lthough paper checks continue to be the most common method of noncash payments in the U.S., a recent study by the Federal Reserve System suggests that the number of checks being written is declining.

In the August 2002 edition of the Federal Reserve Bulletin, the Fed lowered its estimate of the number and value of checks written by American consumers, businesses and government agencies in 2000. This conclusion was based on data that shows an estimated 32.8 billion checks were paid in the U.S. in 1979, 49.5 billion in 1995 and 42.5 billion in 2000.

The bulletin states that although the exact year in which check use peaked is unknown, the evidence is "highly suggestive" that check writing may have hit its highest point in mid-1990.

A previous report issued in November 2001 by the Fed estimated that nearly 50 billion checks valued at $47.7 trillion were paid in 2000. Further research conducted since the November report caused the Fed to revise its estimate to 42.5 billion checks valued at $39.3 trillion.

The report also suggests that consumers and businesses are using electronic payments more and that electronic payments have "increasingly replaced" larger-value checks. The growth in electronic payments, especially debit card payments, has doubled between 1995 and 2002, accounting for 40 percent of all retail noncash payments in 2000.

You can find the Bulletin article and the revised retail payments research project on www.frbservices.org.