Warning: this article contains both facts and personal opinions.Here is another change in lifestyles that is happening around us. 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 that promised payment if given to a bank.
In an article on the Wired web site at http://goo.gl/5uzq8, Marcus Wohlsen asks, "In the 21st century, what could be more ridiculous than checks? Little pieces of paper upon which incredibly sensitive information is printed in a font from the punch-card era of computing: sign your name and, voilà, the paper becomes money!"
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. (The Social Security Administration still delivers paper checks to some long-time retirees, but the number is decreasing every year. New applicants for Social Security benefits are not given an option for paper checks; they must accept electronic delivery of funds.)
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. On the other hand, electronic deposits avoid most of the security issues since thieves normally do not have access to the information required. Electronic payment 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. 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, or 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.
In the article in Wired, Marcus Wohlsen describes a new mobile app from WePay that allows independent service providers to invoice their clients directly from their smartphones, thereby avoiding the problems with either cash or checks. Those clients can receive invoices by email or text message. The clients can then click to pay those invoices on the web, using either 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.
The app that Wohlsen describes may be new, but others have had similar electronic invoicing and payment methods for years. PayPal is probably the best known (I have sent invoices by PayPal for years and have been pleased with the results) as do many banks and accounting services. The one thing that differentiates the new WePay app is that it can be entirely cell-phone based. The merchant can send an invoice directly from a smartphone and even receive payment on the phone. Of course, the merchant also can use a tablet computer, a laptop, or a traditional desktop computer if he or she wishes. Wohlsen notes that many small businesses and independent contractors "run their whole business off their iPhones."
You can read Marcus Wohlsen's article at http://goo.gl/5uzq8.
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, electronic funds payments, or by my bank's "pay bills online" service. I find that 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?