NACHA, the governing body that oversees the automated clearing house network, released figures from the first quarter of 2013 regarding transaction volume and overall traffic on the network. ACH is the system that links virtually all financial institutions in the US allowing banks and merchants the ability to convert paper checks to electronic form.
POP, or point of purchase, is the system that retailers convert checks to electronic payments right at the register and the voided check is returned immediately to the customer. The year-over-year numbers from January through March were down 8.5% as compared to the same time period in 2012. In addition, compared to Q4 2012 to the most current numbers, POP transactions were down a full 15%. While some of this decline can be credited to seasonality and inflated volume from holiday spending, the decline is still worth noting.
An alternative to POP is BOC, back-office conversion, which allows merchants to collect check payments at the register throughout the day and process the total in a batch all at one time. While this method historically has had lower volume than POP, it still saw a year-over-year decline, falling 10.5% to slightly under 43 million transactions in the first three months of 2013.
One appeal of BOC vs. POP for merchants is added transaction speed at the register because the customer does not have to wait for the check to be run through, verified, and given back to them. It also does not require each point-of-sale location to have the equipment to convert checks, which can reduce overall hardware costs.
The overall trend that can be gleaned from these numbers is that there seems to be a clear trend showing the use and acceptance of paper checks in retail environments is on a slow decline. This can be attributed to the rise of other forms of payment, one in particular being the growth in number of businesses that accept credit cards. In addition, in my own personal experiences at retail stores and restaurants over the past few years, there is a growing number of business owners that due to fraud, forgery, or even a high instance of returned checks NSF have voluntarily decided not to accept personal checks as a form of payment.
