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Why Checks Will Disappear


How often do you write a paper check? A few times a month? Less? Debit cards, online bill-pay, direct deposit, and electronic checking accounts are making the paper check more and more obsolete. And soon, checks will vanish completely.

In Britain, banks are expected to vote today to eliminate paper checks by 2018. Ireland and some Scandinavian countries have already begun phasing out check payments.

Let’s face it: In today’s digital world, checks are slow, cumbersome, and a liability. (Where else can a thief get all of the information he needs to drain your bank account than from the front of any standard check?)

As the UK vote proves, Banks don’t like checks, either. It costs banks an average of $2 to process every single paper check. Even if that check is for $0.97.

The cost of check clearing is why banks can offer perks like free checking or ATM fee reimbursements if you agree to use direct deposit and bill pay; the bank knows it will save money in check clearing fees. And it’s why free online checking accounts like ING Electric Orange (which don’t offer paper checks) can pay interest.

I can’t predict when banks in the United States may start pushing to get rid of checks entirely, but I would bet that the idea is already on their radar. Until then, banks will continue to incentivize electronic payments so that we grow accustomed to saying goodbye to paper checks.

What do you think? Do you still use checks regularly? What for? Do you think we should get rid of them altogether?

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. I went to Eastern Europe and got a chance to speak to some executives at CitiPrague for a school project. When I asked about checks they all laughed and said they hadn’t seen a paper check since the 80’s.

  2. I work in the finance section of a large government entity. We are unable to accept electronic payments, and therefore receive thousands of checks each day.

    It is crazy that I can accept a credit card payment selling a DVD online, but a large institution with 17,000 employees can’t. If society does stop using checks, getting the public sector to conform, will probably be the hardest part.

    -Dan Malone-

    • Dan is spot on: my county property taxes and Federal/state income taxes are the only thing for which I write checks.

  3. We still use checks to pay rent every month, and to pay certain bills because companies are still charging extra fees to pay online (I know!! Come on!).

    When it comes to money transfers between banks, I still like to use checks because Wachovia continues to charge $3.00 to send money out electronically.

    All of that might change, I’m sure, but for now, checks still have a place in my life and many of the people I know still use them too.

    Some businesses we patronize only take cash or check as well.

    Curious to see how the U.S. follows up to this news…

    • These are the reasons I write the occasional check as well–the monthly rent, avoiding the extra fees to pay electronically (utility company), and avoiding fees for external bank transfers.

  4. I pay my rent using a paper check, but that is it! I rent from the owner and I don’t know how it would work to pay her electronically.

  5. My checks are always handy, but not to actually fill out and pay for things. I keep them around because I need to check my bank account information for paying bills online.

    The last time I had to actually write a check was to the repairman who came and fixed our treadmill, and I’m sure if I pressed it they would take a debit or credit card.

  6. Try telling that to the business community. I work for a billing company that receives thousands of payments from individuals and hundreds of different insurance companies every month. I write the electronic interfaces used by some of our payers for sending payments. However, setting up electronic payment for thousands of random companies would be a horrendous undertaking!

    This probably doesn’t apply to individuals as much, but for businesses, the fact is that it is simply easier to just mail a check to the address on the bill than it is to find out account and routing info.

    Until electronic transfer standards become easier (they are NOT for me!) checks will still be here.

    Electronic transfers are just fine to establish when you have regular, set payments between entities. But when you are dealing with tons of irregular payments from a lot of different sources, electronic payments become very difficult to manage.

  7. Mordechai Grinhute says:

    Paper check is not only costly, it’s also not safe to use

    your personal information, account ID with your signature can be use by con artist

    Electronic checking accounts has similar problems

    According to Nilson Report In 2003 check fraud exceeded $20 billion per year in US, up from $12 billion in 1996 and $5 billion in 1993.

    some estimated in 2008 check fraud exceeded $50 billion per year in US alone

    I submitted a Patent application to USPTO regarding such issue

    my patent pending features a new secure bank account, process electronically and eliminates paper and electronic check account frauds.

    Should anyone be interested, I can send a copy of the patent application and detail how Banks can implement and benefit from the invention.

    Apropos.. Landlords can use such secure bank account to receive rent payments

  8. I do most of my weekly food shopping at my local co-op. They accept debit and credit cards, but they charge a $0.25 and $0.50 fee respectively to help offset the fees the banks charge them. As of now, the banks don’t charge them for paper checks, and so they don’t pass any such fees on to us co-op member shoppers. For that reason, I still use a paper check at least once or twice a week.

  9. Betsy Ross says:

    Sorry, there is more fraud and identity theft with electronic banking than with paper. And we shouldn’t be concerned with the rest of the world and what they do, since it is clear the world is currently a mess. Paper checks require a signature, and also a picture ID whereas electronic banking does not and that says a lot about the potential for fraud.

    And this is in order to make us a currency less economy, and is breaking the backs of Americans with all the profiteers now in those electronic transactions which cost far more than checks and check processing ever did – and provided more jobs.

  10. Betsy Ross says:

    And it isn’t simply “the elderly” that feel this way either, paper checks are safer and more secure than electronic banking anyday.

  11. checks are not slow unless you mail them. Checks at my bank usually clear in two days. I use my check registry and balance my checkbook. Oh yeah, I’m 18. I use checks for everything except online purchases. I use checks at electronic stores too. For online stores, i use pre-paid debit cards.

    I don’t qualify for credit cards any ways. :p
    bye