The Check is in the Mail – How E-Payments Render that Saying Obsolete

The Check is in the Mail
How E-Payments Render that Saying Obsolete 

Mindy Barker | Barker Associates

If you’re like me, you probably can’t remember the last time you heard “the check is in the mail” with any seriousness. While it had been a fairly common sentiment for many years, with online banking, cash apps, Zelle, and more e-payment options materializing every day, it seems to have become a saying of times past. 

According to the Federal Reserve Bank of Philadelphia, paper checks are projected to become obsolete by the year 2026 – that’s just five short years away, begging the question – Are you ready? And while it may seem sudden to some, this trend is not at all that recent. According to the Federal Reserve, even as far back as nine years ago, in 2012, only 15% of all U.S. noncash payments were checks. By 2019, that percentage was reduced to a mere 8.3%. 

Some “Ancient” History about E-Payments 

The history of e-payments goes back much further than 2012 though. One of the significant impetuses of e-payments was actually due to the effects of September 11th; specifically, the grounding of all air traffic (and many checks in envelopes on those planes). The Federal Reserve took action shortly thereafter with the “Check 21 Act.”   

The new legislation authorized fully electronic clearance of checks, rather than presentation of the physical check. At the time, the “new” verification process was explained by the Federal Reserve Bank of Philadelphia, “This legislation initially permitted a paper substitute digital image of a check, and later an electronic digital image of a check, to be processed and presented for payment on a same-day basis.” 

And the rest, as they say, is history. 

Paper Check Usage … A Question of the Ages 

In our tech-driven, fast-paced world, with e-payments and cash apps paving the road to the future of payment processing, it is probably no surprise that check usage is a numbers game in more than one way. It is often based on the person’s age range. For example, younger generations feel the process of checks (and mail in general) is annoying, takes too long, and is inefficient. They’ve grown up with deposits on their smartphones and Venmo payments. In fact, the Google search term “how to write a check” has increased drastically over the past decade, presumably by younger people unsure of the check-writing process.  

In contrast, older generations do not quite “trust” these apps and transferring their cash to anyone with a swipe on their phones or the click of a mouse. They are familiar with paper checks and live by the motto, “if it’s not broke don’t fix it.” But the question is, “Isn’t it broke?” 

E-Payment Savings 

E-payments have a huge impact on business savings. They save money by reducing the costs associated with using paper checks (as much as $9 per check). They also save time with increased efficiency of payments. They even help save our environment by enhancing a company’s green initiative. They do all of this while keeping the foundation of a check alive and well – the ability to securely move money from one entity or person to another. 

Other benefits include: 

  • Reducing a company’s exposure to fraud. For years, checks have been the payment method most susceptible to those committing fraud.  
  • Increasing the ability to quickly process last-minute bill and payroll payments. 
  • Improved client-vendor relationships due to rapid, more efficient payments. 
  • Better reporting and workflow surrounding payments. 

This may be a shift for some businesses, who haven’t been ready to take the full e-payment leap yet. But doing what they’ve always done will not only make them inefficient, it will cost them more money in the long run. Yet, we understand that making the shift and trusting in these systems may still be overwhelming to some. That’s where Barker Associates can help. 

We have seen the “deer-in-the-headlights” look that clients get when trying to sort through the options to choose the best solution for their company. But the fact of the matter is the use of checks will eventually fade away completely, and if the Federal Reserve is correct, that time will be fairly soon. There are simply too many options and solutions now for the old method of writing, signing, and mailing a paper check to live on. If you would like to discuss these services, or if you have other specific areas of concern, please click here to schedule a 30-minute consultation at a rate of $100.