The Check's in the Mail: Why the United States Lags in the Adoption of Cost-Saving Electronic Payments

The United States payment system costs around $225 billion annually and checks account for 75% of all noncash payments. Other electronic payment methods (debit cards, automated clearing house direct deposits, and debits) cost only around one third to one half as much as a check. This paper outlines the main reasons why the shift from checks to cheaper electronic payments has been slow, much slower here than in other countries. We also forecast the future use of checks and electronic payments and end by discussing policy initiatives that may speed up this substitution process.