Can Existing Payment Networks Meet Future Needs?
The proportion of retail, non-cash payments made electronically in the U.S. grew from 15% in 1979 to 40% in 2000. A recent Chicago Fed conference addressed the important question of whether today’s payment networks can adequately support emerging payment technologies.
The last few years have seen a steady decline in check volumes and explosive growth in electronic payments. However, not all payment innovations have gained market acceptance, and not all market segments have enthusiastically abandoned paper-based instruments. Changes in the U.S. payment industry landscape are most dramatically evidenced by a fivefold increase in the combined number of credit card, debit card, and automated clearing house (ACH)payments annually since 1979, with debit cards growing significantly toward the end of that period. The proportion of retail, non-cash payments made electronically grew from 15 percent in 1979 to 40 percent in 2000. Near term, businesses and financial institutions will need to maintain both paper and electronic payment processing systems, while the migration toward electronic instruments will likely drive future investments in technology and the payment infrastructure, raising the question: Can today’s payment networks support emerging payment technologies or will new networks emerge? On May 29–30, 2003, the Federal Reserve Bank of Chicago hosted an industry conference titled “Can Existing Payment Networks Meet Future Needs?”