The death of checks
It’s coming at some point. The checkbook will be tossed onto the dustbin of history, as debit cards and who knows what else take over. The question is — will the check be allowed to gradually disappear or will it be murdered? British banks want to kill it ASAP.
Next month, Britain’s Payment Council is expected to vote to abolish “cheques” by 2018:
…the move was criticised by consumer groups, business lobbyists and charities representing the elderly. They raised fears that vulnerable people, who have relied on their chequebook all their lives, will be left confused.
Many others simply prefer to pay by cheque, instead of by direct debit or bank transfer.
Britain’s Federation of Small Businesses is strongly opposed to ending cheques.
The Canadian Payments Association, on the other hand, doesn’t feel very strongly about any of it. Spokesman Geoffroi Montpetit says the agency will just sit there and do nothing:
Rather than impose a decision from above, the CPA prefers to allow the venerable cheque to be ultimately overtaken by some new, as yet undeveloped method for moving cash around.
“In the absence of an industry or government edict, we’ll just continue to watch (the check’s) market share to continue to decline,” Montpetit said.
What a decline it’s been. In 1990, 87% of all payments were in paper form. Last year, the percentage was 18%. Some form of the check has been around since the first century BC and for 350 years in Britain.
But enough nostaglia. Should the US follow Britain’s lead and execute the checkbook?
I vote for at least banning checks in the grocery store checkout line!
- Nov 24, 2009 12:14 PM — Scott Jagow
- 18 comments
About Scott Jagow and Scratch Pad
Latest Posts
- Should we go nuclear?
- Investment bankers are overpaid
- Greece and WMD's
- Morning Reading
- Yelp needs legal help
- Back to the future
- Is the Volcker Rule dead already?
- Morning Reading
- Apple's saucy apps
- Banking Machiavellianism
- Morning Reading
- Triangle-shaped hot dogs?
- Banks: Like fragile little girls
- Once more into the breach
- Morning Reading
Archives
sponsor
Scott's favorite spots
- 24/7 Wall Street
- BailoutSleuth
- The Big Picture
- Businessweek/Michael Mandel
- Cafehayek
- Calculated Risk
- Carpe Diem
- Clusterstock
- Crossing Wall Street
- DealBook
- Dealbreaker
- Econlog
- Economist
- Economist's View
- Felix Salmon
- Footnoted
- FT Alphaville
- Greg Mankiw
- Growthology
- Infectious Greed
- Knowledge Problem
- LittleSis
- Marginal Revolution
- Mish's Global Economic Trend Analysis
- The Money Blogs
- Naked Capitalism
- Paul Krugman
- Planet Money
- Real Clear Markets
- Seeking Alpha
- Silicon Alley Insider
- Sramana Mitra
- True/Slant
- Unemploymentality
- WSJ/Marketbeat
Sponsor
Comments (18)
November 24, 2009 3:40 PM PT
Having had my debit card skimmed and counterfeited twice in 4 months, I’m not happy about the idea of giving up paper checks and having to use plastic!
November 25, 2009 11:39 AM PT
paper checks provide enough information about you to defraud as well.
November 24, 2009 6:11 PM PT
I never carry my checkbook, but I mail checks and I leave checks for cleaning service and gardener. Lots of very small business still depend on checks.
November 25, 2009 5:33 AM PT
I think it’s a move to push more people to use credit cards, so banks can collect more money on late fees and delinquencies. I wonder what people with bad credit will do if they can’t get a credit card, and they can’t write a check?
November 25, 2009 6:29 AM PT
a check is easier to monitor than a card. it forces a more current and complete account monitoring. there is no question that this is an attempt to enslave and control the people. we finally need to understand that technology is not our servant and move back to controllable ways of living.
November 25, 2009 7:03 AM PT
If we “bail out” the banks because they are essential to the economy, then they should not be able to “suddenly” stop cheques/checks which are essential to their business. This is not akin to the government getting off the the gold standard. It is closer to denying that money is “legal tender.”
I’ve enough problem with my bank that wants electronic deposit of paycheck (okay), but wants to charge me to get cash from the cashiers!
November 25, 2009 11:41 AM PT
I think I actually walked into a bank and talked to a cashier like 3 times last year.
November 26, 2009 5:11 PM PT
I think it is a terrible idea. What happens to us if, say, a terrorist cell brings down the world wide web? How do we continue to function if we can’t use our computers?
November 28, 2009 11:34 AM PT
What makes you think the banks will be any less impacted than you if that happens? A checkbook isn’t as reliable a paper trail as an account balance receipt from the ATM or a printout of your online account page, assuming you do that before someone hacks the web, and assuming no one’s cut the electricity, either. Barring that, there’s always your mattress.
November 26, 2009 10:35 PM PT
I work at a non-profit as a gift processor and I find that most people still make the majority of their contributions on checks. Many people are turned off by credit card fees and our direct mail appeals lend themselves to payment by check.
November 28, 2009 6:22 AM PT
The problem with debit cards is: (1) it is easier to steal a number than a check book and you are less likely to recognize that it’s been stolen until its too late (2) unlike credit cards, the loss is 100% yours should they clean out the debit account, not just the first $50.
November 28, 2009 11:40 AM PT
I’m willing to bet that consumers will demand a fix to such things once everyone’s choice is limited strictly to the debit card. If banks insist on dumping checks, consumers can insist on protections, or move with their feet. I’d also be willing to bet that some bank somewhere would offer those protections. There already are cards to function both as a credit and debit card for no extra cost, so adjustments to address your concern seem inevitable.
November 30, 2009 6:23 AM PT
18% of transactions is still a very large number. I’m with the Canadians on this one: let checks remain as an option. As a small business (4 employees) it is more cost effective for us to write paper checks out for employees and vendors than the other options. The difficulties of straightening out problems also adds up - it is great when it works, but as soon as there is a glitch, watch out. I find it too easy to spend too much when I use a debit or credit card. Using cash and checks remains a tactile reminder of how much is in my account.
November 30, 2009 7:45 AM PT
The checking system provides an alternative backup system. It is nice to know an entity, or computer glitch cannot cut us out or off from a string of numbers representing our “money”. Turning over this much control to give access or deny at the click of a mouse or button is one step closer to financial insanity. Having an “old system” coupled with the new is the best way to go. Keep the checks and the ckecking system.!
November 30, 2009 9:12 AM PT
It’s all well and good to use online billpay for utilities, credit cards, etc. But there are a few items that more or less require a check, such as the monthly rent. Sure, I could setup online billpay for my landlord. But since they are not one of my bank’s known billers, the bank will just end up mailing them a check anyway (and have to process that check when it is deposited). What would those who want to get rid of checks have me do? Walk into the leasing office with a pile of cash?
December 1, 2009 5:42 AM PT
The problem with online transactions is how do you prove to someone that they have been paid? There is just no way that can be done. I’ve asked the bank this several times and they have no answer. With a paper check I can show them a copy of the actual check with their signature on the back.
When the creditor is a bank with a local branch, I can make a payment by check at their window on the last day of the due date even on Saturday and have the payment credited on time. With an online payment with 1 day delivery, the delivery can take 5 days with weekends and 6 days with holidays included.
With a paper check, my favorite local small merchant is paid the full amount of the check. With a debit card payment, they are paid less than the amount of the debit. They have to raise prices to make up for the difference.
Paper checks are not ready for the scrap heap yet.
December 1, 2009 5:51 AM PT
Oh, and not to be forgotten, with a check, I see the name of the merchant or the check number and clearly know who is paid. The online and debit payment is listed on the statement by the name of the parent company payee or payment processing vendor hired by the payee, and has no visibility as to where the payment was actually made to.
December 1, 2009 6:32 AM PT
No checks? Sorry, but my 15 year old babysitter doesn’t take Paypal or debit cards.
Many merchants don’t accept online bill pay.
And what about the collection plate at church? Do we just drop in prepaid VISA cards? A bit ridiculous, don’t you think?