Faster payments is a hot topic right now, with efforts ongoing to drive us closer to faster, or real-time, payments. The US took a big step when the Federal Reserve announced the formation of a taskforce to get faster payments underway. Rather than waiting for analysis by a task force, PYMNTS.com in their controversial article “The Fastest Path to Faster Payments in the US”, proposes a more immediate course of action, which is to kill the check. This article has generated strong reactions from the payments industry. Some call the idea misguided, impractical and illogical. While others wholeheartedly agree, calling the idea bold and daring.
The article argues that checks are an enormous barrier to faster payments in this country, and that the best way to make payments more efficient and effective is by killing checks outright. After all, it states, checks serve no useful purpose. It goes on to say that checks create massive cost and friction across our financial system — for the banks that have to process them, to the businesses that have to issue and wait to receive them, for consumers who have to deposit them and wait for the ‘check to clear’ before accessing the funds, and for those who are without access to our financial system to cash the ones they are given as payment.
Many sharply disagree with the article, citing the fact that the US still has 19 billion checks per year, making checks a critical part of our payments landscape. Remember what happened in the UK, after they decided to abolish checks? Tough opposition by the public and Parliament forced The Payments Council to reverse its decision. The Green Sheet’s “The misguided kill the check chorus”, presents a rebuttal, stating the article is full of false assumptions, leaps of faith and factual errors. Finally, First Data’s “Consumers love checks and so should you.” makes the case why checks are here to stay.