[MONEY] Still Paying Bills With Paper Checks?
Do you still have a checkbook? If so, you’re in the majority, but only if you’re over age 55. Many young people have never written a paper check. Paper checks are dying, replaced by plastic cards and various forms of electronic money transfer. Will checks eventually be banned altogether? Read on for the scoop…
Paper Checks Are Almost Extinct
I'm just one year shy of the double-nickels plateau, but I've been done with paper checks for years. I'd much rather point, click and pay. Or even better, arrange for automatic payments. I haven't even kept a checkbook register for the past 20 years. And when I get a paper check in the mail, I snap a photo and deposit it with my smartphone.
For me, it's the nuisance factor. Just writing out the check is tedious enough. Then it's find an envelope, address it, hunt for a stamp, insert the check and the invoice, and then trudge out to the mailbox.
Oh, and I forgot the worst part… licking that glue strip to seal the envelope. Blech. (If I'm ever elected President, I'll sign an executive order banning paper checks AND fax machines.)
The chart below illustrates the dramatic decline of check payments from 2003 to 2012; payments via credit/debit card, ACH (Automated Clearing House) debits including Paypal and Square Cash, and prepaid stored-value debit cards are taking up the slack.
The federal government stopped mailing paper checks to Social Security recipients in 2015. Seniors get paid via direct deposits to checking accounts or prepaid debit cards now. Public assistance benefits such as SNAP (food stamps) and TANF (Temporary Aid to Needy Families) switched to EBT (Electronics Benefits Transfer) cards long ago; EBT cards work just like debit cards.
The United Kingdom tried to eliminate paper checks in 2009, declaring that all payments would be made via electronic transfers by 2018. But a survey by Parliament found that 46% of citizens over age 55 relied on checks and were baffled by modern payment technologies, so that plan was scrapped.
Electronic Payments are Putting the Squeeze on Paper
Sixty-three percent of all consumers write three or fewer checks per month, up from 35% three years ago. I have a friend who writes just one check per month - to his Luddite landlord - and never pays for checks. He just asks his credit union to print a page of four “temporary” checks three times a year. He laughed when the credit union quoted over $13 for 200 printed checks. He says his next landlord will take Paypal or Square Cash “and like it.”
About 52% of U. S. Millennials never write checks, according to a survey by payment solutions provider WePay. "The younger generation — the kids who are in high school, in college now — don't even know how to write a check," said Greg Litster, founder of SAFEChecks, a company that specializes in check security, in a recent NPR interview. "It is quite remarkable, but it is a fact."
The US Postal Service found a paradox in a 2013 survey of customers. Over 91% prefer to receive paper bills by mail, but only 37% pay bills with mailed checks. Bills and payments sent via mail account for a quarter of USPS revenues - $18.5 billion in 2013. The decline of mailed checks, from 74% in 2003, is another grave wound to the USPS’ finances.
I understand this. I still want a few important bills to come to me by mail so I have a reminder of when they're due. For most others, I'm fine with paperless billing.
Some businesses stick with checks to “leave an audit trail.” But really, it means they don’t want to change their accounting systems to take advantage of the wealth of data that electronic payment methods can provide. A copy of a Paypal receipt is just as sufficient for audit or legal purposes as a cancelled check. Many businesses have accepted the change. The average daily volume of commercial checks collected dropped from 67 million in 2000 to 22.9 million in 2014 — a 66 percent decrease, according to Fed data.
Options For Eliminating Paper Checks
Even if you don’t use a smartphone (my frugal friend above doesn’t), eliminating checks along with their expense and hassle is very easy. Paypal’s Master Card works as either a credit (signature) or debit card (PIN), and it draws money from your linked bank account if your Paypal account balance is insufficient. Also, it pays 1% cash back on signature purchases each month.
Almost every bill I receive by mail shows a website which can be used to make payment. Click, enter the invoice number, and choose the method of payment. Most offer checking account, debit card, or credit card options. Some even allow you to use Paypal.
Square Cash is free for sending or receiving money between acquaintances as long as both have a debit card issued by a U.S. bank. Essentially, a Square Cash transaction charges money to the sender’s card and credits it to the recipient’s card. The money is drawn from and deposited to the checking accounts linked to the debit cards. Transactions can be initiated by either party via a mobile app, at the Square Cash website, or via email.
You don't have or don't want to use a credit card? No problem. Every bank and credit union I know offers electronic BillPay now. Some charge a small fee for the service, but it’s often included free of charge (for seniors, especially). It can be used to pay ad hoc bills or to set up recurring payments, such as mortgage or cable bills, that don’t vary. No need to buy envelopes or stamps.
Do you still cling to paper checks? If so, why? How many checks do you write per month? Your thoughts on this topic are welcome. Post your comment below...
This article was posted by Bob Rankin on 10 Mar 2016
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Article information: AskBobRankin -- [MONEY] Still Paying Bills With Paper Checks? (Posted: 10 Mar 2016)
Copyright © 2005 - Bob Rankin - All Rights Reserved