Paper Checks Are Dead. Cash Is Dying. Who Still Uses Them?

Andrew Van Dam, (c) 2023, The Washington Post

Fri, September 15, 2023

In a few years, comically oversized foam-board novelty checks will be the last remaining evidence of a 20th-century icon, as the paper check goes the way of the landline phone and the floppy disk. Even the most dubious cliché of the past century - the promise that the check's in the mail - has fallen from common usage.

So where - if anywhere - are paper checks making their last stand? That's what astute reader Bill O'Donnell from Chicago wants to know. "How many Americans still use paper checks?" he asks. "Who are they and where do they live? What are the trend lines?"

Let's start with the trend lines, Bill! They, uh, point down. At the turn of the millennium, back when recording each transaction on paper might still have seemed like a good way to outfox the Y2K bug, they were the default for anyone not handing over cash.

Back then, 6 out of every 10 noncash purchases, gifts and paid bills were handled with checks. A mere two decades later, just 1 in 20 are. The paper check's fall from grace has been meteoric, in the plummeting-so-fast-it-immolates-in-the-mesosphere sense.

As recently as 2003, the Federal Reserve ran 45 check-processing locations in which brigades of workers routed each check. A decade later, it was operating just one, in Atlanta, as check usage fell and the Fed executed a long-planned transition to a largely electronic system. The checks were also processed faster, meaning even fewer of them were, as the cliché went, in the mail.

We don't know exactly when the paper check peaked, because the Fed wasn't consistently measuring transaction methods until after the decline began. In the future, officials hope to stay ahead of our payment preferences. If we were to ditch cash at the rate we gave up checks, for example, the Fed's enormous cash-processing operations might require a sudden and substantial overhaul.

"[People were] caught off guard by the rate at which check-writing dropped off the map," said the Atlanta Fed's Kevin Foster, who has spent more than a decade measuring Americans' payment habits. "We don't want to be caught off guard the same way with cash!"

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