The usage of checks (or cheques for UK-based readers) has diminished significantly in recent years, to the extent where finance experts are predicting that it’s only a matter of time before they are completely abolished.
There are a number of reasons why cheques have become unfashionable. They include:
– Slow to process.
Typically, you have to send them by post and then you’re not sure how speedily the recipient will lodge the cheque. The downside to this is the possibility that when the funds come out of your account it could lead you into an unauthorised overdraft.
– Cumbersome to write.
This is particularly the case where you are writing them in a shop. There are lots of bits of info to remember. It’s so much easier to pay by card, especially now that contactless card payment schemes are being introduced for small payments.
– Cost of processing / risk of cheque bouncing.
Most people and certainly most businesses would rather that you paid electronically. The reason is partly because it cuts down on the effort of processing the payment on their side, but also because cheques can bounce. Reliability of payment is particularly important for small businesses where cash flow is a key consideration. Banks also have benefited from the decline of cheques as their processing costs have reduced.
– Security.
It’s easier for a fraudster to get their hands on your chequebook and forge your signature, than it is for them to get access to your online banking details or your debit card PIN.
– Growth of alternative “superior” payment mechanisms:
Most people choose to make payment electronically (either via direct debit or online banking payment) or buy in stores using their debit or credit card or that other old payment mechanism, cash.
All these factors have combined to make cheques a less attractive proposition, for individuals, for banks, and for billers. To back this assertion up, the UK Association of Payment Clearing Services (APACS) reported that usage halved from 10 million cheques issued per day in 1990 to just under 5 million cheques per day in 2006
Further advances in payment technology should see the usage of checks continue to decline. An example, in the UK, is the industry-wide Faster Payments scheme that was implemented in 2008 and which means that electronic payments that previously took 3 days to clear now clear in near real-time. We are also likely to see mobile payment functionality become increasingly the norm. There are already trials where banks have been experimenting with the concept of customers using their mobile phone in a tap-and-go manner to effect point of sale purchases.
All this means that it is inevitable that check usage will continue to diminish. Maybe it’s worth holding onto your latest checkbook in case it becomes a museum-worthy collector’s item in the near future!