Checks Are a Tough Habit to Break... at Least in the US

Celent’s report Noncash Payments: Global Trends and Forecasts, 2014 edition, summarizes payment statistics from over 120 countries. One of the key trends they identify is that while checks may be disappearing in other countries, this is not likely in the US.

In 2013, the US wrote 60% of all checks. “That’s proving to be a tough habit to break”, says Gareth Lodge of Celent. One reason is that Check 21 made checks less burdensome for businesses to accept and another is that people in the US like to write checks.

Ironically, the payments industry's success in replacing paper checks with electronic processing may, in fact, undermine efforts to move toward systems that speed up electronic payments (see Digital Transactions, December, 2014). Financial institutions and processors are in a tough position because of the prolonged burden of maintaining check processing as volumes decrease and costs increase.

There are several initiatives underway in this country to explore faster payment systems and new pipelines, that ultimately would need to be funded. This includes efforts by NACHA, The Clearing House and the Federal Reserve. Banks and processors may be stuck with the costs of two systems, one for declining-but-not-quite-disappearing check volume and one for faster payments settlement.