Are Checks Still Used in the Digital Age?

In a digital financial landscape, questions arise about the relevance of traditional payment methods like checks. While electronic transactions are commonplace, paper checks still maintain a presence. Their role has evolved, adapting to specific needs.

Current Status of Check Usage

Paper check use has significantly declined in the United States over the past decade. In 2012, checks constituted 17.4% of cashless transactions, but this figure dropped to 5.1% by 2021. Despite this reduction, the U.S. continues to exhibit a higher per-capita check usage compared to many other countries. Although the volume of check payments has decreased, their total value remains substantial, accounting for nearly 20% of all non-cash payments by value in 2021. This suggests fewer checks are written, but for larger amounts, and the decline rate has leveled off.

Situations Where Checks Remain Common

Checks remain common where digital alternatives are not preferred or available. Rent payments frequently involve checks, with many renters still using them. Small businesses or service providers, like landscapers, often rely on checks due to credit card processing costs. Government agencies frequently issue payments like tax refunds, Social Security benefits, or insurance claim payouts via check, even though direct deposit options exist.

Checks are also routinely used for large, infrequent personal transactions, including monetary gifts or charitable donations. A paper check offers a tangible record and formality. Some prefer checks due to habit or lack of access to digital payment technologies.

Modern Alternatives to Checks

The financial industry developed alternatives that largely supplanted checks. Electronic Funds Transfers (EFTs), including Automated Clearing House (ACH) payments, facilitate direct deposits for paychecks and government benefits, as well as automatic bill payments.

Debit and credit cards are widely accepted for purchases in physical stores and online, offering immediate transaction processing. Online payment platforms, such as PayPal, Venmo, and Zelle, provide convenient ways to send and receive money between individuals and businesses, often in real-time. Mobile payment apps further extend this convenience, allowing users to make payments directly from their smartphones. For larger, time-sensitive transfers, wire transfers offer a method for sending funds quickly, typically completing domestic transactions within one business day.

Handling and Processing Checks

To access funds from a received check, several processing methods exist. The most common methods include depositing it at a bank branch, an ATM, or through a mobile banking application. To deposit a check, endorse it by signing the back. Depending on the method of deposit, you might also add a restrictive endorsement like “For deposit only” or “For mobile deposit only” to enhance security.

When depositing in person, you may also need to fill out a deposit slip. For mobile deposits, you typically take clear photos of both the front and back of the endorsed check using your bank’s app. Check clearing times vary, but generally, funds become available within one to two business days. Federal regulations often require banks to make at least the first $225 of a deposited check available by the next business day. However, larger amounts, newer accounts, or certain types of checks may experience longer holding periods, which banks are required to communicate.