Target stopped accepting personal checks as payment this month, which might prompt the question: What took so long?
Check fraud has more than doubled in recent years, and businesses have to pay at least a dollar to process every check they receive. Many young adults have never even written one.
But if you haven’t used a check in years and consider it a badge of honor, it can say a lot about where you live and what you’re paying for. In many industries, checks remain a popular form of payment, and they’re sometimes required.
According to consumer survey data from the Federal Reserve Bank of Atlanta, which tracks the percentage of payments consumers make by check, the following industries receive the most check payments: Contractors, such as electricians and plumbers, receive 25% of their payments by check. Charities and religious organizations follow, at 22%. Landlords, government tax authorities and professional service firms also receive double-digit percentages of their payments by check.
There are many industries where checks are required. Your Money readers have written to complain about having to write checks for everything from condo dues and haircuts to dog shows and occasionally long-term care insurance policies.
Some people like it this way, although they cite many different reasons. Feelings play a role, as does expense. Fear, too.
In short, it’s complicated, and we’re not getting rid of checks anytime soon. Here are some of the main reasons why.
Handshake (or hug)
“Checks are a real cultural symbol of relationship commerce,” said Scott Anchin, vice president of operational risk and payment policy for the Independent Community Bankers of America, which wants to reduce the number of check payments. “It’s almost like a handshake.”
Think of a church collection. Sure, you can fill out a slip to pay by credit card. But there’s a ritual associated with writing a check in the moment. “I want to feel the act of giving,” said Anne Thomas, 65, who lives in State College, Pa., and works and volunteers at churches.
Then there are gifts. Sending money on a digital payment platform like Venmo feels like the opposite of a hug, even if it includes emojis, and gift cards can be a pain to use. If you’re sending a card in the mail with a cash gift, a check might seem like the better option.
Fear
For every person who falls victim to check fraud, there is another who encounters scammers online.
Just one encounter with a bad actor on Venmo or similar payment services like PayPal or Zelle — and any resulting difficulty getting the money back — can be enough to prompt people to switch back to paper. And given the high number of security breaches, many people avoid storing their bank account information on any website simply so they can more easily pay fees multiple times a year.
If you’re new to online payments, the fear of adding an erroneous zero or missing a payment due to a misplaced click may outweigh the hassle and risk of fraud associated with checks.
Simplicity
This is where those annoying homeowners association dues come in. Imagine your HOA is self-managed. Now imagine you drew the short straw and are the treasurer this year.
You have a full-time job, family and friends you enjoy seeing. And then there are hobbies, and none of those hobbies include poring over the electronic payment systems of the only local bank that will host your HOA account without charging you a fee, or researching other options.
After all, your hypothetical HOA only has 10 owners, so it’s easier for people to pay by check.
The 3% impasse
Rebecca Symmes, 71, recently moved to Delaplane, Virginia, with plans to retire and rehabilitate her land. To do so, she needed mowers, tractors, wood chippers and other equipment.
Local vendors would let her use a credit card, which would have earned her airline miles, but they wanted to charge her a fee. “The fees ended up being almost the price of a plane ticket,” she said. Instead, she wrote checks because they didn’t cost her anything.
“What many credit and debit card users don’t realize is that the merchant pays for their travel rewards points and cash back through fees charged by processing companies,” said Laura Bair, 61, a hairstylist in Santa Fe, New Mexico.
After a particularly difficult altercation with one of the operators, Ms. Bair has permanently abandoned card payments. She now only accepts cash or checks.
The $1.50 boost
In Queen Anne’s County, Maryland, the service fee for processing a credit card payment is 2.95%. If you want to use what the county calls electronic checks to pay directly from your bank account, it will cost you $1.50.
But paying by traditional check is free, minus the postage stamp and the value you place on the time it takes to find your checkbook and an envelope.
Why pay extra to avoid paper checks or credit card fees? Michael A. McCreary, principal and Atlanta operations manager for Pure Property Management, blames financial service providers for raising the fees they charge companies like his. But he also understands why they charge the fees, and his residents pay $2.95 to make electronic payments directly from their bank accounts.
“While a lot of things can be handled through software, it requires humans to be involved, which is an expense for both parties,” he said.
Leverage (and who has it)
If you have money to give, it’s up to you, so charities and religious congregations don’t want to tell you how to give, if they can help.
“We’re never going to silence people like they do at Target,” said Rick Cohen, communications director and chief operating officer of the National Council of Nonprofits. “The cost of processing and depositing the check is less than the cost of not receiving the donation at all.”
Contractors may have their habits. If you’ve been wiring electrical systems solo for 30 years and the controls work fine, why would you bother with Venmo? And when the plumbers show up to fix the clogged toilet in your one-bathroom apartment, they’re the ones making the decisions, not you.
Then think of gardeners like the one Paul Buckley employs.
Mr. Buckley, 58, lives on five uncultivated acres in Bucks County, Pennsylvania, and has a gardener who helps him tame the land for a few hours a week. She doesn’t know about Venmo or Zelle, and she doesn’t want to, Mr. Buckley told me via email.
She used to only accept cash, which meant anyone who wanted to pay her had to go to the bank. So when she finally said, “OK, I accept checks,” it was like, “Hallelujah!”