NATION With more e-payers, has it come to last writes for checks?

For some check writers, it's a ritual. For some online payers, it's convenient.
WASHINGTON -- In these divisive times, it should come as no surprise that the staff at American University's Kogod School of Business is taking sides.
And in the world of personal finance, it may not get more personal than this.
Chris Vockrodt is in the camp that sits down once a month with a stack of bills and a checkbook. He pays his rent, his utilities and his credit-card bill by writing out checks, a ritual that the 25-year-old graduate assistant is reluctant to give up.
Kellie A. Foy, a career counselor at the business school, used to be a check writer, too. But then, she said, she saw the light, and it was coming from her computer screen. Foy, 31, found out she could pay her bills with a few keystrokes: She'd pick a bill to pay, go online, type in the necessary information and hit "send."
We have become a society divided between check writers and e-payers.
Looking back
Thirty-seven years ago, George W. Mitchell, a member of the Federal Reserve Board, made a bold prediction to a House subcommittee that paper checks were on their way out.
The Check Payment Systems Association says Mitchell was wrong about checks. So wrong, in fact, that the group, the check's chief lobbyist in Washington, pulls out the Wall Street Journal account of his remarks "to amuse ourselves," said Wade Delk, executive director of the association, which represents check printers and ink manufacturers.
To be fair, the group doesn't single Mitchell out. Donald L. Koch, vice president and director of research for the Federal Reserve Bank of Atlanta, predicted in 1983 that check writing would be in a deep decline by the end of that decade. And that gets them laughing, too, all the way to the bank. In 2000, 42.5 billion checks passed through the Federal Reserve, up from 32.7 billion in 1979.
It turns out that Mitchell wasn't completely wrong. He was just off by about three decades. By the time he died in 1997, the decline of check writing was beginning.
In recognition of this, the Federal Reserve said recently that it will stop processing checks at 13 of its 45 sites around the country.
What's harder to estimate, as Mitchell discovered, is how long it will take for check writing to disappear. Common sense says that people will probably not be writing checks in the next century. But how many will continue to write them in this century? And for how long?
Checks still account for nearly 60 percent of all retail noncash payments, according to Federal Reserve data. By comparison, electronic payments made up 7.9 percent of the pie in 2000.
The Fed, which actually does not process the majority of checks written, thinks that check writing has peaked, for real. In an August 2002 report, the Fed said it appears that the number of checks written began to decline sometime in the mid-1990s after a high of 49.5 billion in 1995.
A key point: Electronic payments are growing, at a rate of 18 percent from 1979 to 2000, compared with a growth rate of 1.2 percent for checks in the same period.
One reason is the growing number of companies and banks that accept electronic payments.
Paying online
Consumers can pay their bills online a couple of ways.
Most major credit-card companies, for example, allow customers to create online accounts through the cards' Web sites. These accounts enable customers to see their statements online and to pay a portion or all of their bill over the Internet. Customers must give the credit-card company the name of their bank and their bank account number. And then each month, or even more frequently, they can go to the card's Web site and choose an amount to pay. The payment is electronically deducted from the customer's bank account.
Banks themselves are also setting up online payment services for their customers. Some banks charge fees for the service; others offer it free.
The services typically allow someone to set up automatic deductions to pay a cable television or telephone bill, for example. The bank then takes care of sending out the payment. If a merchant is not set up to accept electronic fund transfers directly, then the bank cuts a check and mails it on behalf of the customer.
For consumers who aren't comfortable with automatic deductions, most online banking services allow people to go to the Web site every month and manually decide when to pay and how much.

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