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?”
Chakravorti and Jankowski summarize the 2005 Chicago Payments conference. The migration to more efficient payment mechanisms is affected by innovations, incentives, and regulations. While advances in technology have yielded numerous payment method alternatives, many have not been widely adopted. A Chicago Fed conference explored why certain payment innovations have been more successful than others.
Businesses, both small and large, are adopting new technologies to automate and reduce the exchange of paper documents in their transaction flows. However, more than 80% of payments between businesses are still made with paper checks. As the exchange of information along the supply chain becomes increasingly electronic, it raises the question: Will payments follow?
On June 21–22, 2010, the Chicago Fed and the University of Granada co-sponsored a conference that brought together policymakers, academics, and industry practitioners to discuss evolving retail payment systems and the role of public authorities, with several panels focusing on the Single Euro Payments Area.