##h payment in the us payments system as measured by the annual number of payments. however, the 1990s saw a marked shift in consumers'behavior. federal reserve research has revealed a steady decline in check usage since the mid - 1990s. by 2003, electronic noncash retail payments exceeded check payments for the first time. debit cards, used primarily by consumers for everyday purchases, have represented the fastest growing segment of the retail payments system. they have been a natural bridge from cash and checks to electronics. historically, automated teller machine and debit card networks, much like the early check - clearing network in the us, were generally regionally based. banks issued debit cards that could be used only on certain networks, which had limited reach across state lines. this meant that, although early debit cards were a convenient new way to make noncash payments, the scope of their use was limited. some networks developed interchange agreements to expand the acceptance of their debit cards. in addition, as debit cards evolved, the major credit card companies and their banks began to issue a new type of debit card that operated through the existing national credit card networks. the use of these so - called signature - based debit cards has been growing rapidly for several years. another payment mechanism that was developed jointly by the private sector and the federal reserve was the automated clearinghouse, or ach, system. the ach system is a batch electronic payment system that has traditionally been used to process recurring credit and debit transactions, such as payroll payments, mortgage and utility payments, and government benefits. in its infancy, the ach system was a segmented regional system that has since evolved into a nationwide payments system. more recently, banks have used the ach system in innovative ways to make nonrecurring payments, such as payments over the telephone or internet, which were typically made by credit or debit card. in addition, businesses that receive large numbers of checks from customers are obtaining their customers'permission to convert the checks into ach payments. as a result, the ach has exhibited significant growth in recent years and is contributing to the decline in the number of payments being processed as checks. it remains to be seen how significant an effect recently emerging instruments such as payroll cards, stored - value cards, or electronic benefits transfer instruments will have on the payments landscape. whether or not these instruments are broadly accepted will depend largely on consumer and business preferences, and on how much of an improvement these instruments

another. in 1913, the us congress established the federal reserve system, not only to provide greater financial stability and to improve banking supervision, but also to provide an elastic currency and a national check - clearing system. the federal reserve began issuing currency in 1914. moreover, checks that were cleared through the federal reserve and that were drawn on federal reserve member banks were exchanged at par value. in the early days, the federal reserve's national check - clearing service was provided free of charge to nationally chartered banks that were required to join the system and state - chartered banks that joined voluntarily. despite some early difficulties with achieving widespread par clearing, the federal reserve's check collection services ultimately provided the nation with a much more unified payments system. during this period, checks or drafts were also used as a means of settling interbank payment obligations. to improve the safety and efficiency of the interbank settlement process, in 1918 the federal reserve developed and implemented fedwire, the first real - time gross settlement system. the key feature of the fedwire system was the ability to transfer account balances held at the central bank through telegraphic messages using a secure communications network. although fedwire was intended to improve the large - value payment system, and quickly accomplished that goal, it was also used for some urgent large - value commercial and retail payments, and continues to be used that way today. the payments operations of state and federally chartered private banks, private clearing houses, and the operations of the new central bank, provided the foundation for the private - and public - sector payments infrastructure that exists in the united states today. yet for many years, policies that deterred interstate banking shaped the design and operation of the retail payments system. the us banking and payments system has also been shaped by other important state and federal laws. starting in the late 1800s, states attempted to develop a more - uniform set of commercial laws codifying existing laws and common business practices. they eventually adopted the uniform commercial code, or ucc, which states generally enacted. at the federal level, a number of laws influenced the development of the banking system. laws such as the mcfadden act and the douglas amendment to the bank holding company act were passed to restrict either bank ownership or bank branching across state lines. over the years, legislation enacted by the various states, and ultimately at the federal level, eliminated the barriers to banks operating across state lines, at least with respect to interstate bank acquisitions. in 1994, the riegle - neal act,