#KillTheCheque: Cheques Are Dying, And Prepaid Is Thriving
Say goodbye to the cheque, because their days as a widely used method of payment are numbered. Thanks to ever-improving technology, electronic payments can be made easier, faster, and more securely than their antiquated paper counterparts. This has resulted in fewer and fewer cheques being written. In 1989 the amount of cheques used numbered 2.2 billion in Canada, according to Bank of Canada and Department of Finance. Today, cheque use doesn’t even make up a third of that.
According to Payments Canada, the amount of cheques written by consumers and businesses decreased from 1.35 billion in 2008 to 1.016 billion in 2012, and dropped even further to 734 million in 2017.
In 2012, Canadian consumers wrote 360 million cheques. In 2017, this number has declined 40 percent, to 220 million cheques. The average Canadian consumers writes only two cheques per month for a total of $1574. Once you factor in rent–the number one use for consumer cheques–it’s clear that the majority of people have no use for cheques.
30 years ago, the total value of transactions by cheques from Canadian consumers and businesses totalled $19.94 trillion. In 2017, this number had dropped nearly 80 percent, to only $4.04 trillion (Bank of Canada and Finance Department). The number of individual transactions have also shown a steep decline–in 2011, 1.186 billion cheques were used in. In 2016, this number has dropped 33 percent, to 798 million transactions (Canadian Payment Methods and Trends – Payments Canada).
With an annual decline in cheque use of 7 percent across the nation, Payments Canada predicts that by 2020 virtually every business and government office in Canada will have switched from cheques to electronic payments.
“I think it’s hard to imagine, to be honest, that cheques are going to be around forever,” Janet Lalonde, Payment Canada’s director of modernization says. “Is there any possibility that, 20-25 years out, somehow people are still going to use paper in any form to make payments? Personally, I would be shocked if that was the case.”
In the US, it’s a similar story. The cheque is dying! In 2012, cheques made up 13.64 percent of the total consumer market share of payments, with 1.169 trillion cheques used. In 2017, the number dropped to 7.47 percent for a total of 772 billion, a decrease of 34 percent. In just one year, from 2016 to 2017, check usage dropped 17 percent in the US.
One reason for this decline, is the recent explosion in popularity of prepaid cards. Prepaid transactions are the fastest growing POS transaction type in Canada, with a 7 percent year over year growth in value, totalling approximately $20 billion. In the US, prepaid card usage in the US is up 4 percent from 2016 to 2017. In 2011, the total value loaded onto prepaid cards in Canada was $9.929 billion. In only five years, the total value increased by 197 percent to 19.5 billion. Similarly, the number of transactions exploded, growing 177 percent from $147.9 billion to $262 billion.
Why are people moving from cheques to prepaid in droves? Find out all the benefits of prepaid, and the disadvantages of cheques, in our #KillTheCheque ebook, coming out next. Stay tuned!
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