One month ago I spoke at the annual meeting of what was once called the Financial Stationers Association (FSA), in Amelia Island Plantation in Florida. FSA is being reborn as CPSA, the Check Payments Systems Association. Like another CPSA, the Colored Pencil Society of America, the association which is listed ahead of them on the Internet search engines when you look up CPSA, the new Check Payments Systems Association is concerned about the advancing tide of automation. But unlike the colored pencil folk, CPSA can report that Americans are continuing to order their product in record numbers.
One of the most interesting elements of this yearís meeting was a speech by Dr. David Humphrey, Professor of Finance and a Fannie Wilson Smith Eminent Scholar in Banking who provides a good deal of the financial information in The Nilson Report each year. Dr. Humphrey reported on the direction in Norway of taking the check the way of the dodo bird. Yet, when he weighted the experience of Norway, Germany, France, and the U.S., into an aggressively mandated replacement of checks, he found that checks would virtually be at the same level a decade from now as they are today (66 billion items, and anything less aggressive will likely see the check in the 87 billion items level in 2010.
While it is true that this organization may be seen as retro, parochial, or by some as an organization of dinosaurs, check printing is alive and well in America. In fact, the FSA executives, some of whom have participated for decades in this organization, are ready for change. Among the issues that the CPSA is researching is check fraud, check order packaging, and a way to enhance the security of the check product.
When one considers the database that could be built of MICR data and address cross-reference, or even the advertising potential of reaching virtually every household each year with a box of information, the CPSA could be turned into an excellent organization for information, education, public service, and even perhaps a lobbying effort, for the plain old paper check.
CPSA, like most associations, is not without its problems. For one thing, it seems to be considered "not cool" in this country right now to be in favor of paper, and the association feels there may be a need to reach out to other stakeholders.
Considering the change in direction by such organizations as NACHA and even the ETA, as plastic card stakeholders first join, and then move competing organizations and products toward their own agendas, it seems broader participation can come at a price. Itís also hard to get more than a yawn out of Wall Street if you are in a business that is perceived to be mature. As a nation, we are sure that everything electronic is inherently better, faster, and cheaper. While this is not true for the paper check, it will take some sure-footed efforts by the CPSA to make such complex issues apparent to the right audience, and not be either shy about the message or defensive about a payment process that has served Americans so well, and for so long.
With such wonderful points to consider, such as the fact that the paper check employs more than a quarter of a million people in the U.S. and produces nearly 40% of the revenue in the U.S. payment system and contributes one quarter of the postal services income, we are left with the understanding that many in the nation do not understand what it is they are tinkering with. While Americans still love checks and are continuing to buy them in increasing numbers and use them readily at retail, it is pleasing to know that the banking industry and even the Fed are able to continue to take cost out of the paper system, but not to eliminate it.
The CPSA slogan for the 1999 annual meeting, "Checks, Americaís Favorite Way to Pay," could be right up there with "Got Milk?" as reminder of Americaís love affair with the paper check and a reminder that 73% of all non-cash payments in this country are still made with paper checks.
