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7/29/2020 News Release -- Automated Payments Partnership Federal Reserve Banks, Mid-America Payment Exchange Announce "Automated Payments Partnership" Contact: Joe Elstner, Federal Reserve Bank of St. Louis (314) 444-8902 Nicole Kuzila, Mid-America Payment Exchange (816) 474-5630 For release: April 15, 1997 Orlando, FL, April 15, 1997 - The Federal Reserve Banks of St. Louis, Kansas City and Chicago and Kansas City-based Mid-America Payment Exchange (MPX) today announced a multistate alliance to boost the use of direct deposit and direct payment in place of checks. The "Automated Payments Partnership" was announced at the National Automated Clearing House Association's (NACHA) "Payments 97" conference. Fed and MPX officials emphasized that the nature and size of the partnership -- three Federal Reserve Banks and the largest regional automated clearing house (ACH) association, together reaching nine midwestern states -underlines the importance they place on expanding the use of electronic payments. The partnership's territory covers Arkansas, southern Illinois, Indiana, southwestern Iowa, Kansas, Kentucky, Missouri, Nebraska and Oklahoma. The officials said the partnership is also aimed at supporting the Treasury's effort, called EFT 99, to educate consumers, bankers and businesses about new legislation requiring most government payments to be made electronically by Jan. 1, 1999. "The 'partnership' part of our alliance's name is important," said John P. Borden, MPX president and CEO. "We want to partner with financial institutions and businesses in moving toward automated payments, because doing so brings many benefits, including time and cost savings, to banks, businesses and consumers. MPX brings to the partnership broad experience in assisting our nearly 2,000 financial institution members in the effective use of ACH services" Hank Bourgaux, St. Louis Fed senior vice president, said promoting electronic payments fits well with the Federal Reserve's payment system oversight role. "As the nation's central bank, we're charged with improving the payment system's efficiency. The Automated Payments Partnership will help us further that goal in the central United States." Bourgaux and Borden said the Automated Payments Partnership will conduct a multi-year campaign to promote greater use of the ACH for direct deposit and direct payment transactions. "Our goal is to see 50 million new ACH originated items within the next two years," Borden said. "On the direct deposit side, we would like to see 100 new companies offering direct deposit and 200 companies agreeing to market direct deposit to their employees. Other goals of the partnership are to involve 40 utilities in joint direct payment marketing campaigns and obtain agreement from 50 nonprofit organizations to offer direct payment to contributors or increase direct payment marketing." Bourgaux said that although direct deposit has been available for many years, more information about it needs to be shared to spur its use in place of paper checks. "About 45 to 50 percent of the U.S. workforce uses direct deposit for payroll, he said. "This is a considerable jump from 1990, when just 15 percent participated, but we still have a lot of room to grow. Last year, only six billion ACH transactions were originated, compared with over 63 billion checks. https://web.archive.org/web/19980214154040/http://www.stls.frb.org/pubinfo/apr14rel.html 1/2 7/29/2020 News Release -- Automated Payments Partnership The officials noted that the benefits for automated payments are substantial. With direct deposit, Borden said, financial institutions save between 75 cents and $1.25 for each in-person deposit converted to direct deposit. Businesses, he said, can save up to $1.25 on each payroll check that is automated. And consumers are freed from taking time to deposit paper checks -- and from the worry that checks can be lost or stolen. Bourgaux said the Federal Reserve is also working with the Treasury and the National Automated Clearing House Association (NACHA) to insure the success of the EFT 99 effort. "We need a strong working relationship with the financial services industry if we are to succeed," he said. "We view this partnership as vital to helping the Treasury achieve its electronic payment mandate. We hope many financial institutions and companies will partner with us to increase the use of automated payments." Federal Reserve Banks serve as banks for depository institutions and the U.S. government, supervise statechartered member banks and bank holding companies, monitor economic conditions in their districts and participate in formulating monetary policy. Mid-America Payment Exchange is a not-for-profit, automated clearing house association that encourages and facilitates the effective use of electronic payments in the states covered by the Automated Payments Partnership. ### Please send comments or questions to henderson@stls.frb.org This page has been accessed [an error occurred while processing this directive] times since April 15, 1997. https://web.archive.org/web/19980214154040/http://www.stls.frb.org/pubinfo/apr14rel.html 2/2