The Check is in the Mail? Not anymore.

By | June 14, 2010

In another hit to decreasing mail piece volumes, Matthew Jaffe of ABC News just posted that the Obama administration will announce that all payments from the government will now be made to consumers electronically.

Once direct deposit becomes standard with an even greater portion of the US population — will this start a trend for electronic business-to consumer-payments? What does this mean for the future of check printing?

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5 thoughts on “The Check is in the Mail? Not anymore.

  1. David Uno

    Each year the percentage of the population that are comfortable using tech increases with new tech savy children and people who adopt tech. This combined with the banks incentive to get revenue from debit cards will only reduce the use of checks in the market

  2. Jukka Lindgren

    It’s about time too.

    Sending thousands or millions of transactions on a piece of paper by mail is complete waste of natural resources, not to mention everyone’s time and effort. Any kind of check is inherently insecure, causes totally unnecessary delays and opens gateways to fraud and misuse.

    The survival of printing industry (or even a segment of it) cannot, and should not, depend on such an issue…

    In my country (Finland), the use physical checks was completely abandoned years ago. The printing industry did not perish.

    Direct deposit aside, the problem of not every Grandma having Internet access is circumvented by providing a subscription service where a notification of any electronic payment or invoice is printed only at the recipient’s local post office and mailed the old-fashioned way to such customers. The amount of physical matter being moved is reduced significantly.

    – They also provide a service where even your ordinary post card can be scanned at the senders post office, and delivered via Email only. It too can be printed at the receiving post office, at the recipients option. But that’s another story altogether…

  3. Sabine Lenz

    Jukka said it perfectly … It is about time.
    Not only from an environmental point of view, but we have been years behind other countries that are using electronic business-to consumer-payments. Originally from Germany I was shocked and amused when I received my first actual, physical paycheck when coming to California in ’91. Something unheard of in Germany, Australia … and other developed countries I had the pleasure to work in.
    Let’s not print print for the print’s sake.

  4. Michael Jahn

    We sell nearly all of our solutions asking for wire transfers or credit card. In this manner, they get their working solution faster and we are paid immediately. All of our staff gets paid electronically. I do not think I have actually wrote a physical check in 5 years.
    The only thing that is news here is into the another story on how Obama is trying to bring our government into the modern world – I laughed very hard when he was first elected and they wondered if they were going to make him give up his blackberry.

  5. Stephen D. Poe

    Jukka and Sabine –

    Having consulted in Europe (including Scandinavia) and living in the US, I know of the significantly different cultural assumptions between the US and Europe. Historically, the majority of most Americans have not placed as much trust in their governmental and financial institutions as most Europeans. This distrust, along with the additional 1-3 day float of a physical check (at least before clearing was improved), resulted in a culture that continued to use physical checks and distrusted direct deposit and debt. Direct debit also has a potential for misuse due to error. Many Americans do not necessarily trust the corporations they pay bills to monthly enough to provide them carte blanche debit access to their checking accounts.

    Printing at the local post office again requires cultural differences; a tighter integration between post office and businesses and the use of the Hybrid Mail specification (or products based on it), neither of which has been widely adopted in the US. The USPS has limitations as to what it can and cannot do placed upon it by the US Congress. In Europe, these limitations have been largely eliminated due to the postal deregulation Europe has experienced in the past two decades. There are many potentially profitable business models it cannot explore because of this limitation. Also note the difference between the number of financial institutions. There were (when I was consulting there) perhaps less than a dozen banks serving Scandinavia. As of 2008, there were 8,430 FDIC-insured commercial banks in the United States. This considerably complicates the process of arranging and maintaining direct deposits and debits and raises the costs to do so.

    I do believe with the recent increase in the use of debt cards that the rate of decline of the use of physical checks in the US is accelerating, although there is still a lag. Bob Meara of Celent recently discussed (“The End of Checks in the US?”, 6 Jan. 2010) why the US is ‘behind’ in this trend and suggested (“10 Reasons Check Volumes will Hasten their Decline in the U.S.,” 21 May 2010) that check volume decline may soon hit 10%-20% per year due to additional viable alternatives and changing consumer habits and. Some of the (public) major financial printers in the US are reporting revenue declines based on this trend and looking to increase their revenue via other means.

    So I believe that the US is finally experiencing the cultural shift necessary to move further away from physical checks, but IMHO it has much more to do with changing attitudes about government and financial institutions and much less to do with being green.

    The financial printers are certainly realizing this and looking for new offerings to stop their revenue decline now before it becomes precipitious.

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