Are personal checks outdated?
End of paper transactions may be more distant than projected
Sunday, March 3, 2013
The decline of personal check usage seems to be glaringly obvious as “No Checks Accepted” stickers adhere to business countertops, and consumers make purchases online or transfer money through Paypal accounts.
But even with the digital era in which we find ourselves, the grim reaper of currency has yet to come knocking.
“They (checks) are still here ...” said Dan Westhues, Central Bank’s director of marketing and retail banking. “But plastic is certainly king.”
The local bank now sees around half the amount of check volume it saw 10 to 15 years ago. A room once devoted to holding a large machine to process checks is no more and the machine has been replaced by small tabletop scanning devices.
As debit and credit cards moved into play, Westhues said banking magazines projected checks would soon die out, but those projections were made years ago.
“Payment systems are continually evolving, the sunset just always seems to be slower than the projections,” Westhues explained.
Although the bank still sees customers on a daily basis, Westhues said many first-time account holders decide to wait on ordering checks to see whether or not they’re needed. Central Bank now issues debit cards on the spot, something Westhues points to how important plastic has become.
Are checks outdated?
It may be faster to slide your debit or credit card, but several businesses do still take those personal checks.
Corporate retailers such as Walmart and JCPenney see it as company policy to accept checks. Walmart, however, runs the checks through electronically, making it more of a debit transaction.
“It depends, but the system may prompt for more information, which we take down immediately,” said Elizabeth Shabangu, an assistant manager at Walmart, 401 Supercenter Drive.
This type of transaction prevents consumers from “paying” for goods before the money is actually in their account, known as “floating” a check.
There is always a certain risk involved with accepting checks, as there are with other forms of payment, Westhues said. The problem with checks, however, requires the business to trust the check is good until depositing it in the bank. He noted that taking down any extra information on how to find the check writer can’t hurt.
Locally owned outlets including Downtown Book & Toy continue to accept checks based on their customer’s preferences.
“A lot of our customers still write checks,” assistant manager Lisa Kolb noted. “We want to be customer oriented.”
The downtown shop sees several repeat customers but still tries to be careful, checking IDs for out-of-towners and asking if the personal information listed is current.
Jefferson City’s famous ice cream shop has relied on checks and cash from its customers for years. Central Dairy just began taking debit and credit cards last summer.
A Central Dairy employee said most customers knew to have cash on hand, and even with the new addition, the shop still sees more cash transactions than plastic.
It does accept checks, as long as they are local, within a 30-mile radius. Even then customers are asked to show identification.
The local Pizza Hut franchise continues to accept checks as well, but has had its fair share of issues. The three local restaurants under the same ownership try to share information, keeping a three-page list of “bad check” writers.
Damon James, assistant manager of the Christy Drive location, said most customers pay by debit or credit, but the restaurant is still cautious, especially when making deliveries.
“There can still be fraud in cards but the potential of loss for the business merchants is a lot less in cards than in checks because it is immediate,” Westhues related.
Businesses that no longer accept checks have most likely been burned one too many times. Although getting extra information to help find the check writer will help, it may cost more money for the business to track down the customer than the amount for which the check was written. Westhues said.
From a consumer standpoint, Westhues said, checks come with a certain amount of risk. He noted there are still people who steal new boxes of checks from the mail but consumers aren’t exempt from risk with plastic, either.
“There is always enough risk that warrants the customer being cautious,” he reminded.
Obviously with the decline of checks, debit and credit transactions are up. Central Bank customers swipe their debit cards on average 20 to 30 times a month.
Westhues said there are different kinds of consumers, some who pay for everything with debit, keeping you from overspending once the money is gone, and credit cards users who pay it all off at the end of the month.
Checks don’t come with rewards, and many credit cards do, allowing people to build up points for hotel stays and airline miles.
“People are obsessed with points,” Westhues noted.
Cash, check, debit, credit, and now, digital withdrawal.
“I think eventually we’ll be paying for everything with smart phones. We are quickly bypassing the plastic industry,” the local banker projected.
However, Westhues acknowledged payment types will evolve with consumer preferences and as technology will allow. Central Bank has recently moved into the next phenomenon of check cashing, allowing users with smart phones to deposit checks simply by taking a picture and never stepping foot in the bank.
“It’s really a marriage between paper and technology. We wouldn’t come up with this if we anticipated checks going away anytime soon,” he closed.