10 Reasons Check Volumes will Hasten their Decline in the US

It’s certainly no news flash that US check volumes have been declining. Depending on whom you talk to 5% to 7% annual rates of decline (checks written) over the past few years seems likely. Another Federal Reserve check study is in the works this year to add precision since it has been since 2007 since the last data point. That Federal Reserve sponsored study concluded there were approximately 33 billion checks written in the US in 2006, down from nearly 38 billion in 2003. But what will the future hold? The tendency is to assume past performance is a good predictor of future results. In other words, many expect this rate of decline to continue. Here are ten reasons to suggest that won’t be the case. 1. CashEdge (www.cashedge.com) Perhaps best know for its online account opening capabilities, CashEdge has launched P2P payment products Popmoney and a suite of small business payment products. 2. Boku (www.boku.com) Boku is a relatively new player in the mobile payment arena. Its focus is on the payment of virtual goods and offers flexible pricing models tailored to micro payments. 3. FreshBooks (www.freshbooks.com) Boasting over 800,000 users, Freshbooks is a web based IBPP solution targeted to small businesses. It makes online invoice creation, presentment, tracking and reconciliation incredibly easy. Not surprisingly, payments aren’t by check. PayPal is a favorite option. 4. PaySimple (www.paysimple.com) is an alternative web based utility for small business bill presentment and payment. The application is payment system agnostic, supporting electronic check (ACH), direct debit and credit cards. 5. iPay Technologies (www.ipaytechnologies.com) is an online bill payment solution provider targeting community financial institutions. Its efforts are bringing check payment cannibalizing services to 3,700 community banks and offers solutions for both consumers and small businesses. 6. IP Commerce (www.ipcommerce.com) provides a “managed commerce services platform”. Its aim is to provide a platform for rapid development of commerce enabled applications. Said simply, IP Commerce is accelerating the development and deployment of electronic payment alternatives. 7. Mopay (www.mopay.com) is the Mobile Messaging and Payment unit of MindMatics AG. Unlike Boku, Mopay is a B2B enabler, with coverage in over 60 countries. 8. Square (www.squareup.com) Hype aside, Square’s aim is to increase the incidence of credit card acceptance by marrying an extremely easy acquiring process with tiny card readers that plug into the audio jack of any iPad, iPhone or Android device. Square’s micro business target market is known for its reliance on cash and check payments. 9. Vendorin (www.vendorin.com) is a trading partner network built to facilitate the easy opt-in for electronic payments. It vastly simplifies the challenge of migrating from paper to electronic B2B remittances. 10. PayPal (www.paypal.com) is the household name in our list. Once primarily associated with eBay, PayPal is quickly becoming a force in B2B payments. Its PayPal Mobile iPhone P2P application enjoyed more than 1 million downloads in its first three weeks. And, this is by no means the end of the list. Said simply, viable alternatives to check and cash payments are multiplying – at an astonishing rate. There has been activity in the B2B financial supply chain space for some time. Now, there are more options there than ever before, and it is becoming easier for smaller businesses to enroll than with earlier incarnations. Mobile payments, particularly P2P, are hot now with banks by the hundreds implementing solutions to adorn mobile banking platforms with P2P payments capability. I wouldn’t be surprised to learn of check volume declines of the order of 10% to 20% per year over the next few years given the accelerating activity among alternative. This would be roughly three times the historic rate of decline.
Bob Meara About Bob Meara

Bob Meara is a senior analyst with Celent's banking practice and is based in Atlanta, Georgia. His research focuses on the branch and ATM delivery channels, customer analytics and check and cash payment processing technologies. A well known authority on remote deposit capture, Bob has led multiple consulting engagements including proprietary research projects involving financial services hardware, software and the impact of self-service on branch banking.

Before joining Celent, Bob was the director of product marketing at Alogent. In this role, he positioned and launched a series of Check 21 payments solutions.

Prior to Alogent, Bob also held positions in marketing and brand management at BellSouth, Hayes Corporation, and Procter & Gamble in addition to being a commissioned naval officer.

Bob earned a Bachelor of Science in Applied Physics and Electrical Engineering from Case Western Reserve University.

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