iStock.com/Neal McNeil
July 15, 2024
Should Other Retailers Join Target in Rejecting Checks?
Target will no longer accept personal checks from shoppers as of July 15, becoming the latest retailer to stop taking the increasingly rare payment form.
In a media statement, Target said the move was due to “extremely low volumes” of customers who still write checks. Target added that it remained “committed to creating an easy and convenient checkout experience, and that includes providing our guests with numerous ways to pay, including our new Target Circle Cards (formerly known as Target RedCard); cash; digital wallets; SNAP/EBT; buy now, pay later services; and credit and debit cards.”
In 1979, checks accounted for about 86% of non-cash payments in the U.S. and it was still fairly common to pay by check at cashiers. Stephen Quinn, an economics professor at Texas Christian University, told NPR, “I’m old enough that I remember — yeah, you’d go to the grocery store, and everybody in line would mostly pay with check. There was some cash, but checks were far more convenient for everybody involved.”
However, check usage dropped to about 7% of overall financial transactions by 2017, according to the Federal Reserve of Atlanta. The decline has been blamed on the arrival of ATMs, which sped up access to cash, as well as the introduction of credit cards, debit cards, and mobile payment systems like Venmo and Apple Pay that offered more convenience and speed over checks. Credit cards and some debit cards also offer perks for usage.
Additionally, checks are known as a bottleneck in checkout lines.
“I worked as a cashier at a grocery store about 7 years ago and check writers were the worst,” said a Reddit user.
Whole Foods, ALDI, Old Navy, and Lululemon are among retailers no longer accepting checks, but the wide majority appear to accept them, including Target’s competitors such as Walmart, Costco, Dollar General, Walgreens, and most grocers and department stores. Checks aren’t able to be used at self-checkout stations, however.
Landlords, contractors, and real estate agents are among those that still rely on checks to conduct business. A recent study by GOBankingRates found that although 46% of Americans did not write a single check in 2023, 15% of those in the 55 to 64 age group and 22% in the 65+ age group still write a few checks a month.
“It’s hardly surprising Target has decided to stop accepting them,” said Neil Saunders, retail analyst at GlobalData and a RetailWire BrainTrust panelist, told CNN. “That said, there will be small pockets of people, including more elderly consumers, who will lament that they are being phased out.”
In the payment space, digital-only coupons have already been called out in recent years as discrimination against the elderly.
Discussion Questions
Will Target see more benefits than drawbacks to no longer accepting checks?
Should other retailers follow?
Are the elderly or some other group particularly inconvenienced by not being able to pay by check at stores?
Poll
Loading …BrainTrust
Clay Parnell
President and Managing Partner
Jeff Sward
Founding Partner, Merchandising Metrics
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
Recent Discussions
More Discussions
How Can Retailers Crack the Gen Z ‘Riddle’?
Gen Z is becoming an increasingly important consumer demographic, but an elusive one to map. How…Does Bath & Body Works’ Scented Holiday Campaign Pass the Sniff Test?
Bath & Body Works is kicking off a new campaign with scent being at the fore…Which Tech Will Solve In-Store Inventory Woes?
Three major tech lineups are looking to solve retail inventory problems. Which is most suited?
Within retail, checks are used in a very small number of transactions. They are also a pain to process compared to electronic payment methods. So, it is reasonable for retailers to reject them. The slight issue is that many older consumers still use them, so abandoning them could cause some inconvenience. I think retailers should make a decision on this based on what their customers want.
Bingo. I still know a lot of customers,Baby boomers, Gen X still pay bills and transactions with a check. While it is less. Target will lose that demographic. It reminded me when a retailer I worked for decided to talk away the weekly paper ads because it cost too much and they wanted customers to use more digital. That lasted 30 days. There was so much pushback from customers that used the periodical to shop each week and they stopped shopping at the establishment.
The crux of the matter is not fraud, not the extra time it takes to transact (although it does), it is the fact that some customers still use them and refuse to use a debit card. Until that changes, some portion of the customer base will be disenfranchised. Not the best idea to discontinue it now.
Yes, but consumers also have to move with the times. Ultimately, each retailer needs to make a determination as to how important checks are to their customer base.
Patience! Most of those who refuse to move on aren’t going to be shopping on their own that much longer… 🙁
Debit cards have been with us since 1966! I think patience might be wearing a little thin at some retailers! 🙂
Neil, you are spot on as usual. The number of customers that insist on paying by check is so low, that it won’t significantly impact Target is those customers choose to shop elsewhere. It is hard to believe that anyone would choose to pay by check for small transactions when there are so many other options. I frequently experience retail or restaurant environments that are credit/debit only and don’t accept cash. That will be the next “currency” to go away, but it will still take time.
Paying with check is so infrequent today, it’s not a surprise it becomes a bottleneck. Retailers should determine if their local demographic requires support for checks, and if so, ensure they support it in such a way that it doesn’t slow down other shoppers. Perhaps make it a transaction supported only at the customer service desk?
Good idea!
Other retailers already have…Target isn’t leading on this. Will some people be inconvenienced ? Sure: it will be an opportunity for a leading nationwide discounter who wants to cater to check writers (and those who remember grade school math will recall the defintion of a null set).
It is a reasonable cost cutting measure. It will allow Target to maintain lower operating expense. Checks are more expensive to process, slow down checkout lines, and have the associated overhead of requiring a fraud software tied to POS. There might be an extremely small impact on a constantly shrinking population that would switch retailers based on the preference to pay with a check. The last legitimate reason to accept a check in a Mass Merchant, and most Specialty Retailers with an average ticket price under $1000 is for payment on account of the retailer’s Private Label Credit Card.
When a customer fumbles around and pulls out a checkbook, other customers flee to a different line. Kudos to Target for pulling the plug on this.
Retailers should consider not accepting checks due to their susceptibility to fraud, longer processing times, and higher operational costs. Most consumers now prefer faster, more convenient payment methods like credit cards and mobile payments. Checks can also expose personal banking information, posing security risks. However, a small population still relies on checks. Retailers should understand their demographic to ensure eliminating checks won’t impact their bottom line. Alternatively, they could offer check processing or cashing at guest services to accommodate these customers.
This is not about retailers following or joining Target. Just like Target didn’t join or follow anybody else. Every retailer is deciding for themselves what makes sense in what is now an overwhelmingly digital environment. Checks are almost as obsolete as buggy whips. But people who depend on buggy whips will not be easily persuaded to give them up. So the retailer can regionalize or localize the decision. It’s only a matter of time before checks are truly a relic of the past for front line retail transactions. Each retailer out to be able to quietly deal with their own customer base. For some customers it may even be a big loyalty factor. They’ll shop as long as they can wherever their checks are accepted.
It makes sense for other retailers to follow Target’s lead in disallowing personal checks.
In some European countries, personal checks have not been used for many years, because debit cards accomplish much the same thing as they do here.
Over the years, much research has been conducted regarding the risk of accepting personal checks, and results vary. However, I believe that as many as 5% of personal checks bounce due to insufficient funds. Millions of dollars are lost forever.
Almost every legitimate shopper today has either a credit card or a debit card. The prohibition of personal checks enhances the efficiency of customer service and check stands, and reduces conflicts between customers and employees. – Db
Funny, just last week I did a poll of our indie clients about accepting checks. Not many still take them, but others who have customers who prefer that method of payment do.
It’s easy to say the world has moved beyond checks because younger generations don’t use them, and it’s easy to discount the millions of older people who still do. But it’s hard to walk away from millions of check writing consumers with deep pockets and that’s what Target is doing. I don’t think we have heard the end of this conversation.
Every retailer needs to make this determination based on their audience. It certainly appears Target has done their math and concluded that their definition of ‘extremely low volumes’ translates into ‘no more checks’. Other retailers will need to do their own homework to determine at what point do they make a similar decision. Is it 1% or 1/2% of total transactions? Regardless, I can see cash being next on the chopping block. Several retailers, truck stands, and entertainment venues have already move 100% to digital only.
While we are talking about retailers, whole countries have moved away from checks:
All those countries have elderly people. Apparently, an accommodation was unnecessary.
It’s time to move on. With so few checks being written because of cash-alternative payments, eliminating them for payment purposes is inevitable. Retailers accept different forms of payment, and debit cards can work. It’s not always easy to break from traditions. Some customers may resent Target (or other retailers) not taking checks. However, if we handle those customers with a personal touch, we can show them a new way – an easier way – and win and even deepen their confidence and trust in the brand.
Since checks were already such a small part of Target’s payment methods used, I doubt this will have any impact at all – accept for Target cashiers who will no longer need to process these transactions. And while there is little doubt that some consumers — and yes, primarily older shoppers who still use checks — this will be a change that they may not appreciate. If some of these shoppers defect to other retailers as a result, then that’s their choice. The fact is, check writing for most retail purchases has significantly waned over the years, and it will only continue to diminish as time passes. I expect to see more retailers discontinue accepting checks, and Target’s announcement may even be a catalyst for making the decision. Ultimately, every retailer must understand their customers and make decisions that they feel serves the greater good, but that doesn’t mean that every customer will be happy.
This is a cost control decision that simply follows an increasing trend of people just using cards. I rarely see cash anymore and I cannot remember the last time I saw someone pay by check. Ever. So Target makes a decision aimed at cost control and maybe (maybe!) alienates a few customers.
No big deal.
Fanatic attention to Customer Service? If you were a single store operator and you knew your customer, would you take a check from them? Just saying……And no I’m not a fan of being in line in the grocery store when someone ahead of me has just tendered 25 coupons (21 of which were valid) and pulls out a check). Economics meets Customer Service – fair enough. Now how about the cost of picking up a return from a customer…..Betting that one costs more than processing a few checks.
What is a check?
Target is actually a laggard here. Unless a significant portion of sales are from check, likely driven by an older population, it feels like its time to move on or figure out how to support it on a one off use case rather than as a standard.
I can’t remember the last time I wrote a physical check. The operational realities are changing for the banks, customers and retailers. Some retailers here in Canada will not even take my cash anymore.
The convenience and speed of digital payments outweigh the minimal use of checks that often slows down checkout lines. Other retailers should consider following if they also experience low check usage because this move aligns with modern payment trends and enhances the shopping experience.
The primary hesitation will be from the elderly and a few who still use checks regularly and may be inconvenienced by this change. Retailers should ensure that they provide clear communication and support for alternative payment options to help these customers transition smoothly.
Yes, it is a pain for retailers to process them compared to electronic methods, hence the increase in retailers rejecting them.
However, when deciding if other retailers should follow Target’s lead in rejecting checks, it’s important to evaluate various factors, including the demographics of their customer base, the operational costs, and the security concerns associated with check payments.
Target’s recent decision to stop accepting checks is a larger sign of modern consumer behavior. This decision was inevitable as more consumers transition to digital payment forms such as credit cards and mobile wallets, and more retailers are likely to follow. As the article notes, the average American writes very few checks. For those who are still looking for alternatives to digital payments, paying with cash remains an option.