An old payment system may look new again, if Deluxe Corp.'s ad campaign around checks captures consumers' imaginations.
Though check volume continues to decline, Deluxe says that regulatory uncertainty about cards is creating an opportunity to win consumers back from the clutches of plastic.
"We knew that [increased regulation] was going to have an impact in how people were going to spend," said Susan Eick, Deluxe's vice president of financial services marketing. "If you are looking at a traditional product, why wouldn't you look for an opportunity to remind your customers that this is a safe form of payment?"
Regulation E's electronic funds transfer rules allow banks to charge overdraft fees only to customers who preapprove those penalties. Some banking customers who haven't opted in will be declined if they swipe for more than the balance in their accounts.
Rather than suffer the immediate disappointment of having a transaction declined at the point of sale, consumers may turn back to checks to take advantage of the float provided by the older payment form.
"Those without cash or checks, they are going to be left stranded, or embarrassed," Eick said.
Almost none of these arguments are evident in Deluxe's ad campaign, launched in late September. The campaign instead uses images more commonly seen in beer commercials.
The St. Paul company's online video features a skinny, poorly dressed character named Duncan Steele, who smells like pennies. In the video, Steele holds up a long line while writing a 59-cent check for a beef jerky — a move the beautiful woman behind him finds irresistible.
"I always pay by check," Steele says. "Credit cards are a sucker's game."
Deluxe's financial services and direct checks business lines, which get most of their revenue from consumer checks, together provided 42% of the company's 2009 revenues. Deluxe generated $1.34 billion in 2009 sales, down 8.5% from the previous year.
The ad effort is not Deluxe's sole recent move to bolster its check-writing operations. In April, the provider of paper checks and small-business marketing services paid $98 million in cash for Custom Direct Inc., a Joppa, Md., direct-to-consumer check provider.
Analysts said Deluxe's ad campaign doesn't make much sense.
"As far as I'm concerned," checks "are dying animals," said George Thomas, a principal at Radix Consulting Inc.
He said that by the end of the decade he expects to see very few, if any, paper checks. "The younger generation, they don't even use checks anymore," Thomas said. "You have the old-timers hanging on, but more and more people are going to be doing those payments either through direct debit or through home banking."
In the meantime, Deluxe is apparently deviating from moves made over the past several years. In 2006, for instance, in an effort to become less reliant on checks, it acquired companies that offered Web hosting, printing, signage and other business services.
Deluxe sponsored a study in light of its "Stand Up for Your Right to Write Checks" marketing campaign. It found that about three-quarters of American consumers insist they should have the freedom to pay at stores or restaurants with whatever method they choose.
That doesn't quite fit, said Nancy Atkinson, an analyst at Aite Group LLC in Boston. That figure "really surprises me," she said. When consumers use checks at the point of sale, she said, "I think most people just get aggravated with them."
Businesses, however, still do a fair amount of check writing for bills, Atkinson said.
A recent Aite study found that roughly 40% of customers at 80 "large" corporations with $1 billion or more in annual revenue paid their bills with checks.
"One thing I will say is that check writing is still hanging on," Atkinson said.