As Check 21 wraps up its first decade, its impact has been considerable, to the point where the Federal Reserve has but one site left for processing checks and at least one industry player sees the day coming when some bank or credit union out there might actually not accept them.
But, according to others, reports of the death of the paper check are greatly exaggerated to paraphrase Mark Twain.
There's no doubt that check processing has changed dramatically in the past few years, especially considering how little the process had changed since the 1890s, when Twain was still writing and the predecessors of Glenn Wheeler's company began exchanging cash letters in Texas.
Wheeler is president of Viewpointe Clearing, Settlement and Association Services and CEO of the former National Clearing House Association. His organization has been through several iterations and acquisitions, a process driven by Check 21 legislation and kicked off by the tragic events of Sept. 11, 2001.
"I was at Bank One then and part of my team was responsible for outbound check transportation. We already knew we didn't want to rely on sending checks by air anymore-for a lot of reasons, including weather delays-but 9/11 really smacked us in the face," Wheeler said.
The Check Clearing Act for the 21st Century-Check 21-was passed by Congress in October 2003 and took effect a year later.
Since then, change has been swift as technology vendors and financial institutions took advantage of electronic tools to move check clearing toward a near real-time environment as image capture moved from the back office to the teller and then out to homes, offices and ATMs.
Then in 2010, remote-deposit capture went mobile, as vendors and financial institutions that saw a market for it hastened to get the service onto BlackBerry, Android and iPhone platforms, further extending to consumers the conveniences that had been reserved for the enterprise itself.
"Back in 2003 the Federal Reserve Bank had 45 paper check processing sites all over the country and now there's just one, in Cleveland. The benefits of Check 21 have been in multiple areas, both for credit union members and for credit unions themselves as the process has become quicker and more efficient," said John Levy, executive vice president of Integrated Media Management in Linden, N.J.
Levy's company specializes in electronic management of receipts and other documents and found Check 21 deployments to be a natural fit. Check 21 has helped his company grow, Levy said, but he also sees an end game.
"In my opinion, and it's just my opinion, this window is not going to stay open forever," he said. "I believe check processing volume is going to continue to diminish and that the benefits of Check 21 won't be as great even five years from now as we see today."
Levy cited the growth of alternative channels such as bill pay and person-to-person as reason, as well as the coming of age of new consumers who didn't grow up writing checks.
"Gen Y likes to do everything online, and right now consumer capture is right up their alley," he said. Levy conceded that current stats show snail mail as still the single most heavily used payment channel, but added, "Every time someone who's older passes away, there's a backfilling with someone new coming into the workforce who likes to buy online and who doesn't use checks."
But will there come a time when a bank or credit union decides not to take checks? "I would say that's going to happen, maybe in five to 10 years," Levy said. "But maybe I'm just being a contrarian."
Divergent opinions were easy to find. "I don't think I would go that far," said Craig Roy, senior vice president for support services at the $3.5 billion Digital Federal Credit Union in Marlborough, Mass. DCU has been a front-runner in check capture, partnering with EasCorp to deploy Check 21 services to its 350,000 members.
"We've been hearing for 25 years that checks are going to be wiped from the face of the Earth, but I don't buy that concept," Roy said. "But I do think we're going to continue to see a reduction in the number of physical checks as people continue to embrace this technology."
Working with vendors like EasCorp allows smaller credit unions to get in on the RDC act, which they're going to have to do to stay competitive, Roy believes, and he noted that his own large credit union just notched a milestone in check capture.
"Three months ago the actual number of checks we physically receive from our members was surpassed by the number of remote deposits they're sending in," the DCU executive said.
Hal Tilbury, founding CEO of Bluepoint Solutions in Vista, Calif., another vendor that moved into Check 21 after creating document management solutions for credit unions, also thinks paper checks will continue to be honored as long as consumers want to present them.
In fact, Tilbury said he thinks image capture might actually make paper payments even more palatable, since couriers no longer have to transport them, branches can efficiently process images at the teller and back-office level and RDC eliminates the need for postage and mailing.
"The cost of handling paper checks is getting so much lower than it used to be that I think we may see a renaissance in their use and in checking accounts," Tilbury said. "They're also easier to secure against fraud than a debit card."
"I see equal lines forming to get mobile and home capture solutions and I see teller capture taking over a lot of the back-office work associated with branch capture, but I don't see checks going away anytime soon."