Why Do We Use so Many Checks?

In this paper, we review factors influencing the migration from checks to electronic payment alternatives in the United States. We identify underlying (dis)incentives for the various payment system participants to migrate to electronic payments. Such analysis sheds light on why checks are used when the real resource cost of processing payments may decrease by using payment networks that allow for virtually risk-free transfer of funds between the buyer and seller's transactions account in real time. However, given competition from non-bank payment providers and the increasing share of online purchases, the usage of electronic payments should increase