Also see......
"Next to cash, checks are the most frequently used method of payment
in the United States. About one-fourth of all checks written in the
United States are deposited in the institution on which they are drawn
("on-us" checks). Checks not drawn on the institution at which they
are deposited are called interbank checks. The Federal Reserve Banks
are among many providers of interbank check collection services to
depository institutions.
Handling interbank checks requires a mechanism for exchanging them and
providing for the related movement of funds (or settlement) among
banks and other depository institutions that are involved. When a
depository institution receives checks drawn on other institutions, it
may send the checks for collection to those institutions directly,
deliver them to the institutions through a local clearinghouse
exchange, or use the collection services of a correspondent
institution or a Federal Reserve Bank."
http://www.federalreserve.gov/paymentsystems/checkservices/default.htm
"Once you've paid by check for your groceries, the first place that
check goes is to the grocery store's bank, where it is deposited. But
the funds may not be immediately available, unless you and your
grocery store use the same bank -- and actually, about 30 percent of
checks are drawn on and deposited into the same bank, in which case
the processing, or clearing, is handled internally. But otherwise, the
grocery store's bank will probably want to verify the check with your
bank, the paying bank, before it converts the check value to cash. But
most banks do not communicate with each other directly; instead, they
go through a middle man, an intermediary bank.
There are three types of intermediary banks:
Federal Reserve Bank
Correspondent bank
Clearinghouse corporation
The Federal Reserve Bank is the central bank of the United States.
Regional branches of the Federal Reserve handle check processing for
banks that hold accounts with them, and they charge a fee for their
services. Such services include check collection, air transportation
of checks to the Reserve Bank and delivery of checks to paying banks.
Reserve Banks handle about 27 percent of U.S. checks.
Correspondent banks are banks that have formed "partnerships" with
other banks in order to exchange checks and payments directly,
bypassing the Federal Reserve and its fee. Outside banks may go
through a correspondent bank to exchange checks and payments with one
of its partners."
http://money.howstuffworks.com/question500.htm
"The check collection system in the United States is efficient, but
the collection process a check goes through may be rather complicated.
A check written on a particular bank and cashed by or deposited into
the same bank would be handled and processed within that bank. Checks
of this type?called ?on-us? checks?account for nearly one-third of all
checks. The remaining two-thirds are known as transit checks because
they must move between different banks, sometimes passing through
several in different parts of the country.
Local Clearinghouses
Banks in large cities often form associations for exchanging checks
drawn against the members. A clearinghouse may have fewer than a dozen
members, but these banks are usually the largest in the area.
Clearinghouse members group the checks of other member banks, exchange
them at a specified time each day, and settle accounts with each
other.
Clearinghouses can often collect and process locally drawn checks
faster and more efficiently than do intermediary services, such as
correspondent banks and the Federal Reserve?s check collection
network.
Correspondent Banks
Most banks maintain accounts at other banks for the purpose of
collecting checks. A correspondent bank accepts checks from the bank
with which it has a relationship and processes those checks the same
way it processes those for its depositors. It credits the depositing
bank?s account and forwards the checks to the bank on which they were
drawn.
The Federal Reserve?s Check Collection Network
The Federal Reserve is the largest nationwide processor of transit
checks, handling about a quarter of all checks in the United States at
45 Federal Reserve check processing facilities across the country.
All financial institutions that accept deposits can purchase Federal
Reserve check collection and other payments services. The Federal
Reserve is required by law to charge these institutions a fee for its
services to cover its expenses. But the Fed?s large volume of checks,
extensive automation, and speedy processing allow it to keep check
collection costs and prices low.
Checks are moved efficiently across the country from one Federal
Reserve check processing region to another using the Fed?s check relay
network, an air and ground transportation network of private vendors
managed by the Federal Reserve Bank of Atlanta. The Reserve Banks also
are linked electronically to a settlement fund that keeps track of the
districts? net balances as they exchange checks for settlement."
http://www.frbatlanta.org/invoke_brochure.cfm?objectid=207A1EA4-D45D-11D5-A3820008C7720D25&method=display_body
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THX1138 |
