Plastic is winning the fight as preferred form of payment

Lexington Herald-LeaderOctober 29, 2012 

If you're paying bills at the University of Kentucky, chances are you're no longer using a conventional paper check.

The number of mailed and walk-in checks for UK's Student Account Services, which handles student tuition and fees, has plummeted from 8,200 totaling $20.4 million in 2008-09 to 5,200 totaling $13.4 million in 2011-12. Meanwhile, the number of electronic payments and credit card transactions has skyrocketed.

It's evidence that bank customers are saying a lingering farewell to their paper checkbooks and choosing electronic forms of payment, whether debit and credit cards or online withdrawals. They no longer get back a monthly packet of canceled checks along with their paper statements, which many view online. Great Britain already has set a sunset date for the use of paper checks: By 2018, consumers there will use other forms of payment exclusively.

Even churches, once known as the place where checks were conspicuously dropped into the offering plate, are getting into the new order of cash transfer.

Centenary United Methodist Church in Lexington offers an e-giving program, in which members can pay by an automatic checking account draft.

Cathy Vickers, the church's finance manager, said that although the e-giving method is used by only about 20 members, the service might grow as "more and more people are becoming more familiar with online banking and services their own banks offer."

Don't worry about being held up too much in the grocery store line. The debit card crowd is already there, too.

"While we do continue to see some customers who prefer to use cash or checks, the popularity of electronic forms of payment continues to grow," said Tim McGurk, a spokesman for Kroger in Louisville.

Also, many banks now offer a checking account option that doesn't even include paper checks for those who do all of their banking online.

Steve Kelly, executive vice president of marketing and sales at Central Bank, said 2005 was a key year locally in the transition away from checks.

"For our bank, 2005 was the year that was the tipping point, meaning that we had more electronic transactions than we had paper," Kelly said. "Since that time, electronic has been steadily growing."

The "float" on paper checks — the time between the moment a check is handed to a vendor and the time it comes out of the payer's account — can be cut to a sliver of the few days it used to take if a vendor converts the check to an electronic transaction.

"Many people don't have to carry a checkbook," Kelly said. "They have money if they've got plastic."

Mobile banking customers using smartphones check their accounts an average of 37 times a month, he said — a far cry from the once-a-month packet of statements and returned checks that customers used to get during the heyday of the checkbook.

The trend away from paper checks is, of course, not limited to Kentucky. From 2001 to 2011, paper checks declined from approximately 60 percent of all non-cash payments to roughly 20 percent, according to the Federal Reserve.

PNC, a bank with numerous branches in Kentucky, has seen online transfers increase dramatically, said spokesman Fred Solomon.

Nonetheless, the paper check has its pockets of support.

"We process quite a few," said Ashley Corbett, vice president of deposit operations for the Bank of Lexington. "Surprisingly, a lot of people think checks are a thing of the past. They aren't.

"People use them more so than the general public really thinks."

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