Americans in the 1970s experienced a time of great technological change. Credit cards represented the future of a “cashless” society where payments occurred with swipe. Computers housed customer accounts in sophisticated data processing centers, removing the need for ledgers and paper records from local branches.
Despite the amazing automations of the times, the paper check remained the most common form of payment with 90% of all financial transactions made by check in 1972. Many businesses still did not accept credit cards for payments, so a timeless tradition continued of paying by checkbook.
Once a month, people sat down with the pile of bills that had accumulated. To pay every bill, people wrote a separate check and enclosed it in an envelope with the bill stub (a small paper record issued by the biller to track payments). A payer would lick the envelope shut, affix a stamp, and mail it. The entire process was time consuming and expensive. A Pittsburgh newspaper described the common experience of a local woman in 1972:
“Mrs. James Bolton sat down to the frustrating monthly ritual of settling the family’s regular accounts. One after another, she wrote out a total of 17 checks-phone, bill, department stores, utilities, drugstore, credit cards- and stamped the envelopes with 17 eight-cent stamps costing her $1.36 at current postal rates. Altogether, the act of sorting bills, writing checks, addressing, sealing, and stamping the envelopes took Mrs. Bolton more than 40 minutes.”
On January 6, 1970, First National Bank of Arizona introduced a new solution for its customers. They created an oversized check with 48 separate businesses listed. Next to each business or utility name, the customer could write the amount owed each institution. The customer than mailed one “Supercheck” in a pre-paid envelope to the bank with the bill stubs. As the bank described in its ads, the new bill pay tool “eliminates stacks of checks and envelopes plus a lot of stamp licking.”
Where Mrs. Bolton took 40 minutes to write 17 checks, a First National Bank of Arizona customer could complete their monthly bills in 15 minutes or less. Each Supercheck cost $.50, but that was a fraction of the cost people were used to paying when they needed to buy their own stamps for a dozen or more payments.
At the bank’s check processing department, team members used the Supercheck as guidance to make payments on the customer’s behalf. The list of participating businesses on the list included national names like American Express, Sears and Mobil Oil, but it also included utilities and businesses unique to the customer’s area. For example, customers in Yuma had a different water utility company listed than those customers in Phoenix. Customers received customized forms for their areas.
The release of the new bill pay tool “exceeded all of our expectations” according to First National Bank of Arizona’s project manager Greg Zieman. In addition to customers, businesses also loved the product as it reduced the number of checks they needed to process for deposit. Businesses either had the money moved directly to their accounts if they were a customer of the bank, or they received one cashier’s check that totaled all payments from all bank customers that month.
The Supercheck offered a creative solution to a growing problem for banks. As more customers wrote checks, the amount of time and money spent processing the paper payments grew. By 1971, researchers estimated that Americans wrote 22 million checks annually. More checks meant potentially longer processing times and longer waits for customers to see money available in their accounts. To adapt, banks built data processing centers with million dollar computers and sorting machines. Hundreds of workers programmed the computer, handled the magnetic tape rolls used to store records, and ensured checks were processed correctly. In addition to building a more advanced infrastructure to handle more checks, banks looked for ways to cut down on the number of checks written in the first place.
Within two years, 400 other banks in the U.S. offered similar bill pay services inspired by First National Bank of Arizona’s Supercheck. Some banks even took the idea further. Northwest Bancorporation (today Wells Fargo), a bank holding company based out of Minneapolis, Minnesota, began to offer “SuperCheck” as a free service to customers in 1972. As Northwest described the service to customers: “We pay your bills for you.”
Despite its instant popularity, the Supercheck and all check based bill pay tools had their limitations. Customers could not add business names to the list. It could not cover debts owed to individuals. Using the check successfully also required careful planning by customers to time payments correctly. First National Bank of Arizona processed all payments on the same day the check was received, but each individual company on the list had different systems of tracking transactions making it easy to send the check in on time but still have a payment labeled as a late.
Bank executives at the time viewed Supercheck as an important solution using the technology that existed, but many also viewed it as an intermediary step for where the technology was headed. As First National Bank of Arizona Vice President of Marketing John C. Sack explained “Even so, it’s really a step between where we are and where we have to go with banking. The burden of paperwork to process is just too heavy.” New technologies like the Electronic Funds Transfers Systems (EFTS) and later the internet allowed for payments to be recorded digitally without ever needing a paper trail. In 1995, Wells Fargo made history as the first bank to enable customers to pay bills and track payment history in one, secure place online using its Online Bill Pay.
Today, fewer people use checks to pay bills, but customers continue to depend on banks to help innovate solutions to make paying bills easier.