Did you know more than $5 trillion moves through the United States payments system —one of the largest in the world— each day? Keeping payments flowing through this system in a safe, efficient and accessible manner is one of the Fed’s core responsibilities.

Here’s what it means for you: As the bank for banks, the Federal Reserve supplies financial institutions with cash and coins fit for distribution — meaning they’re not worn, torn or counterfeit. And the Fed also helps ensure the checks you write, the money you transfer and the electronic bills you pay make it quickly and safely from point A to point B.

Fed teams across the country, including at the Richmond Fed, work together day in and day out to keep the payments system running safely and efficiently to the benefit of consumers, financial institutions and the entire U.S. economy.

Keep reading to learn more about what we do and how we do it.

What We Do

Provide Payment and Financial Services to Banks and the Federal Government

Federal Reserve Financial Services is an integrated Fed organization with representation from all 12 regional Reserve Banks and the Federal Reserve Board of Governors in Washington, D.C. The Fed, under the leadership of the Federal Reserve Financial Services team, provides a variety of payments and financial services to individual financial institutions (e.g., banks) and the federal government:

Distributing Cash & Coins: The Fed supplies financial institutions (e.g., banks and credit unions) with the currency and coin they need to meet the needs of their customers. At the Richmond Fed, Cash Services teams at our Richmond, Baltimore, and Charlotte locations distribute cash and coins to financial institutions across the Fifth District.
Automated Clearing House: The automated clearing house (ACH) processes batches of electronic funds transfers — like direct deposit paychecks, utility payments, eChecks, or corporate payments to vendors — between financial institutions. As the nation’s largest ACH operator, the Fed receives files of payments from originating institutions, edits and sorts the payments, delivers the payments to receiving institutions and then settles the payments by crediting and debiting the institutions’ accounts.

What is an Automated Clearing House?

A system for processing batches of electronic funds transfers for pre-authorized, reoccurring payments — payroll, corporate payments to vendors, insurance premium payments and utility payments.

Clearing Checks: The Fed provides check collection services to depository institutions. Use of paper checks has declined steadily since the 1990s; today, nearly all checks processed by the Fed are electronic.

Funds Transfer and Settlement: The Fed offers four automated funds transfer and settlement services to institutions and organizations with Fed accounts:
Fedwire® Funds Service
FedACH®
FedNow® Service
National Settlement Service
Act as the “Government’s Bank”: Regional Federal Reserve Banks provide a range of payments, financial and securities services to the federal government. For this reason, it’s commonly said that the Fed acts as the “government’s bank.” For example, the Reserve Banks maintain the U.S. Treasury’s operating account, pay checks drawn on the Treasury and make electronic payments on behalf of the Treasury and government agencies. They also support the auction, issuance, and redemption of Treasury securities, the processing of U.S. savings bonds, and the processing of money orders on behalf of the U.S. Postal Service.

Drive Innovation Through Research and Outreach

The payments landscape is ever-evolving, as evidenced recently by the emergence of 24/7 instant payments through the FedNow® service.

The Richmond Fed is the headquarters for Currency Technology and Support, the technical arm of Federal Reserve Financial Services that supports the cash processing operations of the Reserve Banks, the U.S. Bureau of Engraving and Printing, and the U.S. Secret Service. The Currency Technology and Support team, in partnership with the Richmond Fed's Cash Services team, leads testing and implementation for high-speed currency processing equipment, counterfeit detection technology and currency designs that help Fed cash processing teams identify worn, torn and/or counterfeit bills with greater speed and accuracy.

Additionally, teams across the Fed work in cooperation with Congress as well as both private- and public-sector organizations to conduct research that helps Fed teams, financial institutions, policymakers and the public understand how payments and payments systems are evolving. This research helps Fed teams ensure the U.S. payments system continues to operate safely and efficiently as technology and consumer needs evolve. Common research topics include:

Trends in consumer and business payment choice
The growth of digital and instant payments
Security and fraud prevention in electronic payments
Payments system access

Fed teams also conduct payments outreach to gather insights from banking, business, community and technology leaders across their region that can help inform future strategy for the payments system. At the Richmond Fed, this work is conducted in part by convening the members of our Payments Advisory Council, which includes representatives from financial institutions from each state in our region, and our Business and Payments Advisory Council, which includes representatives from a variety of merchants.

Share Educational Resources

Fed payments teams regularly partner with financial institutions, community groups, and economic education specialists to strengthen understanding of how the nation’s payments system works. At the Richmond Fed, we offer Payments 101, a self-led online learning module that takes learners back in time to understand the origins of our current currency system and the Fed’s role in it before catapulting them forward into the future to explore the next payments frontier.

Payments 101 is suitable for students (middle school and up), educators, and anyone who would like to learn more about the Fed’s historical and modern-day roles in helping consumers’ payments move from point A to point B safely and on time.

Current Fed Payments and Financial Services Customers

If your institution is a current customer of the Fed, please visit Federal Reserve Financial Services to find the appropriate customer service contact to meet your needs.

Additional Resources

The Fed’s Role in Payments Innovation – Podcast

Payments Services Feedback

Payments Overview

Learn more about the Fed's role in the payments system, including information on the Payments Services function at the Federal Reserve Bank of Richmond.

The Fed's Historical Role in Payments

The Federal Reserve has a long history in the nation's payments system. Part of the reason that Congress created the Fed in 1913 was to reduce the impact of banking crises on the system.

During the crisis of 1907, for example, many banks and clearinghouses refused to clear checks drawn on certain banks. This contributed to the failure of some institutions that were otherwise solvent. To mitigate such disruptions in the future, as well as to address perceived inefficiencies in check clearing, the Fed was charged with creating a national check clearing system.

In subsequent years, the Fed partnered with the private sector to improve several aspects of the payments system, including:

Adding a routing number to checks that identifies the institution on which a check is drawn,
Developing the Magnetic Ink Character Recognition (MICR) system for encoding checks so they could be read electronically, greatly advancing the automation of check processing, and
Developing the Automated Clearing House (ACH) system to electronically process credit transfers (such as direct deposit of paychecks) and debit transfers (such as automated bill payments).

What We Do Today

The U.S. payments system has become the largest in the world, transferring more than $5 trillion each day. Most of these funds are transferred between buyers and sellers through financial institutions. A large number of these institutions have accounts with one or more of the 12 Reserve Banks that, along with the Board of Governors, make up the Federal Reserve. As a result, the Fed is an important intermediary in clearing and settling interbank payments.

The Fed helps ensure the resilience, efficiency and accessibility of the payments system that underlies our economy through several services and activities:

Three types of funds transfer and settlement services, including Fedwire, which is typically for large-value, time-critical payments.
One of two national Automated Clearing House operators.
Issues and processes currency and distributes and stores coin.
Paper and electronic check processing.
Maintains the bank account of the U.S. Treasury, as well as other support services.
Money order processing for the U.S. Postal Service and payment services to other federal agencies and foreign governments.

The Role of the Richmond Fed

In the Fifth District, the Payments Services function at the Federal Reserve Bank of Richmond supports the nation's payments system from its offices in Richmond, Baltimore, and Charlotte. Collectively, Payments Services staff have the following mission:

We use our broad understanding of payments, technological expertise, and ability to forge strong partnerships to deliver high value, innovative services and thought leadership in payments.

Payments Services has three divisions:

Learn more about the Fed’s role in the U.S. payments system via our Payments 101 module.

In addition, the Currency Technology Office is headquartered at the Richmond Fed. This organization serves the cash processing operations of the Federal Reserve System as well as the U.S. Bureau of Engraving and Printing and the U.S. Secret Service.

Additional Resources

The Fed’s Role in Payments Innovation – Podcast

Payments Services Feedback