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The Case of the Disappearing Paper Check

The Case of the Disappearing Paper Check

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.

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.

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.

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Anonymous   |     |   Comment #1
I hope they don't go away. I can't tell you how much time I have spent on the phone with all kinds of companies that like to take money out of my checking accout without so much of a ' how do you do'. I'm ready to start mailing them billing fees for my time. Additionally the time it can take to get them to refund it, they have 8 weeks and most of them use it.
Hoody   |     |   Comment #2
I use them, I don't like any "automatic" withdrawal authorizations, 

btw I got an email from Discover the other day, seems you can no longer pay your bill in cash at your local Sears store either. But its funny they said you can write a check lol.
Anonymous   |     |   Comment #6
Makes sense, in a way.  Cash is too tempting for some people to resist stealing.  Too many untrustworthy people today. 
Anonymous   |     |   Comment #7
Great employees...only the best that $ can buy!
Anonymous   |     |   Comment #22
..is this change effective now or in a few months?? Discover Card website still says you can pay bils at select participating Sears. https://www.discover.com/credit-cards/help-center/payments/making-your-payment.html
Anonymous   |     |   Comment #23
please note payments via cash, cashier's checks and money order are not accepted at Sears stores. 
Hoody   |     |   Comment #25
At a Participating Sears StoreCheck with your local Sears store to verify they accept Discover Card payments (please note payments via cash, cashier's checks and money order are not accepted at Sears stores); any sales associate can assist with your payment.
  • When paying via check the card is not required; however, the full account number must be written on the check.
  • Remember to keep your receipt to confirm payment.
The email I got said it will take effect the 1st of July, its kinda silly, the only thing paying them with a check now is you save the 44 cents stamp, but they now need to process that check.
Anonymous   |     |   Comment #3
I never have cash. It is credit card or debit card only. I do use checks for property taxes and gifts. 
Anonymous   |     |   Comment #11
Very soon all credit, debt, checks and other negociable instruments will disappear, it will be your DNA on a chip or the veins in your palms or other bio-unique identifier.
Tj   |     |   Comment #4
I pay almost everything online with credit card and pay pal,  but "I do not sign up for automatic pay". Yesterday I got mail from AT&T, free $50.00 restaurant  gift certificate if I sign up  for auto pay,  Still I won't do it.
Anonymous   |     |   Comment #5
Some people are just to paranoid.  I have been using Automatic Withdrawal Authorizations for several years now (Utility bills and credit card payments).  I check my monthly bank and CU statements carefully each month and sometimes on-line during the month.  Never had I found even one bogus withdrawal or over payment.  Works for me.
Anonymous   |     |   Comment #8
Would never use automatic payment authorizationsfor any utility except phone bill. I make it a habit to read my meters every month to check with the charges and mistakes are made, always an overread never an underread, at least once a year. All it takes is a fone call to straighten it out before sending a check. With autopay they've already taken the overcharge out of your card and it's more time consuming to correct.
Anonymous   |     |   Comment #9
Let me add cable bill to the fone bill. Those two are the same every month. The ones I will never authorize auto pays for are electric, gas and water.
Anonymous   |     |   Comment #10
I have budget and it is $53 a month for gas heat, stove, water heater, and cooking in Michigan. I check the reading in May and June just to make sure the reading is correct. In the winter we have estimates because of the deep snow. Soon everyone will have auto read from the meters like the electric company has. 
Anonymous   |     |   Comment #14
Like I stated:  Never had I found even one bogus withdrawal or over payment.  Works for me.

There may come a day, but until then........
dale   |     |   Comment #19
Nothing to do with paranoid but with real world experience. Wait til you've been hit with an outrageous incorrect reading of a water, gas or electric bill and it's already been taken out of your account. Then see how long it takes to straighten out which always means having them read the meter again. You'll be wishing then you paid by check.
andy bkm
andy bkm   |     |   Comment #20
Simple. Don't have enough in that account to cover any "outrageous" automatic withdrawal amounts
dale   |     |   Comment #21
Simpler. Only one checking account is sufficient to cover all monthly expenses. Don't sign up for auto pay for any service which has a history of erroneous billing. Pay those accounts by check.
Cracker   |     |   Comment #12
There are some things for which there is no better payment option than a check.  For example, paying taxes.  With a check, you have proof that they accepted your payment in the event there is ever a dispute.  They are also good for charitable donations in places which don't take credit cards, like a church.
Anonymous   |     |   Comment #13
Thus, some recipients are more receptive to their "customer" in making it easy to pay in the manner a customer wants.  Otherwise, those institutions may not receive voluntary $ contributions.
hoho   |     |   Comment #15
When I pay my taxes they stamp the bill paid so you have proof of payment (or the mail it to you of you pay by check or via escrow. Our church WANTS you to charge or debit your checking account so they still get the finds when you don't show up.
Anonymous   |     |   Comment #16
Now that's a greedy church!
Do they want you for "you" or for "your money"?
Anonymous   |     |   Comment #17
I don't know of any church that doesn't pass around the collection plate.
Anonymous   |     |   Comment #24
They don't. Mine has setup a # or special text for smartphones to donate using credit card
Anonymous   |     |   Comment #18
Checks: All taxes, medical treatment co-payments, home maintenance and repair contractors.
Auto-pay: Utilities including phone and internet service. Monthly LTC insurance premiums.
Allotments from pay: Dental insurance monthly premium.
Credit cards: Gasoline, vehicle maintenance, major purchases, homeowners insurance, automobile insurance and health insurance premiums.
Cash: Minor purchases, restaurants and entertainment.
RJM   |     |   Comment #26
Just wrote one yesterday for my car tag. By mail is $3 cheaper than online. So I paid for the stamp to save $3.

I usually write one for my property taxes each year too. One year, it took them 2 months to cash it because they were understaffed but they honored the postmark date.
Anonymous   |     |   Comment #27
Company just asked me to accept a verifyvalid echeck but they dont say where to cash the check after I print it.  It is a mystery who will cash the check and what bank it is drawn on.  I want to give it a try but if I have to pay to cash it I am gonna pass on this technology.