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Why Are Checks Still a Thing?

We have a lot of better options, yet we're still sometimes forced to use this 300-year-old technology.

Usually when I write a Why Is This Still a Thing column, I discover that although the technology seems outdated, a better option has never really come along to replace it. Condoms, tampons, shoelaces, and even fax machines are kind of hard to beat for their intended purpose. But today I'm tackling a different beast: the paper check.

The paper check does have a better alternative. Lots of them. You can use PayPal or Venmo or e-transfer from your bank (or about 500 other electronic systems) to transfer money to another entity without ever having to put pen to paper, place a check it in an envelope, lick a stamp, and mail it like it's fucking 1847.


Yet my landlord, and hundreds of businesses across the US, still insist on using paper checks.

"They're still a major form and a favorite form of doing business," Larry Schweikart, a banking and business historian at the University of Dayton, told me over the phone. "I personally like doing business with checks."

Schweikart told me checks were originally born out of convenience. In the 1700s, they were used in England and Scotland as an alternative to carrying large, heavy quantities of gold and silver around the countryside. The problem back then was with clearing: being able to confirm that someone else had the money they had scrawled on the paper check. So most people just used banknotes instead (like cash but issued by individual banks).

"Between 1890 to about 1930 or so is when you start to see a lot of checks making an appearance," Schweikart said. "Part of the reason for that is the mobility of Americans. With steam power for trains and steam ships, you didn't want to send big bundles of money on far journeys, so now checks became a very personalized bill of exchange."

It also marked the emergence of the clearing house, an answer to the problem of confirming whether a check was good. Before the Civil War, clearing houses began to crop up in every major city. At the end of each day, tellers would go to the clearing house with stacks of banknotes from different financial institutions. Each teller could then exchange the banknotes for notes from their own institution, Schweikart explained.


Eventually, this process was done by mail instead of in person, but it paved the way for personal checks. Along with banknotes, tellers could exchange checks marked with routing numbers that indicated from which bank and account number the money would be drawn, which is still how it works today.

"Once you had the clearing in place, bankers became increasingly willing to accept checks and that made people more willing to pay with checks," Schweikart said.

That's all well and good if you're worried about sending a bundle of cash on a steamboat to England, but why the hell are we still using this technology 100 years later when the internet has erased all need for such a system—and replaced it with much more convenient, fast, and efficient systems?

Well, we aren't, really. In 2012, the most recent numbers I could find, just 15 percent of all noncash payments in the US were issued via checks, according to the Federal Reserve. That's down from 2003, when 46 percent of noncash payments were checks. They're starting to fade away, but a few sections of the population cling to the old paper technology.

"Many people, probably many of them over 40, still think of checks as being a paper record that offers some actual proof that a bill was paid," Howard Bodenhorn, an economics historian at Clemson University, told me via email. "A friend of mine—a highly educated man in his early 50s—said that he owns some old gold and silver coins because he wants to have some 'real' money on hand when the machines take over. There was a certain amount of tongue-in-cheek to that comment, but I could tell from his tone that there was a degree of sincere concern and distrust as well."


It seems the check is largely kept alive by older generations. A 2013 Pew Research survey found that while 54 percent of 18-29 year olds in the US bank on their phone, only 40 percent of people 30-49 do. For those over 65, only 14 percent said they bank on their phone. In fact a majority of people over 65 (53 percent) said they don't do any online banking at all. While the number of people banking on their phones has almost certainly grown overall since 2013, it's unlikely the demographics have changed significantly. The shift is still coming from the younger generations.

While older generations might feel more secure with the comfort of a physical record, many younger people find checks annoying and inefficient. You have to pay to get a stack of them, you can run out unexpectedly, and you have to wait for the recipient to cash the check before the money leaves your account. Plus they're very susceptible to fraud: a survey from the Association for Financial Professionals found that 77 percent of all attempted or actual financial fraud in 2014 was committed through checks, compared to debit, credit, or wires. But Schweikart laughed at the notion that online banking was any more secure.

"Really? Really? You're going to tell me this after incredible hacks have gone on? Personally, I would say a check is far superior," he said.

He also noted that for himself, and many of his peers, having a physical, reliable status on your funds in your back pocket trumps any convenience factor. Checkbooks never go offline. Checkbooks still work even if you are travelling and don't require wifi. But he conceded that, eventually, checks will fade away completely.

"They've been around now for about 300 years," Schweikart said. "But, like anything, they'll go away."

Until then, I'm just going to have to suck it up and pay my landlord the old fashioned way. But at least I can pay for pizza with a flick of my finger.