SOME AREAS, STORES OffER CUSTOMERS TN£
OPPORTUNITY TO MAKE ClfSl-ll.ESS ANO CHECKLE6S
PAYMl:NTS. BY IN5S<TING A SPECIAi. CARI> IN A
PO(lfT-OF-SALE ELECTRONIC TERMINAl, TYPfNIS
IN A PERSONAL IOENTl/:ICATION NUMBER. ANO
THE CHARGE, THE AMOtlNT OF THE Ptlr«:lfA5E IS
AUTOMATICALLY SH(FTEO FROM Tl-IE CUS'lOMER'S
ACCOUNT 70 THE STORE'S ACCOUNT.
EL£CTRONIC IMPROVEMENTS AREN'T CONFINEO
70 CHECK PROCESSING FACILITIES. BANK CUS·
TOM£R5 CAN NOW HANDLE A VARIETY OF .
TRAN5ACTION5-- [)£POSITS, WITHl>l?AWALS, 5HIFTS
BETWEEN SAVINGS ANO CHECKIN0 ACC,Ol./NTS
AND lOAN PAYMl:NTS--THROUGH AUTOMATED
TELLER MACHINES••• EVEN AT NIGHT.
SOME PEOPLE FORECAST THAT MOST PAYMENTS EVENTllALLY
WILL Bl: HANOI.cl> 8Y A NETWORK OF COMPUTERS LINKING
BANKS ANO THl:IR CUSTOMERS l:U:CTRONICALLY, ELIMINATING
MOST PAPf=R CHECKS.
~#1.0CAL
~ coMMUNIC~5
CENTER
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Federal Reserve Bank of St. Louis
CQWWJNICATI
CENff~
20
MRS. H£N0£RSON SOMEOAY MIGHT HAVE S'EVERAl
A!.rERNA7E MIEANS OF PAYING BILL5. SHE MAY BE
ABlE TO PAY FOR HER C. O.C>. PACKAGE FROM FITZ1-/UGl-l'S O£PARTMENT STORE WITH A CHECK, THROUGH
A CREC>IT CARO WIRIE TRANSFER NETWORK OR.PER·
IIAPS ELECTRONICALLY FROM HER HOME •••
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Federal Reserve Bank of St. Louis
. :···:.::•'·. ·.. ·:
Q
\.p 7'-'C>'\~
j
Q
BANK~ COMPUTER.
g
HENDERSON
ACCT .-$24 .95
FITZHUGH ' $
BANK+ $24 .95
THE COMPUTER WOULD VERIFY HER IOENT!TY
(PERHAPS BY VOICE), C/.IARGE HER BANK.
,/.ICCOUNT ANO TRANSFER liER PAYMENT
Ol~CTLY TO THE STORE'S ACCOUNT.
:5 ANO A'IYMENTS WILi.. BE MAO£ l=t.ECTRONICAlLY BY THEIR 8AM
Wt/.L RECEIVE ti COMPLETE PRINTOUT FROM 7H£ BANK
:2..1
TI-/E FUTURE WILL UNDOUBTEDLY HOU> MORE: ELECTRONIC PAYMENTS. HOWEVER, AMERICAN
l=AMIL/E5 ANO BUSINESSES WILL STI/.L U~ PAPER CHECKS.
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Federal Reserve Bank of St. Louis
BUT, WHATEVER THE MIX
BETWEEN EL~CTRONIC ,AND CHECK
PAYMENTS, THE FEDERAL RESER'IE
WILL CONTINUE TO PLAY A
VITAL ROLE IN P~V/D/NG AND
ENCOURAGING AN ECONOMICAL,
REL/ABLE A/JD EFFICIENT
PAYMENTS SYSTEM.
HOW TO WRITE A CHECKWRITE YOUR CHECK CLEARLY ANO COMPLETELY. DON'T LEAVE ANY
BLANKS. AFTER YOU HAVE FILLEO THE STUB IN YOUR CHECKBOOI<.
AND COMPLETED THE ARITHMETIC (TO MAKE SURE YOUR BALANCE
COVERS THE tHECK YOU ARE DRAWING), FILL IN THESE FIVE ITEMS
IN IHI<..
1.
2. TNE NAME OF THE
THE DATE YOU WRIT£
THE CHECK. NEVER WRITE
A FUTURE C>ATE.
PARTY RECEIVING
THE CHECI( AFTER
ro THE
",g,qy
OROER OF':
o.- - \
~"tt-
~-
~
I
~
I
'I
I
5. YOUR
3. THE AMOUNT IN WORDS
A5 FAR TO TH~ LEFT A5
POSSIBLE. FINISH THE SPACE
WITH A LINE TO PREVENT
THE INSERTION OF WORDS
TI-IAT INCREASE THE
AMOUNT.
4. THE AMOUNT IN NUMBERS.
WRITE A5 CL05E 70 THE$ SIGN
AS POSSIBLE. IF THESE
NUMBERS 00 NOT AGREE WITH
THE AMOUNT IN WORP>, YOUR
BANK WILL PROBABLY PAY
7HE AMOUNT IN WORDS, Bl.IT
THIS WILL TAK/E EXTRA 71ME.
SIGNATIIRE.
IT SHOI.ILO MATC/.I
THE ONE FILEO AT
T/.IE BANK WHEN
YOU OPENS) 71-{E
ACCOUNT. DON'T
SIGN UNTIL }f)(J ARE
SURE THAT 7HE
CHECK ~'15 WHAT
'IOU MEAN.
A/EVER CROSS OUT OR C/.IANGE ANY PART Or YOUR CHECK. IF YOU MAKE
A MISTAKE, START A NEW CHECK. OON7 £END YOUR CHECK FORM5 70 OTHERS.
HOW TO ENDORSE A CHECK-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
70 CASI-I, OEPOS/T, OR TRANSFER 10
SOMEONE ELSE A CHECK MADE OUT 70 YOU
IT MUST BE "ENOOf?!;ED'~ SIMPLY Wl?/TE
YOUR NAME ( AS IT APPEARS ON THE
CIIECK) ON THE BACK, A5 SHOWN. IF THE
NAME ON THI= FACE OF THE CHECK DIFFERS
FROM THE WAY YOU REGUtARLY SIGN, YOU
MAY AOO yOUR PROPER SIGNATURE. UNLESS
you A()() A RESTRICTIVE PHRASE LIKE ''R)R
OEPOSIT ONLY~ AN ENOORSEO CHECK 15
THE SAME AS CASH.
23
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The following comic-style booklets
also are available from the Federal
Reserve Bank of New York:
The Story of Money
The Story of Banks
The Story of Consumer Credit (English)
The Story of Consumer Credit (Spanish)
The Story of Inflation
FEDERAL RESERVE BANK OF NEW YORK
Publlc Information Department
33 Uberty Street • New York, N.Y. 10045
1983