Kristin R. MoyerAccording to Silicon.com
The venerable paper cheque celebrates its 350th birthday next week, although the prospect of the payment method celebrating many more is diminishing.
According to the Cheque and Credit Clearing Company (CCCC), the industry body that manages the cheque clearing system in the UK, the first cheque was made out on 16 February 1659 for £400 by Nicholas van Acker to a Mr Delboe.
When was the last time you wrote a check at the grocery store or clothing store? More likely you used a debit or credit card. Last month I purchased some hand printed cards from an artist on Etsy.com who happened to live in Israel. Did I write her a check? No, I used PayPal. (Now, if only, the post was as efficient. It took almost a month for the cards to arrive in the US.)
The decline in cheque usage is not uniform, according to the report. Older people still prefer to use it, with more than 50 per cent of over 65s in the UK still making spontaneous payments by cheque at least once per month. Women write more cheques than men, with more than 40 per cent making at least one cheque payment in a month.
Yes, I know many banks, especially in the US, deposit and process millions of checks a month, a year. Banks have finally adopted remote deposit automation at the branch and extended it to their business customers. Some are even considering consumer remote deposit automation. If you are a Gartner client, you might want to read our (Rick DeLotto and myself) warnings about this new trend.
And, while I have some affection for checks – I worked for several years in check and remittance processing, the heyday of the check is passing or passed (depending on where you live). They are time consuming – to write, to process. This isn’t news to you, I’m sure. It’s no secret that banks have either maintained or outsourced at least one shift of operations staff to process checks. Yet, the adoption of image-based processing and clearing took years – and in the US was jumpstarted only by Check 21 legislation in 2003.
As checks decline in countries that still use them, some organizations are pushing for a end date for them.
In 2008, the Payments Council published a report tentatively suggesting 2018 as the end date for cheque processing. This has been rejected in favour of determining a date when alternatives to cheque payments are available to those that still rely on them. Subsequently, the Payments Council has decided it will agree on an end date for cheque payments by the end of 2009.
Checks were the PayPal of its time in 1659, no doubt. As banks look forward, look for ways to optimize operations and lower costs, maybe it’s time to stop plans for next year’s birthday party.
Category: operations payments Tags: checks, cheques, payments, paypal, remote deposit
2 responses so far ↓
1 Robin Ferrari February 17, 2009 at 1:40 pm
Great article. As the check declines for the consumer (No doubt the success of Paypal), there is still a strong market for checks in B2B. Especially with Check 21 law and corporate RDC in place Businesses are leveraging the efficiencies of the new process and fixed cost to take a check vs. credit or debit card variable percentages on large ticket items. Not to mention the audit trail and other benefits that come with a paper check that means so much to a business. No doubt a business will work to get a payment, however they see fit, to get the money to keep their business going. Check, ACH, Credit Cards, Debit Cards, the list goes on and will continue to grow leaving the burden on the business to take and effectively manage multiple payment types. With over 11 years experience in payments (green to most in the marketplace) I’ve heard the check will be gone on a number of occasions, but I don’t believe it will be gone in my lifetime.
2 Stessa February 19, 2009 at 3:23 pm
I have to disagree. I think that banks need to educate their business customers on the various types of electronic payments and whether or not the business would benefit (ie get paid faster, more reliably, more cheaply) from encouraging their customers to use them. The check is one of the most expensive ways for businesses to accept payments. It’s in the bank’s interest to help their business customers with this challenge.