Fintech is seen as one of the most promising industries in the market with online payments driving interest among investors.
While platforms like PayPal (PYPL, Financial) and Apple’s (AAPL, Financial) Apple Pay continue to convert conventional bankers into online and mobile bankers, statistics indicate that other forms of payment and especially checks could die off in the near future.
PayPal and Apple pay can be useful in settling bills and simple payments, but when it comes to huge payments companies and even individuals think of checks and wire transfers among other methods.
According to a business checks designer platform, Checkomatic, companies still find it necessary to use checks in settling some of their payments, which means that killing the checkbook is going to be a harder nut to crack than initially thought.
The world payments report 2015 indicates that some of the leading countries where checks are still widely used are France and the U.S. These countries are not devoid of online payment methods and credit cards, but they still hold great value for checks and other forms of paper payments. In addition, two countries and especially the U.S. are known to be very strict in their monetary policies with tight regulation on payments.
Nonetheless, credit and debit card transactions still maintain leadership accounting for a majority of global payments. This is primarily due to the fact that individual transactions dominate the payments industry.
There have been doubts among people with regard to embracing mobile payments as information security becomes more crucial with every breakthrough in the Fintech market. Startups and large tech companies have introduced products to compete in the industry with the use of NFC technology in mobile phones on the rise.
There are even those who are convinced that credit cards and debit cards could be under threat as the push for cashless economies continues to spread across borders.
Nonetheless, a cashless economy does not necessarily imply that people would stop using other payment methods such as checks. In fact, checks are part of the greater list cashless payments, and there are also digital checks that can be considered to be in the same category with online payments.
While most people use a credit or debit card to make a payment, there is a good number who still have checkbooks at home. It would appear that the need for hard transactional evidence is still a priority for many people.
As for companies, checkbooks are more or less a requirement. How often does your creditor offer to pay you using a credit/debit card? What about PayPal? While these methods of payment are dislodging the traditional predecessors like checks and wire transfers, different people have placed different levels of trust on them when it comes to transacting massive amounts of cash.
With PayPal and Apple Pay, we are talking about the potential to be hacked in which case a company could lose money. The same happens to credit/debit cards, and depending on various regulations, banks have placed caps on the maximum a person can transact using these credit/debit card and mobile/online payment methods.
In addition, some businesses have placed high fees on payments made using credit cards or online payments. And while checks have their own flaws, their ease of traceability seems to give them some edge among several businesses.
Conclusion
To date, the wire transfer is the only unlimited method of payment whereas checks come close. This means that regardless of the overall dominance of online payments in the payments industry, checks still have their place in the market, one that seems set to continue in the foreseeable future.
Therefore, as PayPal, Apple, Alphabet (GOOG, Financial) (GOOGL, Financial) and others continue to introduce online and mobile payments products, financial regulations and security concerns will continue to provide reasons for companies and individuals to make transactions using checks and wire transfers.
These two may not be as fast as their rivals, but they are trusted in many ways.
Disclosure: I have no position in any stock mentioned in this article.
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