Say Goodbye to the Check Float
Published October 07, 2004
Jim Blasingame of the Small Business Advocate points out that the check float that so many U.S. consumers (and small businesses) have relied upon will soon be gone. Go for that overdraft protection your bank offers, he says. You may need it by the end of October:
- "...[T]he 'Check Clearing for the 21st Century Act,' or 'Check 21,' was passed, and will go into effect on October 28, 2004.
Although it was not the prime motivation for Check 21, it turns out that one of the by-products is the end of check float as we know it.
Practically speaking, when a customer presents a check for payment to a merchant with Check 21 capability, the amount tendered will be debited from the account at the point of sale, as with an electronic approval of a debit card. In fact, the merchant will likely just hand the check back to the customer after verification.
With Check 21, the days of shopping with checks first and making a deposit later are over.
So if a paper check is basically going to be treated as a debit card, it's easy to see how this icon of our consumer society will join 'float' in the history books. Indeed, one expert predicted that with Check 21, the current movement away from paper checks and toward electronic money, 'will shift into hyperspeed."'
Another goal of Check 21 is processing efficiency. Under the new law, banks won't be required to return cancelled checks. This will mean significant savings for banks, but if you rely on returned checks for record keeping you're going to need a new system."
With no float time left, one of the last major advantages of writing paper checks in the retail environment will be gone. Of course, this shift from paper checks to electronic transactions has been taking place for years --driven by convenience — as this chart, showing in-store transactions in the U.S. shows (via ePayNews.com):
About the Author: Anita Campbell is a trend spotter and futurist for the small business market. She keeps close tabs on the small business market at her weblog, Small Business Trends. Sign up for the free newsletter.
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- Say Goodbye to the Check Float
- Published: October 07, 2004
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- Section: Culture
- Writer: Anita Campbell
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Here in Colorado, most merchants have been doing that for the last year or so. Even getting a tank of gas goes through the dohickey. Then, you sign a receipt (just like a debit card) and they hand you back the check.
Basically, checks are obsolete. Get a debit card. I plan to as well, soon as my wife lets me!
Re your comment:
-- Who the hell writes checks anymore?
According to the chart, apparently 15% of the U.S. population still writes checks in stores, at least as of last year (although even that high a number surprised me).
One place where I still see checks being written is the grocery store. Not often -- but I will occasionally be in the checkout line behind someone writing a check.
i still like cash (imagine that! i'm such a luddite!!).
nothing pisses me off more than having to wait in the 'express' lane while the three people in front of me use their debit cards to buy single items.
I'm the same. And if you give the clerk an exact denomination for the amount of gas you're buying -- $5, $10, or $20, say -- you can usually move ahead of the line.
what's really scaring is seeing a kid/cashier attempt to make change.
when i worked in a store it was back in the late 70's, just before automatic registers...so you had to figure out the change and count it back.
i see kids now who seem to have a hard time just pulling, say, $7.68 from the drawer.
weird.
I think Wal-Mart already does this, because when I've written a check there they run it through somehow and hand it right back to me.
I'm curious, Rodney, why it is that you use only checks and cash? I'm not passing judgment, mind you -- just curious.
Time someone making change versus the time it takes you to sign a receipt for a debit or credit card purchase. At most of the stores I shop at in CO, it makes no difference, unless the printer for the CC receipt is especially slow, or the cashier fails to execute the card process as soon as they hit total. If the cashier is also bagging for you, I'd posit that it's quicker to sign while they're bagging, rather than waiting for them to also make change. IOW, I think using plastic is absolutely no faster or slower than using cash in most cases. Now, checks, on the other hand, slow everyone down. They are, however, excellent bookkeeping tools for those that need to carefully watch what they spend, while they spend it. Someday, we'll have smart credit/debit cards that will be able to display our current balance, as well as recent credits/debits. We're already close with microchip-based smart-pass units that are already in use in many areas. Someday, sooner than the paranoid want, we'll have one single ID/finance card that hosts all the information from all our financial accounts, and we'll choose what service to apply when we make each purchase; and we'll never have to take it out of our pocket (or off our wrist, neck, wherever we choose to wear it). Scary? Sounds good to me.
MasterCard is already in the process of rolling out a contactless payment system using RFID chips.
The RFID chip could be embedded in a credit card, a key fob, or a cell phone. Then all you'd need to do is pass the card, fob or phone near an RFID reader and voila! Your credit card account would be automatically charged for the purchase. No swiping, no signing, no entering a PIN number.
Check out this story about Mastercard's new payment system.
And what if someone steals my phone, card, etc.? They don't even have to authenticate their use of my stuff to steal from me?
BHW, I asked the MasterCard spokesperson your question, and got this fast response:
"Hello Anita,
MasterCard PayPass transactions are just as safe as, if not more safe than, traditional card payment transactions, as the PayPass feature incorporates special security technology to prevent "replay" fraud when a PayPass program is implemented as recommended by MasterCard. MasterCard PayPass also provides more consumer control, since the card doesn't have to leave the hands of the consumer to be swiped by the merchant. Also, MasterCard PayPass provides zero consumer liability in North America, just like all MasterCard payment programs.
Hope this helps."
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When I paid by check for my son's oral surgery last fall, the doctor's office used one of those doo-hickeys to make the transaction right then and there, handing me back my check and a receipt showing the money had been debited from my account at that moment.
So far, that's been my only encounter with the instant check debit thing, but then again, I rarely pay by check at the point of service.