Q. Writing checks seems like a hassle. How long is it likely before this practice disappears entirely?
A. Personal checks have been a staple of the American financial landscape. They’re easy to drop in the mail and relatively safe, making them very popular — we Americans use more than 36 billion a year, with consumers accounting for just over half the total, according to Federal Reserve research.
But for those with the goal of seeing all paper purged from personal finances, don’t hold your breath. Personal checks aren’t about to disappear in the next few decades, and probably not ever.
“People like options and they don’t like options being taken away,” said John Hall, a spokesman for the American Bankers Association.
Another factor lies with the aging of the U.S. population and the comfort many older people have in writing checks for their monthly bills. Computers, Web sites and plasticized debiting do not hold the same speedy lure for them, payment experts note.
Still, personal checks almost assuredly will become a niche market.
Consider the explosive growth of the debit card over the past five years: the ease of plastic, without the burden of debt. And some banks are now testing cards with wireless abilities, allowing users to wave their card toward a reader and pay for a purchase.
And don’t forget the higher usage of banks’ online bill-pay programs and independent electronic fund transfer systems such as PayPal, a unit of eBay Inc.
Many people already have dispensed with paper checks.
Your income can be deposited directly into your checking or savings account, and bills paid electronically. Many utilities, credit card vendors, mortgage companies, cable television operators, mobile phone carriers, etc., encourage customers to pay either through monthly debits or via their Web sites. Some companies even cut you a small price break to do so.
The check itself is undergoing a mini-revolution of late. A law that took effect in October, dubbed Check 21, allows banks to exchange electronic images of checks without the hassle and expense of having to send them back to you.
Checks that once made the circuitous route from payee to bank to airplane, truck or boat ride back to your own bank can now be scanned and sent digitally. Indeed, the days of getting your cashed checks back in the mail are probably numbered, as most banks would prefer you to be content with a copy of the cleared check available at their Web site.
Today, most “point-of-sale” transactions now occur with debit or credit cards, a fundamental shift in American retailing after decades when people would pay with cash and checks.
In 2003, electronic payment volume surpassed paper checks for the first time, and the number of checks paid decreased 4 percent between 2000 and 2003, according to Dove Consulting Group Inc., a Boston-based consultancy that studies payment strategies.
By 2010, checks’ share of the payment market could fall below 25 percent of non-cash payments, according to a study Dove conducted last year for the Fed.
Farther out, checks’ market share is likely to fall to only 2 percent to 3 percent, “certainly in the single digits,” said Joel Stanton, a Dove consultant who worked on the 2004 Fed study.
“Think of this: The Internet is still a new medium from the last 10 to 15 years ... and even debit cards were just getting off the ground in the early ’90s,” Stanton said. “It’s a long time away, but I can see where the days of the check are coming to a close.”