Matt Phillips explains that the use of personal checks has been in radical decline:

The usage of checks as a payment system has plummeted in the U.S. in recent years. In 2000, checks were used in more than 40 billion transactions, according to a recent report from the Federal Reserve’s Cash Products Office. That number is down to less than 20 billion, according to the Fed’s most recent numbers, which are based on a survey conducted in October 2012.

When it comes to American payment preferences, checks run a distant fourth. (At least when you measure the overall number of transactions. Checks are used for about 19 percent of the value of all purchases, slightly higher than debit or credit cards.) {…}

While the number of check payments continued to rise into the mid 1990s—they peaked at an estimated 49.5 billion in 1995—checks began to lose significant market share to alternative forms of payment like debit and credit cards and direct, electronic, automatic clearinghouse payments (ACH).

The trend toward electronic payments only gathered pace, and by 2003, the Fed estimated (pdf) that other forms of payment had overtaken checks in usage. And by 2006, checks accounted for barely one-third (pdf) of non-cash payments in the U.S.

This had more resonance for me several years ago than it does today. When I lived in Cascadia and Estacado, check-writing was more or less non-existent. When I had to write a check, it was actually a big ordeal because it meant that I would have to track down the checks, the envelopes, stamps, and so on. The infrequency of all of this meant that I didn’t have to be organized about where these things were. And I wasn’t.

That changed when we moved to Arapaho, where suddenly checks were required for just about everything. Neither the power company nor utility company accepted electronic payments. Nor did trash pick-up, though that was quarterly instead of monthly. Notably, the monthly charge for all of these things changed on a regular basis, so I couldn’t do the automatic payment system through the bank (where they essentially cut you a check). Strangely enough, I actually found this to be reasonably convenient. Once I was in the habit of writing checks, whether I was writing one or four didn’t really matter so much. With four, I could develop a system – mostly a matter of having a station for my check-writing stuff.

That continued when we moved out here, where once again neither the power company nor city utilities accept automatic payments.

Eventually, one would assume, all of these recipients will accept electronic payments. But prior to moving to Arapaho, I’d assumed that almost all of them had. The statistics about the relative decline in usage are a bit misleading, though. It’s not just that people are paying with credit cards and debit cards instead of checks, but they’re doing so instead of cash. Despite the fact that I currently write four checks a month (power, utilities, rent, storage), it’s a distinct minority of the non-cash payments I make, due mostly to a decline in cash payments in favor of plastic.


Category: Market

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4 Responses to Check Doom

  1. Peter says:

    I find it hard to imagine major businesses not accepting electronic payments.

  2. CGHill says:

    My current bank — and, for that matter, my previous bank — will process an electronic payment to just about anyone. If it’s on their Big List, fine; if not, they themselves will cut a check to the payee, which, they warn, takes longer.

    • trumwill says:

      One of these days I should probably just bite the bullet and learn how to do that. I learned how to do it for monthly checks of the same amount, but not for individual ones.

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