According to the Federal Reserve Bank of Philadelphia, paper checks are predicted to become obsolete by 2026. Given the advantages of electronic bill payment and options such as Zelle, Vnmo, Cash App, etc, why are paper checks still so common for businesses? A faster answers should be, familiarity, universality, and “perceived” budget, but also, the convenience of simply not changing or not updating with something newer because things are working the way they are.
In a huge move, the american chain Target has decided to stop accepting personal checks as a form of payment at checkout. The retail giant states that it was committed to creating a more convenient checkout process for its customers, but that due to “extremely low volumes” they have decided to no longer accept personal checks starting July 15th, 2024.
According to Federal Reserve data, the use of personal checks as payment has been on the decline for years, with checks only accounting for 3% of payments in 2023 down from 4% in the two previous years, and 7% in 2020. While they are getting rid of this option, Target has taken several measures to notify guests in advance of this move. They still plan to accept other payments such as cash, digital wallet payments such as Apple Pay, SNAP/EBT, buy now/pay later services, and credit and debit cards.
This is just the latest in a series of moves that Target has made to hopefully streamline their checkout process while, in addition, helping to curb theft. One of those follows the trend of some other retail stores – eliminating or limiting self-checkout options at some stores this year. Stores such as Dollar General and Five Below have also stated that they are going to be eliminating self-checkout options due to concerns over how they can contribute to product loss and theft. There have also been other reports that Target will be allowing employees to intervene to stop thefts of $50 or more, which is less than the previous $100 threshold.
Are checks going to be obsolet? In 2023 the Washington Post report that checks aren’t entirely dead. While the volume of checks written each year has fallen from 50 billion in 1995, it was still at 11.2 billion in 2021. For high-value payments, checks are often a preferred choice. But the death or non-use of checks is a mere matter of time, and in this case, a short time.
Some of the disvantagens of using checks these days is that some businesses do not accept personal checks anymore, your bank may charge you a service fee for writing too many checks, and some banks may charge a fee for each month that your balance is low. A few of the types of digital payments that can provide digital alternatives to checks include ACH/eChecks, cards and real-time payments. All of them are faster, cheaper and more secure than checks.
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