Why Paper Checks Are Still Going Strong?
Checks are often the preferred method of payment for big purchases. However, in an era of mobile wallets and internet banking, writing paper checks seems like too much work. According to a report by Bank for International Settlements, the growth rate of check usage is only 2.7% per year, which is significantly lower than other payment modes. However, even with the low growth rate, paper checks continue to be a major payment method.
photo by photoSteve101 via Flickr
According to Federal Reserve data, about 18.3 billion paper checks were issued in 2012 alone. That accounted for 15% of all noncash payments for that year. Nowadays, individuals and businesses rely on online providers to get checks next day, the following are a few reasons why.
1. No Extra Charges
Credit card payments are executed by third-party processors. These payment processors charge a certain fee every time you use the card to make a payment. Banks also charge processing fees for online fund transfers and wire transfers.
2. Security
A check is much like a signed contract that promises to pay a specific amount to a specific person on a specific date. With the post-dating feature, vendors can rest assured they will receive the money on a particular date. As a business owner issuing the check, this buys you valuable time to arrange the funds needed. You also get the option to stop the payment if the vendor fails to deliver the promised product or service.
3. Traceability
Paper checks are much more traceable compared to automatic bill payments, money orders, and cash transactions. Once the issued check is cleared banks usually sends a notification message to the registered phone number. In case there is a dispute, all you need to do is call up the bank and tell them the issued check number.
4. Accessible
Even in this digital era, you can’t expect everyone to be conversant with net banking. While most people today have smartphones not everyone has Square, Paypal, or other online wallet accounts. However, almost everyone has a personal checking account. This simply means checks still remain as the most acceptable payment mode, globally. Checks work simply because everyone knows how to use them.
5. Control Over the Payment Process
When you write a check you get a greater control over the payment process. You can not only stop a payment but you also don’t have to rely on any third-party payment processors.
6. Personalization
You can personalize your checks however you want. If you want your check to stand out, you can add a design that is unique to you or your business. Adding a famous quote or a tagline in the memo field can really set your checks apart from others.
The Bottom Line
Even with the popularity of online banking, paper checks are still relevant today and are trusted by business and personal users alike. Checks are convenient, secure, traceable, affordable, and customizable. These positive aspects ensure the popularity of paper checks for years to come.
Author: Pankaj Deb
