Check 21 The Payment System

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Check 21 The Payment System the Federal
Reserves Product Offering

• Steve Whitney
• Senior Vice President

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The Payment System- Changes

• Electronic payments are becoming more prevalent
  for both consumers and businesses alike
• Growth in debit card usage, electronic bill
  payment
• Check to ACH conversions at lockboxes, POP, and
  Web
• Mergers and Acquisitions
• Check 21 is just around the corner
• The Federal Reserve sees the transition from
  paper to electronics as positive, actively
  promoting this trend
• An important step in improving the safety and
  efficiency of the payments system

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The Payment System- Changes

• Check volume is declining nationwide forever!
• Reserve Bank volume declines began in 2001 and
  are trending down, similar to the industry
• Forecasts call for a 3 - 5 annual volume
  decline over the next few years, however, some
  financial institutions are experiencing steeper
  declines

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Planning Assumption for the Change
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Reserve Banks Role in Check 21

• Reserve Banks will
• Accommodate the Act when implemented
• Continue to offer existing check services
• Remain committed to using new technology in check
  processing
• Offer new enhanced services as facilitated by the
  Act

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• Check 21
• Product Suite

FedForwardSM
FedReturnSM
FedReceiptSM
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Federal Reserve Product Offering FedForward
The FedForward product suite is designed to help
our customer transform their operations to clear
dollars faster, reduce transportation, streamline
backroom operations and extend deadlines.

• Forward collection includes
• Image Cash Letter Deposit (electronic in,
  electronic or substitute check out). DSTU X9.37
  format for collection via Federal Reserve
  clearing services.
• Electronic Endpoint Group Sort (electronic in,
  electronic out). DSTU X9.37 format for collection
  via Federal Reserve clearing services
• Cull From Mixed and Other Fed Paper Cash Letter
  Deposits (paper in, electronic or substitute
  check out)

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Federal Reserve Product Offering FedReturn
Product suite designed to help our customer
transform its inbound and outbound returns
processing operations to reduce risk, streamline
backroom operations, improve quality, and speed
the returns processcreating opportunities for
substantial operating savings.
FedReturn includes Qualified Return Image Cash
Letter Deposit (electronic in, electronic or
substitute check out). DSTU X9.37 format for
return via Federal Reserve services Derived
Returns (electronic in, electronic or substitute
check out). DSTU X9.37 format for return via
Federal Reserve services (in early 2005) Bank of
First Deposit Return Information Service (in
early 2005)
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Federal Reserve Product Offering FedReceipt
FedReceipt services deliver a portion or all of
inclearings electronically FedReceipt The items
drawn on a financial institution that are
deposited electronically with the Federal Reserve
are collected in an image cash letter and
presented to the customer electronically, without
paper to follow. Items drawn on our customers
institution that are deposited as paper with the
Federal Reserve are presented in paper cash
letters. FedReceipt Plus FedReceipt Plus
presents all of our customers machine-readable
inclearings in an image cash letter in lieu of a
paper cash letter presentment. This image cash
letter will include items drawn on the customer
that are deposited in image cash letters with the
Federal Reserve as well as the remaining paper
items that are image-captured by the Federal
Reserve for a fee.
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• The Federal Reserve

Visit www.frbservices.org For more information