Fed Chairman Ben Bernanke meets with President Obama.
A new study being conducted this year will reveal how Americans are spending their money. The Federal Reserve Study will specifically be comparing the volume of electronic payments and checks.
Similar studies have been conducted every three years since 2001.
“These studies underscore the ongoing evolution of check electronification while providing additional insight to help industry participants play for the future,” said executive vice president of the Federal Reserve Bank of Atlanta, Richard Oliver.
The 2004 study revealed that for the first time electronic payments outnumbered check payments in the U.S. In 2007 check usage continued to decline.
So what does that mean for personal checks and business checks? To get a better idea of the situation we have to take a closer look at the most recent studies.
The 2004 studied revealed that in 2003, 46% of payments were made by check and 54% were made electronically. Again – this was the first time checks were used less often than electronic forms of payment.
What you have to realize is that this study stacks up check usage against all other forms of payment. That includes debit cards, credit cards, Automated Clearing House payments (ACH), as well as EBT payments (food stamps and other government assistance).
When you stack checks up against any other single form of payment, they still outnumber even debit or credit cards.
The most recent survey also found that the total value of payments used through checks continues to top the total value of electronic payments. Checks made up 55% followed by ACH at 41% (Keep in mind that 38% of ACH payments that year were converted checks).
Credit and debit cards only made for a total 4% combined. That’s because more business is conducted with checks, and credit and debit cards are used for smaller purchases.
Another factor we must consider is that more checks are being processed electronically or automatically, but are still being used. For example, you may have direct deposit set up for your paycheck, but you’ll still receive paper business checks as a receipt. It may have void printed on it, but it’s still a business check.
The 2007 Federal Reserve study cited this fact about electronic check processing: “Over the past three years, there have been significant changes in the way checks are cleared. These changes are increasing the efficiency of the check clearing system for interbank checks.”
In 2007, the study found that Americans were using debit cards more often than credit cards. In 2003, 19% of payments were made with debit cards and 23% were made with credit cards. But in 2006, 27% of payments were made with debit cards and 23% were paid with credit.
That’s good news. It means more of us are starting to live within our means instead of spending money we don’t have. It could mean that more people will also start using personal checks as a responsible way to pay.
The bottom line is personal check usage will continue to decline, and that will most likely be evident in the Fed’s 2010 survey. But the Federal Reserve Study also shows that there are still more than 30-billion checks written every year. Even if that number goes down by a few billion more, it’s still a significant chunk of the business conducted in this country.
It still makes sense to order personal checks online. At Check Advantage we offer both personal and business checks at as much as 75% less than what your bank sells them.
Check Advantage still sees the benefits of using personal checks in day to day life. Plus there are technological advances in mobile banking that are making personal checks more efficient to use. Read our recent post about the new iPhone application for Chase bank customers to learn more.
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