1. Figure 27.4 Federal- Reserve Collection
Bank
Depository
Bank
Step 3
Step 4
Payor Bank
Step 2
Step 5
Step 1
Payee
Payor
Step 1: Payee provides goods and services to payor; payor gives check to payee.
Step 2: Payee deposits check. Depositary bank credits payee’s account.
Step 3: Depositary bank sends check to the Federal Reserve bank. The Federal
Reserve bank credits the depositary bank for the check.
Step 4: The Federal Reserve bank sends the check to the payor bank and debits it for
the check.
Step 5: The payor bank debits the payor for the check.