What Is a Regional Check Processing Center (RCPC)?

A regional check processing center (RCPC) is a local Federal Reserve facility where checks that are drawn on depository institutions are processed overnight. A regional check processing center conducts check-clearing operations including paper and electronic, and interbank check clearing.

A depository institution is a financial institution such as a savings bank, credit union, commercial bank, or savings and loans where the public makes deposits. Due to the increasing reliance on electronic check processing, the Federal Reserve Bank mainly processes electronic forms of payment through credit cards, debit cards, and online account transfers versus paper checks.

Key Takeaways

  • Regional check processing centers (RCPCs) are check processing facilities located throughout the United States.
  • RCPCs are run by the Federal Reserve, America's central bank, which is also responsible for check clearing and payments infrastructure.
  • Over time, the number of physical checks written and processed has decreased substantially with the advent of electronic and online payments.


Understanding Regional Check Processing Centers

The Federal Reserve continuously updates its check processing systems and restructures its schedules in order to meet the demand of check processing and make it more efficient in accordance with technological advancements. According to the Fed, the number of checks written in the United States has been declining since the mid-1990s as electronic processing of checks is increasing.

How a RCPC Works

The Federal Reserve Banks provide check collection services to depository institutions. When a depository institution receives deposits of 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 check-collection services of a correspondent institution or a Federal Reserve Bank.

For checks collected through the Federal Reserve Banks, the accounts of the collecting institutions are credited for the value of the checks deposited for collection and the accounts of the paying banks are debited for the value of checks presented for payment. Most checks are collected and settled within one business day.

Check Clearing Volume

The number of physical checks written nationally has been declining since the mid-1990s as the use of electronic payments instruments has grown. In addition, the Check Clearing for the 21st Century Act (Check 21) removed barriers to the electronic collection of checks and electronic check collection has now become the primary method for collecting checks. Indeed, almost all checks processed by the Reserve Banks today are deposited and presented using the Reserve Banks' electronic check collection services.

These changes have enabled the Reserve Banks to reduce their national check-processing infrastructure so that, since early 2010, they have been processing paper checks at one location nationwide, down from 45 in 2003.

Nearly all the checks the Federal Reserve Banks process for collection are now received as electronic check images. From 1989 to 2008, the volume of checks decreased by half, from around 18 billion to just over 9 billion. Since then, that number has continued to drop, reaching a low of just 3.77 billion checks cleared in 2020.

While the number of checks written has declined, it is also interesting to note that the average value of checks cleared has risen at the same time. In the 1990s. the average value of a check written was around $725. In the 2010s, it had more than doubled to an average of around $1,500 per check. In the year 2020, the average check was worth nearly $2,100. This indicates that people are using electronic payments or credit cards for smaller purchases and reserving checks for larger sums.