It is often said that payment types never go away, we just add more payments and more form factors. This is true of checks which have been declining in use, but that rate of decline is beginning to slow, suggesting checks may be reaching a plateau. The ABA Banking Journal posted some background on check volumes:
According to the 2016 Federal Reserve payments study, the volume of check payments fell at an annual rate of 4.4 percent in the three years from 2012 and 2015 alone.
Last year, however, overall check volumes held steady for the first time, and business checks actually increased by 1 percent. Checks also dominate payment types among businesses; the new AFP 2016 Electronic Payments Survey reports that over half—51 percent—of all business-to-business payments are still checks. Banks whose strategic goals target business accounts will quickly recognize the importance of these numbers.
When a payment type is in decline or stagnating, considering product improvements and investments is a tough decision to make. But, as the article points out, a no-growth product should be review for automation and cost reduction. Also, as providers focus on other growing products, this creates an opening for more fraud to sneak in undetected, so more attention may be warranted:
The cost impact for banks becomes clearer when you consider that checks also continue to be the leading target for payment fraud, measured both in terms of attempts and actual losses. The total cost of fraud, including preventing, investigating and resolving losses, escalates proportionately.
Paper-based processes and checks remain the number one source of payment fraud for business accounts, outpacing card and wire fraud by a good margin. Fraudsters quickly adapt to change and develop new ways to exploit systemic weaknesses, so that by 2016, the AFP Payments Fraud and Control Survey found that 73 percent of institutions have experienced actual or attempted fraud.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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