Joining cassette players, fax machines, and VHS tapes, checks may be the latest version of an offering that once represented a novel invention, and provided substantial value, but has been replaced by more recent versions, such that it has grown obsolete.

Compared with cash payments, checks made life easier for consumers, who could pay for in-store purchases without having to worry about exact change, as well as mail in payments for their utilities and such. Thus, checks became a ubiquitous form of payment in the late twentieth century. But the number of payments made by check has been declining steeply, such that between 2018 and 2021, their usage decreased by around 7 percent each year, and only 11.2 billion checks were written in 2021.

This decline largely can be attributed to the value offered by innovations in digital payment methods, including Apple Pay, and payment apps, like Venmo, PayPal, and Zelle. These contactless money transfers became particularly popular during the years of the COVID-19 pandemic, but their convenience and immediacy has facilitated their continued usage.

In contrast, checks have grown less convenient. Stores need a substantial, separate infrastructure in place to process checks. Employees typically require training to verify which checks are legitimate, and the payment method itself requires some additional steps at checkout, compared with tapping or swiping a credit card or mobile payment. Considering the monetary and time costs associated with accepting checks, balanced against the relatively few payments still written by check, many retailers are phasing out their acceptance. Target joined other large retailers in announcing that it would stop accepting checks as a form of payment in July 2024. Aldi and Whole Foods also stopped accepting checks recently.

Digital transfers also offer a greater amount of security, reducing the need for manual entry or the risk of a check being rejected for insufficient funds (i.e., bounced). The advanced information systems that large retailers have implemented tend to manage digital transactions quickly, which also offers additional advantages for streamlining supply chain operations and providing more accurate inventory updates.

Still, shifting completely to digital payment methods and eliminating all cash-based approaches might alienate some customers. Older shoppers continue to use checks consistently, though at declining rates. Some vulnerable consumers simply do not have access to the technology tools required to undertake digital transaction. And the decision to eliminate a long-accepted payment method, unilaterally, puts the burden of adaptation on the consumers. Such negative considerations run the risk of driving customers away to competitors, as well as causing harm if they lack viable alternatives for obtaining the products and services they need.

Still, change is inevitable, and retailers must track and take advantage of evolving consumer behavior to achieve optimal supply chain management. The disappearance of checks is unlikely to be the last major shift in retail payments, as continued innovation and adaptation keep informing and affecting consumer preferences in the future.

Discussion Questions

1. If more large retailers begin to reject checks, what will customers who still rely on checks do to adapt to this shift?
2. At what point do new store policies lead to unreasonable expectations of consumers?

Sources: David G.W. Birch, “I Will Live to See the Last Check,” Forbes, July 15, 2024; Nicole Norfleet, “Target Joins Ranks of Aldi, Whole Foods as Stores No Longer Taking Checks,” Star Tribune, July 3, 2024; Aimee Picchi, “Target Will Soon Stop Accepting Personal Checks from Customers,” DNyuz, July 8, 2024; OpenAI ChatGPT, “Assistance with Research on Target’s Decision to Stop Accepting Checks,” ChatGPT, August 8, 2024.