Will Online Bill Payment Spell the Demise of Paper Checks?

Abstract

Over the past several years, the emergence and adoption of electronic payment instruments have acutely affected check usage. This transition has been especially evident at the point of sale as debit and credit cards have become pervasive. Today, the rapid growth of online bill payment looks to threaten checks' last redoubt. However, bill payment technology is still in its adolescence; the interplay of many stakeholders in the industry, including technology firms, banks, billers, payment cards, and customers, has led to rapid, unscripted innovation in just a few years. This paper quantifies some of the trends in the industry while addressing the interests and impact of the market's prime movers in an effort to determine to what extent the displacement of checks will continue.

Keywords: Electronic Funds Transfer, Checks, Internet banking, Automated clearing-houses