Checks - Rumors of their demise are greatly exaggerated

With the advent of FinTech, paying by check may seem archaic. However, for the last 20 years, the U.S. has seen only a moderate decline in the number of checks.
Garth Leonard

With the advent of FinTech, it may seem archaic to pay someone by check in 2021. However, for the last 20 years the United States has seen only a moderate decline in the number of checks issued for noncash payments. Electronic Automated Clearing House (ACH) credit transfers have skyrocketed in comparison, as have the use of both credit and debit cards. Is the check here to stay, or is it about to go the way of the dinosaur?

Why checks?

From their origins in 1st Century BC, checks became popular in modern times due to their wide range of acceptance, as well as their ease of use. The payer can purchase the checks for a minimal cost, and the payee can deposit them without incurring any fees. By comparison, the average credit card processing fee is between 1.3% and 3.4%. In 2012 alone, approximately 18.3 billion checks were issued, totaling $25.9 trillion dollars. It wasn’t until 2018 that ACH transfers exceeded the total number of checks issued in America.

U.S. Usage

According to a 2019 Federal Reserve Payments Study, total checks issued decreased by 3.6 billion and $3.39 trillion in value from 2015. Similar declines were observed in the preceding period from 2003 to 2012.

Credit cards exceeded the number of checks written in 2010, with a steady increase ever since. Debit card transactions exceeded checks issued by 2007, and ACH debits in 2010. ACH credits matched checks issued for the first time in 2018. The only noncash payment method that has not exceeded checks is prepaid debit cards.

International usage

Americans have certainly been decreasing their check usage over time, but checks are still squarely in use. Canadians write fewer checks than the average American, with France writing even less and Germany, Sweden, and Norway using almost zero. 

Some countries have eliminated the use of personal checks altogether. This includes Finland (1993), The Netherlands (2002) and Poland (2006.) You can still cash a check from the U.S. in these countries, but the use of a check to draw funds from a personal account is no longer an option. Those countries actively considering the retirement of checks, such as Australia, have found consumer payment trends during the Covid pandemic may hasten the retirement date.

Generational usage

Believe it or not, nearly 50% of Millennials still use checks today. Data from Qualtrics shows that more Millennials write checks than Millennials who own video game consoles. And those particularly tech-savvy Millennials who are living in a FinTech world? For every one who used a mobile payment platform, three times as many Millennials wrote a check.

When compared to Baby Boomers, Millennials were 16 times more likely to use Apple Pay. For every six Millennials who used Venmo, only one Boomer utilized the electronic payment service. And yet, according to a survey from Businesswire, nearly 30% of adults are still likely to mail in a check to pay their taxes. The technology to send and receive funds electronically exists, but Americans of all generations still love to write their checks.

Looking ahead

When looking at the trends, one can’t help but notice the steady decline in both the number and value of checks written over the last two decades. Despite the continued usage of checks from all age groups, alternate payment methods have the potential to make checks obsolete in the near future.

It is entirely possible that the US may join Finland in being completely devoid of checks. However, given the fact that the US still writes billions of checks per year despite the availability of FinTech solutions, it is equally possible that rumors of their impending demise are greatly exaggerated.

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