There are some things you just don’t see too much any more, phone booths, 45 rpm records, audio cassettes, and soon the list might include paper checks.
Bank of America made news earlier this year when it announced SafeBalance, a new checking account, with guess what, no checks. Many internet banks don’t allow them like Incrediblebank.com, or charge you for them like Capital One 360, where, according to their website, you won't automatically receive checks to write, but you can order your first checkbook of 50 checks for free. After that, a checkbook will cost $5.00.
Remember too, how you used to get a wad of canceled checks with your bank statements? Now only scanned copies of canceled checks are routinely available. Some banks, like Bank of America, charge to have scans of these canceled checks delivered with their statements. The only free option may be to access the check scans using the bank’s online banking service.
Paper checks are disappearing. According to the 2013 Federal Reserve Payments study, the number of checks written in 2012 fell to 21 billion, a drop of about 25% from 2009. In fact, there are some estimates that if the decline continues its downward spiral, checks could vanish by 2026.
"But as more and more banks offer mobile payments, that timeframe could be closer than estimated," says David Bakke, a writer for MoneyCrashers.com.
What’s driving the death of paper checks?
"In a word, e-commerce. Digital payment systems make it easier to pay by more user-friendly means," says John Oxford, director of corporate communication and external affairs for Renasant Corporation, a $5.9 billion retail bank holding company.
"Physically, in today’s digitalized world with Square, PayPal, prepaid debit cards that can transfer between accounts and online bill pay, among many options, who wants to carry a checkbook around with them anyway?" asks Oxford.
Also, the waiting from writing a check to having someone cash it and then clearing it can be a pain in the neck, compared to instantly transferring using a digital method.
E-commerce (along with Check 21) has delivered faster and better means of exchanging money, thus checks are declining in usage, even with mobile deposit options, according to Oxford.
Like most everything, it also comes down to dollars. "Banking systems like to avoid paper costs, so you have that going on as well for the decline in checks from a supplier standpoint," says Oxford.
Some businesses, including lots of restaurants refuse to accept checks, points out Bakke. "If transaction fees for credit card payments ever drop significantly, you might see more businesses no longer accepting checks," he says.
Even when it comes to weddings, some say paper checks aren’t the gift du jour. "When it comes to wedding gifts, paper checks just aren’t that common anymore," says Kathy Cheng, founder of Thankful Registry, a gift registry. "Wedding guests actually prefer the convenience of using a credit card or bank transfer, instead of carrying a check and a card. Perhaps it’s a generational thing," says Cheng.
She also notes that some engaged couples prefer having cash gifts deposited directly to their PayPal or bank account, instead of dealing with checks which can get misplaced.
Why checks still matter
However, while the average Jane or Joe may be moving away from checks, checks remain the preferred payment in the business world for a number of reasons, says Patrick Lethert, chief marketing officer for VerifyValid, which offers eChecks, that combine the benefits of a check with the speed and free transmission of the internet.
One advantage of checks is that they carry full remittance information. As a single, controlled disbursement, they are safer than cards and third, they cost significantly less to process than cards, says Lethert.
"With cost-cutting and the advent of Check 21, many banks send scanned check images, rather than the full paper check, which gets destroyed early in the process most of the time," Lethert explains.
But for all the advances in technology, old school still has charm. When the power goes out and you can’t "swipe", paper still works. Truth is you can’t use a credit or debit card everywhere. Think government offices and churches, for example.
However, as the world turns, some things fall off, checks may be next on the list.