Ever since the introduction of online banking, the use of paper checks has steadily declined. For reference, the total number of checks written back in 2001 is more than double than that was issued last year. However, the decline in check usage has been mostly because individuals have shifted to other payment methods. Businesses by and large continue to pay using checks.
Who is Writing a Check and Why?
Individuals Paying for Products or Services: What was a common sight before has now become somewhat of a rarity. Nowadays, it’s hard to find someone who would pay using checks at supermarkets and retail stores. It was a common practice before as local retail stores proudly displayed storefront banners displaying “We Accept Personal Checks” among other signage. Thanks to the convenience of online payment wallets and credit cards a lot of stores today refuse to accept paper checks. According to statistics, 4.4 million checks were issued by customers back in 2006 to pay for products and services at checkout counters. That number dropped sharply to a million back in 2012 and it has been steadily declining since. This is why it’s safe to conclude that people, in general, have moved on from paper checks when it comes paying for stuff at retail outlets.
Businesses Paying Other Businesses: While personal checkbooks are gathering dust, businesses continue to use checks to pay other businesses and contractors. There are more than a few reasons why. Paper checks are often integrated with Quickbooks and other accounting software packages, which makes printing them and maintaining a tab on all the expenses a seamless affair. Checks also allow business owners to attach a battery of other information such as invoice number and payee contact details. This is why instead of reducing its use businesses are adopting new technologies to efficiently managing check payments. Businesses now order custom cheap checks online and deposit checks using mobile apps to save the effort of going to the bank.
Businesses Paying Employees: Checks were the primary mode of payment businesses used to rely on when sending out salaries to employees. Paying salaries using checks is something that worked until the early 1970s. However, that all changed when direct deposits came along. For decades now, funds are transferred via payroll direct deposit from business checking accounts to employee salary accounts. In this day and age, salary checks are all but extinct.
Individuals Paying Other Individuals: Individuals have been quick to adopt the newer banking technologies. In fact, online wallets and net banking are geared for personal use. It takes mere seconds to transfer funds using mobile apps, which has long made paper checks obsolete. However, some people still use checks to pay contractors and people who don’t have bank accounts. Checks are also given as gifts. Apart from those few instances, people mostly rely on digital wallets and app-based banking to send money to other people.
While personal check use is definitely on the decline, business checks are not going anywhere. Businesses still prefer leaving a paper trail when making payments and the fact that paper checks can be printed quickly using business accounting software is an added convenience. The total volume of business checks issued per year proves that paper checks are still relevant today.