There is a lot of excitement and expectation around the payments sector at the moment, and rightly so. We have already seen technologies such as contactless and mobile payments make their mark on the industry, while in the future it’s possible that innovations like biometric authentication and wearables will have a bigger role to play.
However, amid all this thinking about the future, it’s crucial that merchants, payment processors and financial institutions don’t overlook the ongoing importance of longer-established payment instruments, such as cash and checks.
Recent research has shown how, despite a clear trend of declining use of these methods, they continue to account for large proportions of consumer spending.
Checks hold their own
The percentage of consumers in the US, the UK and Canada who have written a check in the last month is higher than the proportion who have used a mobile wallet. That’s according to the September 2017 report Lost in Transaction, which was commissioned by payment processing firm Paysafe.
More than 3,000 consumers were surveyed, and half (50 percent) of respondents from the US said they had written a check in the past month, compared with 31 percent who used a mobile wallet and 14 percent who were using cryptocurrencies. Similarly, 40 percent of Canadian consumers had written a check in the past month and only 16 percent used a mobile wallet, while the proportions for the UK were 30 percent and 24 percent respectively.
Other findings showed that, in the US, consumers carry $50 on average in their wallet at any given time. This suggests that cash remains a familiar and reliable payment option for many people, despite the convenience offered by newer alternatives such as contactless cards and mobile payments.
Focusing on the US, Joseph Daly, Paysafe chief operating officer for North America, said the modern American consumer experience is defined by “a huge diversification of choice – in retail options, services delivery and payment methods”.
As far as retailers are concerned, Mr Daly said the merchants that survive will have invested in the necessary solutions and systems “to meet a range of customer payments preferences and quell security concerns”.
Will traditional payment types be around forever?
It’s not unusual to hear predictions that the longest-established forms of payment – namely cash and checks – are destined for extinction and we will one day live in a cashless, paper-free society.
However, as the Paysafe research indicates, these methods are still used regularly. Commentators have proclaimed the imminent death of the check for many years, but, as far as consumers are concerned, it still has value. There are also many organizations, such as charities and small businesses, that continue to rely heavily on check payments.
The UK’s Cheque and Credit Clearing Company has introduced plans for a faster, industry-wide, image-based check clearing system, underlining the significance of checks within the wider payments landscape. The new process comes into effect today (October 30th 2017) for some banks and building societies, and will be rolled out to all providers before the end of 2018.
Furthermore, businesses and financial institutions have access to check imaging solutions that make the job of receiving and processing checks quicker and easier than ever.
As far as cash is concerned, figures from Retail Banking Research have shown that $13.2 trillion was withdrawn from ATMs worldwide in 2015, which equates to more than $25 million every minute. So it goes without saying that physical currency is still absolutely crucial to the day-to-day functioning of the global financial system.
These forms of payment might not be as common as they once were, but consumers continue to demand and use them in huge numbers. Financial service providers, retailers and other businesses must have the necessary solutions in place to meet this demand and deliver maximum choice for the public.
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