Here is another change in lifestyles that is happening around us. In the 21st century, what could be more ridiculous than checks? A paper check is a little piece of paper upon with incredibly sensitive information printed in a font from the punch-card era of computing. Anyone can easily steal money from your checking account if he or she can obtain the numbers printed along the bottom edge of your checks.
If you pay by check anywhere, anyone who touches the check has access to the routing and account numbers, they are encoded on the bottom of the check in magnetic ink. It’s called the MICR line. When you pay your mortgage payment, your electric bill, or any other bill by check, a dishonest employee in the company’s mailroom can easily copy the numbers printed along the bottom edge of your checks and then have new checks printed that he or she can use to empty your checking account.
Luckily, paper checks for paying bills are fast disappearing. As genealogists/micro-historians, should we be recording this change in our lives? Our descendants will probably be fascinated that we used paper “I.O.U.s” in the good ol’ days, I.O.U.s that promised payment if given to a bank.
In fact, checks have obvious security problems. Millions of checks are stolen each year, either directly from the postal service or from mailboxes after the mailman has delivered the check. Because of the high theft rate of checks in the mail, the Social Security Administration and thousands of payroll services have switched from issuing checks to direct deposit to payees’ bank accounts.
Unlike electronic deposits and even credit cards, checks entail significant risk, if stolen. Payroll checks and government checks will usually be replaced, if stolen, but personal checks vary widely. Some banks will provide insurance on checks while others do not. The so-called free checking accounts rarely are insured. If a thief steals an uninsured check and cashes it, you lose the money. In contrast, all credit cards in North America and in many other countries are fully insured against theft or fraud. Even better, electronic deposits avoid most of the security issues since thieves normally do not have access to the information required. Electronic payments theoretically could be hijacked, but such crimes are rare. Theft of checks is much easier and far more common.
Checks also depend on trust in a manner not required by other forms of payment. When someone pays by check, the receiving party has to hope that the checking account has sufficient funds to cover payment by the time the check reaches the bank. In effect, writing a check is simply handing someone a note that says, “I’ll gladly pay you Tuesday for a hamburger today.” In some percentage of cases, the check bounces.
In contrast, payment by credit card, debit card, PayPal, Apple Pay, or any other online transaction doesn’t require any trust at all. The receiving party, usually a merchant, receives confirmation from the card holder’s bank within seconds that the funds are available and will be transferred to the recipient’s bank account. In an in-person transaction, all this happens within seconds, typically while the purchaser is still standing in front of the merchant’s employee. Checks never have that level of security for the recipient.
Of course, payment by cash does not require any level of trust at all; but, carrying cash creates all sorts of other security problems. Cash is easily stolen or lost and, if that happens, there is no way to get the money back. If anyone is concerned about security, cash is probably the worst method of making payments simply because of the problems associated with carrying of cash in a pocket or purse.
Several electronic invoicing and payment methods have become very popular in recent years. Your bank’s “pay bills online” gives much faster and more secure results than do paper checks. Apple Pay, Android Pay, Google Wallet, Amazon Payments, PayPal, and even Bitcoins collectively are becoming more and more popular every year and also are replacing paper checks. One thing in common with all of those services is that they require a handheld device or a web browser on a desktop or laptop.
Obviously, not everyone today has a computer, a smartphone, a credit card, or a “pay bills online” bank account. However, the number of people without a modern electronic payment method is dropping rapidly every year and will soon approach zero.
Will paper checks disappear? I believe they will and probably will do so within the next decade. In fact, I would say “good riddance” to checks and checkbooks. I now write fewer than three or four paper checks per year, and I believe millions of others do the same. I pay almost all my bills by debit card, credit card, PayPal, electronic funds payments, or by my bank’s “pay bills online” service. I find those methods to be much safer than paying by check or by cash. I no longer carry a checkbook with me. Also, most payments made to me are done via direct deposit or credit card. I rarely see a paper check any more.
The world is changing rapidly around us in this technology age. Sometimes change is a good thing, sometimes not so good. In this case, the elimination of paper checks strikes me as very good thing.
What do you think?