Why We Can’t Just “Write Off” Paper Checks
- Some pundits predict "the end of checks."
- A Trump executive order has eliminated checks from federal government payments
- It is unlikely that the public in general will follow suit.
"I think we’re probably rushing towards the point where checks just aren’t going to be a thing anymore."
This is a quote directly from a new Q&A post on Payments Dive from Tom Warsop, President and CEO of ACI Worldwide -- who has decades worth of experience the finance and payments industry.
It's a perspective not uncommon within the banking and payments industries. We recently noted that mainstream media continues to push this narrative, even with data showing that -- from a corporate perspective -- check usage surged in 2024.
However, this viewpoint has seen a bit more transaction with the Trump executive order to "modernize how the government handles money, switching from old-fashioned paper-based payments to fast, secure electronic payments."
Let's dive deeper into the topic by answering a few common questions.
Addressing Common Questions About Checks
Question: What effect will the executive order have on check usage?
Answer: Very little. Government checks make up a very small portion -- 116M, according to an X post from DOGE -- of the estimated 10 billion+ check written each year.
Question: Why aren't more businesses utilizing digital payment options?
Answer: There are several reasons, including high fees for credit cards, both payer and payee needing to accept the same payment rail -- and, of course, behavior.
Question: Why would businesses and individuals still use checks with all the reports of fraud?
Answer: While the answer is more complex, we can boil it down to a simple answer for each. For businesses, fraud is common, and many times their bank will reimburse them for the loss. For individuals, most are taking a reactive approach and, until they fall victim, they will not easily change their behaviors.
Do you have a question that you would like OrboGraph to answer? Email marketing@orbograph.com.
Sentiments from Financial Institutions
This is where opinions will diverge between Mr. Warsop and other industry experts. As we noted in a previous article:
"The idea that checks are going away has been around since the 80's. Many banking veterans at the ECCHO Operations Meeting shared their experience, noting that they have been hearing the same message for decades -- yet checks still persist. The consensus from more than 60 payments experts is that checks aren't going away anytime soon," said James Bi, Marketing Manager and Fraud Detection Specialist at OrboGraph.
Even with the rise in digital banking, there will be a place for checks. Businesses and individuals have used checks for decades as a preferred method of payment. Unless the US Government follows in the footsteps in Australia and eliminates the payment method all together, or FIs choose to not accept checks as an industry (many FIs fear not accepting checks will cost them significant number of customers and deposits), checks will continue to be widely utilized now and for decades to come.