via www.panini.com
Strange as it may sound, the use of checks at point-of-sale (POS) remains highly relevant. Certainly in terms of historical comparisons they exist in a diminished capacity, but look closely and you will see paper checks in many POS environments.
Countries including Brazil and France still experience high usage of checks at POS. Even in the US, checks are an important part of the retail payments mix, representing nearly 10% of all US check volume or an estimated 2.6B payments. It’s also important to consider that check intensity varies among vertical segments within retailing. Generally, you find higher check usage in grocery, discount retailing, convenience (petro) stores, pharmacies, and large ticket segments (i.e. furniture, automobiles, appliances, etc.). In addition, there are specific applications associated with higher check usage. For example, in Brazil checks are often used to pay for large ticket items on a payment plan. In the US small businesses often use checks for purchases because the payment method is highly integrated with their business processes and habits.
Why do we continue to see checks at POS? Basically it’s related to perceived benefits. Merchants like the accelerated clearing, rich customer information (with check image capture), and lack of interchange charges connected to credit and debit cards. Check writers like the familiarity, broad acceptance, detailed transaction record, and absence of fees they may have with a card. Of course there are also potential drawbacks associated with checks including fraudulent use, possibility of return items, and physical handling expenses. On the whole, however, some markets, segments, and applications find a positive value proposition related to the check as a payment instrument.
So, what are the implications for the continued use of checks at POS? Given the volume of check payments and the global emergence of image-based clearing legislation, there are significant opportunities for technology solution providers to help automate, streamline, and safeguard the acceptance of checks at POS. There are also opportunities for innovation, such as the enablement of electronic check capture in conjunction with the relatively new segment of virtual terminals. Additional opportunities include new capture technologies (for example, Wi-Fi connection to POS), and applications including item guarantee/verification, return item processing, and archive/retrieval.
While NFC, EMV and other payments generally garner most of the attention in the retail POS space, there’s no question that for millions of retailers around the world, the efficient and effective acceptance of checks continues to be an opportunity for payment vendors to add value.
NACHA Statistics on POP Transactions in 2012
POP Originations Q4 2012 -- 117,399,407
POP Originations Q3 2012 -- 111,033,375
POP Originations Q2 2012 -- 117,349,000
POP Originations Q1 2012 -- 108,599,991
