Paper Checks: Payment Substitutes are NOT Universally Reliable According to Atlanta FED
- Check usage has actually increased in recent years
- Checks persist for many reasons, including it's role as an "easy solution"
- Retailers are actually moving away from cash
Recently, data from AFP on business check usage noted that use of paper checks jumped from 75% in 2023 to 91% in 2024. Take On Payments, a blog sponsored by the Payments Forum of the Federal Reserve Bank of Atlanta, recently examined how innovations in payments acceptance play out in consumer check use.
Claire Greene, center director at Atlanta Fed Payments Forum, notes that the use of checks has declined significantly over the past decade, but they nevertheless remain an important payment method that should not be overlooked.
In fact, the article reports:
- Person-to-person (P2P) payments made by check dropped from 17% in 2015 to just 6% in 2024
- Bill payments made by check fell from 53% to 27% for contractors in 2024
- Charity donations dropped from 33% to 20% in 2024
What may be the cause for the decline? The article references the Survey and Diary of Consumer Payment Choice, where Consumers rated checks poorly for convenience, security, and speed of payment -- preferring instead cards or an electronic method to handle both purchases and bills. Additionally, more payees are now able to accept payment through these other channels.
Why Checks Still Persist
There is no doubt that the rise of user-friendly payment apps and increased acceptance of electronic payments have contributed to this decline in check usage. However, checks still play a vital role, especially when other payment methods are not consistently dependable.
So far, check substitutes are not universally reliable—like when my collection of mobile payment apps doesn't include the app preferred by a friend. Our quick solution: he mailed me a check. This kind of unconditional acceptance, I believe, is what makes the paper check an enduring app.
This is is of critical importance for B2B, B2C, and P2P. We've seen the rise in various tech-based payment channels, but BOTH parties within the transaction must accept that channel. An individual cannot just simply pay their rent in Bitcoin to a landlord that does not accept that method. Likewise, a business cannot wire a payment to a contractor who does not accept wire transfers, or purchase more supplies from another business with a credit card if they do not accept the payment.
In fact, retail businesses are moving away from accepting cash.
To put it simply, aside from cold hard cash (for the time being; see above), checks may be simply the most accepted and versatile payment form in the US. For FIs, this means -- until there is a universally accepted payment method -- checks will be a trusted mainstay. Consequently, it's key for FI's to deploy AI technologies like Anywhere Recognition that automate the payment method and eliminate any operational inefficiencies.