WASHINGTON - Considering the alarming rate of bankruptcy filings, it would be understanding to assume that credit cards have overtaken the lead as consumers' preferred method of non-cash payment. Statistics are not only proving otherwise, paper checks continue to dominate the volumes of non-cash transactions and are forecasted to remain at current levels of volume or higher in the foreseeable future. Consider the following. According to a 1999 study by Global Concepts for the Check Payment Systems Association (CPSA), "The Indelible Check: An Assessment of the Dominance of the Check in the U.S. Payment System at the Close of the 20th Century" : * the paper check is responsible for generating approximately 40% of the total revenue for the U.S. payment system industry; * 87% of U.S. adults have a checking account; * corporate income taxes tied to the checking industry and paid by non-bank parties are estimated to be between $600 million and $1.25 billion each year; * employees and their employers in the checking industry are estimated to contribute almost $917 million to Social Security each year. Employees in the industry contribute an estimated more than $61 million to Medicare annually. * annual check volumes have grown over the past five decades from less than 7 billion checks written in 1950, to an estimate 70 billion annually by 1999. In order for other forms of non-cash payment to overtake checks in usage, "ACH, credit cards, and debit card payments would have to double their current two-digit growth rates simply to stall check growth," says CPSA. Furthermore, "even if the check was to decline in volume, overall annual check volume will still be in the range of 50-60 billion checks per year for years to come under even the most drastic forecast of declining check volumes." The payment system of the 21st century is about choice, offered Julie Faulkner, associate director of marketing, credit union division for Clarke American Checks Inc. "Emerging new payment systems are not being used by consumers as a replacement for checks, but rather another option. Consumers want to be able to choose how they make their transaction and they're deciding at the point-of-sale the transaction system that's most convenient for them," Faulkner said. ACH, credit card and debit card payments' projected increase, according to CPSA, of 46%, 34% and 24% respectively from 2000 to 2002 underscores consumers' growing use of a variety of payment methods. Still, "the exponential growth of credit and debit card transactions at the POS has had little adverse effect on the check," says CPSA. What does consumers' increased demand for control of their payment method decisions mean for credit unions? One effect already evident is members are taking more ownership of the check reordering process direct with the check printer. Instead of a CU member service representative taking the member's order and subsequently owning the entire check reorder process, including making any corrections, pricing the reorder and handling the mailing and delivery instructions, check reordering has become a complete home shopping experience for members. In this scenario, check printing vendors are establishing co-sourcing partnerships with credit unions and working with them not as a substitute for the CU, but acting on behalf of the credit union as a service provider. Faulkner says Clarke American is in the final testing phase of being able to take calls 24/7 from credit union members in its newest call center in San Antonio. The 68,000 square foot call center is scheduled to open in June. That will make four call centers Clarke American will operate to take check reorders (the other three are in Orlando, Salt Lake City and Syracuse). -
ekingoff@cutimes.com
