Checking in on checks

bank-cheque-2693029_1280Overheard: “I never go to the bank. Except when some jerk writes me a check that I have to cash or deposit.” 

As you probably guessed, I overheard that remark some time ago, before consumers could deposit a check by taking a picture of it with a smartphone. According to Wikipedia, the first U.S. financial institution to offer that service was West Virginia’s Element Federal Credit Union in 2009.

But now that smartphones serve as personal tellers to millions of people—and we have the likes of mobile deposit, bank and merchant bill pay, Zelle, Apple Pay, Google Pay, Square, Venmo, PayPal, etc., and plastics galore—a crucial question arises. Namely…

Why on earth does anyone still write checks? 

Dire predictions run rampant about the future demise of currency. While there seems to be less chatter about the potential demise of checks, it’s out there. In an article entitled “Why do people still write checks as payments in stores?,” StackExchange’s Personal Finance and Money page lists nine disadvantages to continued check use. Under “advantages,” just one word appears: “Nothing.” The author continues: 

I assume the only reason stores still accept them is that people still use them, but for the life of me I can’t figure that part out. Why does anyone still write checks in stores for amounts that are clearly small enough that you could use a debit card? What is the benefit?

There are, however, many who allege the superiority of and predict a long, prosperous future for checks. Most offer the same basic copy points: Checks don’t incur “convenience fees” (an audacious euphemism if ever there was one), checks are more secure (that one is arguable), not everyone is online (fair point), not all merchants accept plastics or digital payments (such are a vanishing breed, and deservedly so, if you ask me), better recordkeeping (nonsense!), and float (which, depending on which side of the equation you’re on, can be an advantage or a disadvantage).

Not surprisingly, check printing company Harland Clarke is a strong advocate for the pen-and-ink form of payment. One year ago this month, VP of Marketing Karen Salamone blogged, “As it turns out, the theory millennials prefer tech to traditional payments like checks and cash couldn’t be more inaccurate, and there is data to prove it.” Citing a Qualtrics study, she pointed out:

80 percent of millennials use cash … 64 percent carry cash most of the time … 4x more millennials use cash than the top mobile payment platforms … 3x more millennials use checks than mobile payment platforms … 42 percent still use checks … More millennials use cash more than debit cards … 

I’m unconvinced that those data support the “couldn’t be more inaccurate” claim. Carrying and using currency and checks may reflect circumstances more than preferences. After all, making a digital payment requires a payee who has the means of accepting it, and not all have the means—yet. 

Salamone also noted: 

… only 34% of millennials report owning a video game console, which means more millennials use “old fashioned” checks than play games. A similar research study found that overall millennial checks usage is high: 87 percent of millennials have written a check in the last three months. 

Until now I was unaware of video game console ownership as a leading indicator of payment technology preference. As for 87 percent of millennials having written a check—check—within the past three months, there is a question of spin. Consider how NPR News reported similar data:

A 2013 survey by payment solutions company WePay showed that … 64 percent of consumers write fewer than three checks per month—up from 35 percent three years earlier.

Meanwhile, numerous Fiserv studies show that millennials lead the pack when it comes to acceptance and adoption of digital payment systems. (Full disclosure: Fiserv is my employer.)

Many check defenders point to a Federal Reserve Payments Study from 2016. Yet the study reveals only that checks are obsolescing at a slower-than-predicted pace, a far cry from “checks are here to stay.” Moreover, much has changed since 2016. Digital payment options have proliferated, improved in user friendliness and accessibility, and grown in acceptance and ubiquity. And now that Peer-to-Peer payments are a thing, I am hard-pressed to come up with anything checks can do that digital payments can’t do better. Except, of course, take up space in your pocket or purse and cost you every time you reorder.

Even street performers are hep to digital payments. I was recently in Las Vegas where a street magician, passing a hat at the end of his act, announced, “For those who don’t carry cash, I accept electronic tips.” With that, he displayed a sign showing about every major P2P platform you could name.

So what keeps checks around? I’d suggest a few factors. 

For reasons beyond me, there remain payees who hold out for checks. The local elementary school fundraiser, for instance. There was no way I was going to lecture the adorable, seven-year-old, dizygotic twins at my door for not being prepared to accept Zelle.

There’s the romance of a check in the mail from a relative. But the gift check is fast giving way to the gift card, and the gift card is fast giving way to online gift card.

Some digital payment systems have ceilings, making checks or money orders a needful alternative. This may explain why the Board of Governors of the Federal Reserve System has reported that, over the past 30 years, the volume of checks written has consistently fallen while the average amount has consistently risen.

Not to be overlooked is the thing about old habits, that is, that they die hard.

I have my doubts as to whether cold, hard currency will ever go completely away. I am reminded of this each time I leave a tip for the hotel maid on my pillow at check-out time. But checks? With apologies to the check printing industry, I’m not sure they will be around much longer.

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