“The check’s in the mail” is a sentiment many in today’s workforce would not understand. That’s because they neither receive nor write checks.

Direct deposit has been available since the early 1970s, even though not all companies were set up to do so then.

In most cases people want their money as fast as possible, which is easy to do with various electronic transactions. PayPal has been around since 1998, Venmo started in 2009, and Zelle has been available since 2017.

In 2023, 46 percent of people in the United States did not write a single check, according to GOBankingRates.

“According to our survey, in the past year, 15 percent of Americans wrote a few checks a month, 17 percent wrote less than six checks, 17 percent wrote a check once a month, and 4 percent wrote more than 12 checks,” the personal financial publication says on its website.

In 2003, the Federal Reserve had 45 check processing locations. That dropped to one by 2010 because of the decline in checks being written.

Some companies won’t even accept checks. This includes Whole Foods, Target, Gap, Old Navy, Athleta, Best Buy, Costco, Dollar Tree, Home Depot, Kohl’s, Publix, Sam’s Club, Staples, Walgreens and Walmart.

Future of finance

The Independent Community Bankers of America, a trade group, sees a more rapid decline in person-to-person check writing compared to commercial check transactions.

“In business there are a lot of processes established around check use,” Scott Anchin, vice president for senior operational risk and payments policy for ICBA, said.

In the personal realm, it’s pricier expenditures that still often get paid by check, he said, such as mortgage payments, medical bills, contractors, and the government—like the Internal Revenue Service.

Fraud is one of the biggest concerns with any check. Personal information is on the check, along with the routing and account numbers. Anchin said fraud prevention technology is expensive, but necessary component doing financial institutions doing business.

That is why ICBA is a proponent of new technology that has come on board of late. The Clearing House, a private payment system, launched Real Time Payments (RTP) in 2017 and the Federal Reserve came out with FedNow in 2023.

“We are bullish on these new networks that provide community banks the opportunity to innovate and build relationships with customers,” Anchin said. “This is giving community banks the opportunity to work with customers with how they use safer (methods). We’ve seen a positive environment with these.”

RTP and FedNow are considered instant payments. It eliminates the intermediary like PayPal or Venmo. Plus, PayPal, Venmo and Zelle all have varying transfer limits that are much lower than the instant payment route.

FedNow has a default limit of $100,000 that can be raised to $500,000 by individual banking entities. RTP has a $1 million single transaction limit, though each financial institution could require a lower dollar amount.

“(This) is the way of the future and the way all financial services are headed,” Chris Call, CEO of North Bay Credit Union in Santa Rosa, said. “People want faster access to funds. Whereas wire transfers are expensive, this is pennies to do.”

What institutions have to say

Financial leaders in the North Bay agree the number of checks being written and deposited by clients is steadily declining, but they disagree whether their use will go away completely. And not all are ready to embrace the new instant payment technology.

They do agree it is definitely a generational issue—that many older customers are keeping their checkbooks and most younger ones don’t want one or don’t even know how to write a check.

Having a receipt of sorts is one reason people still like to write checks.

Call, with North Bay Credit Union, expects to be able to offer his members FedNow shortly after the first of the year.

“I wouldn’t be surprised in the next 20 years if we will see checks become obsolete. I think we will see wire transfers become obsolete with FedNow,” Call said.

Kevin Miller, CEO of Travis Credit Union based in Vacaville, said the death of checks has been forecasted his entire career. He admits fewer checks are being processed, but believes the need for them will continue for the indefinite future—especially business-to-business.

Miller also realizes innovation is critical in order to retain members. That is why he expects TCU to offer FedNow sometime in 2025. The institution is currently analyzing the risks before pulling the trigger.

“You have to invest in infrastructure, time and people to make sure you have good rules to protect yourself from good transaction and the bad,” Miller said. “Today we are looking at what is the risk if that transaction is fraudulent and how much damage is there on the receiving end.”

FedNow works 24/7, the banking system does not. Miller said there is a short window for an institution to accept the transaction. That is why he and his people are scrutinizing the process to make sure it will work for TCU and its members.

“The data is people want things now and easy. But if can move all of your money in one fell swoop, you might say that is too easy,” Miller said.

Santa Rosa-based Exchange Bank saw the number of personal and commercial checks either being written or deposited drop between 5 and 10 percent between September 2023 and September 2024.

“I think one day they will be gone. I’m not sure if that will be five years or 25 years from now. I don’t know when,” Kevin Bender, Exchange Bank’s chief banking officer, said of checks. “One of the things that goes through the minds is people who use bill pay with the bank they think they take care of all bills there. Even if the consumer or business is not writing a check, the bill pay service is.”

While it costs money to process a check, it’s not a big enough reason to try to accelerate their disappearance, Bender said.

It also costs money to offer Zelle, FedNow and RTP. Zelle is a service most institutions offer customers with no additional fee.

For now Exchange Bank is on the fence about FedNow.

“It looks like of the 10,000 or more banks and credit union there are 400 to 500 offering (FedNow). It is expensive to offer,” Bender told the Journal. “We have looked at it. When it’s more prolific we may offer it.”

Note: A version of this story first appeared in the North Bay Business Journal.