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Consumers writing off paper checks

By Allison Ross ·
Thursday, December 19, 2013
Posted: 4 pm ET

The paper check is falling out of favor.

That statement is no surprise, thanks to the ease and convenience of plastic money and online transactions.

But even as experts note a downward trend in the number of checks, billions of paper checks are still being written and torn from checkbooks each year to pay for myriad things, from Girl Scout Cookies to rent.

Last year, the number of checks written fell to 21 billion, a drop of almost 25 percent from only three years ago, according to a report released Thursday by the Federal Reserve.

Source: 2013 Federal Reserve Payments Study

Source: 2013 Federal Reserve Payments Study

The study found that paper checks made up only 15 percent of all noncash payments last year.

Meanwhile, noncash payments overall have been growing. For instance, the number of credit card payments grew at an annual rate of 7.6 percent from 2009 to 2012. Debit card payments grew at a rate of 7.7 percent over that same period.

A 2012 study by the Federal Reserve Bank of Philadelphia found that, if the decline in the use of checks continued at about the same pace, checks could disappear by 2026.

But, there are still many good reasons that consumers may want to turn to checks, particularly in instances where someone may want to have a record of a purchase that can't be done using a debit card or credit card, such as sending a check to a relative on her birthday or paying a microbusiness such as a home repairman.

This week's report found that, although the numbers of checks being written by consumers to businesses is declining, the numbers of checks that consumers are writing to each other remained about stable between 2009 and 2012.

And, the speed at which a check gets processed has improved over the years as the process becomes increasingly electronic. This week's study found that 17 percent of the checks deposited in 2012 were deposited as an image at the bank of first deposit compared with 13 percent in 2009.

"Despite the continued decline in the use of checks, the check clearing process continued to gain efficiencies and has become virtually 100 percent electronic," the report noted.

When was the last time you wrote a check? Do you think checks will ever completely go away?

Follow me on Twitter: @allisonsross.

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