Despite repeated predictions of their downfall, checks continue to be written in the United States in ever-growing numbers, research indicates.
Estimated yearly volumes range from 65 billion to 70 billion items.
That makes checks and their longevity factors to be reckoned with even as the banking industry introduces more and more electronic innovations into the payment system. Yet even with the market research and other assumptions being made, it is difficult to pinpoint the size of the checking business or the timing of its long-anticipated decline.
"The problem is that there has not been a comprehensive survey of the number of checks written since 1979, and everyone has been extrapolating from that each year," said Louise Roseman, director of payment systems for the Federal Reserve System. "If they were off a little each year, it could be wildly off by now."
The 1979 study, coordinated by the Federal Reserve Bank of Atlanta with the Bank Administration Institute and the American Bankers Association, concluded that 32.8 billion checks were written in 1978.
The belief is that volume continues to grow between 1.5% and 2% a year, Ms. Roseman said. The Fed, which is widely assumed to process 25% of all U.S. checks, handled 16.6 billion items in 1998, which would put annual volume at 66.4 billion. At a 2% growth rate, the number would reach 67.7 billion this year.
However, Fed volume rose 3.9% between 1997 and 1998. Through the first five months of 1999 the year-over-year rate of increase was 5.2%.
That surge may be explained by a decline in the correspondent banking business, Ms. Roseman said. That would tend to steer volume to the Fed, perhaps at faster than the overall market growth rate.
"I think the rate of growth is slowing," Ms. Roseman said, "but if you asked me the factual basis upon which I based that impression, I am not sure I will be able to give it to you."
The Check Payment Systems Association of Washington commissioned a study by the Atlanta-based research firm Global Concepts Inc., which said 1999 volume would be at least 69 billion. The study -- based on a survey of member firms that admittedly have an interest in check growth -- concluded that check-writing would increase until 2005. "It probably will not be until at least 2010 before you see a significant downturn," said Gary Satterfield, executive director of the CPSA.
Global Concepts and the CPSA began with an estimate by Green Sheet Inc., a Petaluma, Calif.-based newsletter publisher for the transaction processing industry, that there were 67.3 billion items in 1998. Global Concepts then polled the 52 members of the association, which includes check printers, printing-equipment suppliers, and check verification companies, about their 1996, 1997, and 1998 business volumes.
The Nilson Report, a newsletter publisher of Oxnard, Calif., estimated there were 63.59 billion checks in 1998, up one percent from its 1997 estimate of 62.93 billion.
Green Sheet has estimated that checks will number 68.7 billion in 1999, based on a 2% growth rate. Green Sheet put 1997 volume at 66.09 billion.
Whatever the volume, the check remains popular because of its ease of use, float advantages, and recordkeeping convenience, Mr. Satterfield said. Those behind the CPSA suggested that bankers may be too quick to abandon the check as a core product worthy of additional development.
"There are a lot of decisions, policies, and assumptions being made by folks in the banking industry that are based on inadequate knowledge about the true economics of checks," said Steve Ledford, senior vice president of Global Concepts, a firm that has continually urged bankers to keep their faith in checks and their profitability.
"Banks make a good deal of money on the check," Mr. Ledford said. "It is a popular product, and the cornerstone of the bank-consumer relationship." Checks contributed $21 billion of revenue in 1997, Mr. Ledford said, citing a study conducted by the Bank Administration Institute of Chicago and PSI Global of Tampa. Fees from returned checks alone produced $8.1 billion.
