The Check Ain't Dead - But It's Lagging
According to a recent study, consumers are using new payment methods at a rapid pace, and banks had better start thinking about their payments issues and technologies if they want to keep up.
"Beyond the Decline of the Check: New Directions in Retail Payments," took a look both from the demand side (consumer market research) and the supply side (interviewing banks, bill payers, retailers). The study was conducted by Unisys, Global Concepts, Inc. and a private researcher.
What the study found was that consumers are surprisingly flexible about how they pay for products and services with 42 percent saying they changed their payment methods in the last year. Another 33 percent said they plan to make changes in the next year.
The study also found that:
Check payment will decline by two percent annually over the course of the next few years, so that by the end of 2004 checks will constitute less than half of all noncash payments.
When new methods of check conversion and check imaging exchanges between banks become realities, the decline in volume of checks will double. The study also said that it expects it to be three to five years before the right market and regulatory barriers crumble to make full truncation at the points of deposit or payment a reality.
Debit cards are growing at twice the rate of credit cards and are expected to grow faster than any other method for in-store purchases over the next two years. Consumers preferred personal identification number debit cards by a 12 percent margin over signature debit transactions.
Fifteen percent of retail bill payment check writing will shift to electronic payments and 34 percent of cash transactions will shift to cards at the point of sale over the next year.
While 64 percent of billers have yet to look at offering Web-based bill presentment, 15 percent are evaluating it.
To see a white paper evaluating the study or to get more information on the results, go to www.unisys.com.
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 2, 5/05
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