Payment study not giving checks a fair shake

By Glenn Wheeler 

The “2011 World Payments Report,” by Capgemini, EFMA and RBS offers some interesting findings on global payments, including trends in the use of non-cash payments, checks and cash. The main headline to come out of the study may be that non-cash payments, which include credit transfers, wires, direct debit, mobile payments and card transactions, grew 8 percent globally. However, buried in the study are also some noteworthy statistics about the use of the check.  

Similar to the 2010 Federal Reserve Payments Study, which looks at noncash payments in the U.S. from 2006 through 2009, the Capgemini/EFMA/RBS study shows that check usage is in decline. There’s no disputing the numbers but I believe the statistics in these reports need more context. Despite their decline, checks have remained a significant payment instrument – to the tune of $31.6 trillion in value paid in 2009, according to the Fed study; and, as the Capgemini/EFMA/RBS study reveals, almost a quarter (23 percent) of U.S. payments.  This is not minor.  

Reinforcing the check’s importance, ING Direct recently decided to offer paper checks to consumers for the first time ever. This shows how much consumers still rely on checks for their everyday payment needs.  

Of course, ING Direct is not alone in its effort to stay in front of consumers’ check needs. Banks continue to invest in, and market services to, consumers around checks. Financial institutions are upgrading their check deposit systems, either with envelope-free ATM deposits or the ability to snap a photo of a check and deposit the funds directly from a mobile device.  

Clearly, electronic payments are on the rise, but checks are holding their own as noted in this study.  While consumers may have more payment choices – everything from credit cards, prepaid cards and P2P to old, reliable cash – check writing is still widely used. To provide some perspective on all of this data: While the decline of check usage has been the talk of the industry for years, it’s still a widely used payment instrument that consumers want and require. There is still opportunity to innovate in this space to create efficiency in the processing of checks and to enhance the instrument itself with security features consumers will value.  

About the Author 

Glenn Wheeler is vice president, Viewpointe Clearing, Settlement & Association Services. He has extensive banking experience.