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Payments 101: How Your Money Gets From One Place to Another

Photo of Federal Reserve Bank of Richmond building

Along with monetary policy and bank supervision and regulation, one of the Fed’s three main functions is payment services. The Fed provides financial services to banks and the U.S. government and plays a major role in the nation’s payments system. Basically, we help ensure your money makes it from Point A to Point B safely, securely and efficiently.

For example, Reserve Banks distribute currency and coin to banks — and sort, authenticate and store fit currency and destroy unfit currency. Reserve Banks also provide check collection services to depository institutions and provides electronic payments through Fedwire and the Fed’s automated clearinghouse. Finally, the Fed is the fiscal agent for the U.S. Treasury and performs services such as processing checks and other payments for the U.S. Treasury and government agencies.

Explore the world of payment services and learn more about the vital role we play in the U.S. financial system through our online Payments 101 learning module!

Payments 101 is a fun, interactive learning module that introduces you to the Payments world in a whole new way. You’ll go back in time to learn about the first currencies used by humans (including shark teeth and wampum beads), how the Fed created a flexible nationwide currency system, the types of payment systems we use today, and what the future holds.

This self-led module takes about 30 minutes to complete. It’s suitable for middle- and high-school students, college students, educators, and anyone who would like to know more about this important Fed function.

Teachers: It’s easy to integrate the Payments 101 learning module into a daily lesson plan. The module is accessible through any laptop or mobile device.

Launch module

Related Resources

Your Connection to the Economy and the Federal Reserve Infographic is an infographic that guides students through their role in the economy, the Federal Reserve's role in the economy and the ways the Federal Reserve connects to their daily lives including through payments.

The Fed Explains the Payments System - Like a circulatory system for the economy, the U.S. payments system facilitates the flow of money between buyers and sellers. This animated video explores the Fed's role in keeping our monetary circulatory system healthy.

Voluntary National Content Standards in Economics

Standard 11: Money makes it easier to trade, borrow, save, invest, and compare the value of goods and services. The amount of money in the economy affects the overall price level. Inflation is an increase in the overall price level that reduces the value of money.

Benchmark 1, Grade 12: The basic money supply in the United States consists of currency, coins, and checking account deposits.

Benchmark 2, Grade 12: In many economies, when banks make loans, the money supply increases; when loans are paid off, the money supply decreases.

National Standards for Financial Literacy

Standard 2: Buying Goods and Services: People cannot buy or make all the goods and services they want; as a result, people choose to buy some goods and services and not buy others. People can improve their economic wellbeing by making informed spending decisions, which entails collecting information, planning, and budgeting.

Grade 8, Benchmark 3: People choose from a variety of payment methods in order to buy goods and services.

Grade 8, Benchmark 4: Choosing a payment method entails weighing the costs and benefits of the different payment options.

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