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Will checks become obsolete?


Checking Out: What's the Future of Checks in the 21st Century?

Check writers -- both old and young -- will see their favorite bill-paying option slip away as businesses stop accepting checks altogether. Airlines, grocery stores and retailers have all begun jumping on the bandwagon, leaving the days of the checkbook in the dust.

The trend isn't limited to the private sector, either; both the United States and the United Kingdom are shifting away from paper checks, too (or cheques, as Brits like to say). In the U.S., for example, food assistance offered through the Supplemental Nutrition Assistance Program (SNAP) is now delivered 100 percent electronically, and the paper coupons known as food stamps are a thing of the past.

The country as a whole received a big nudge in 2004 when the Check Clearing for the 21st Century Act (more commonly called Check 21) went into effect. Basically, banks no longer have to retain original checks; instead, they can now keep electronically stored images of checks, which can be dealt with in a much timelier and cheaper fashion. Businesses can also opt to instantly convert customer checks in order to complete electronic fund transfers, bypassing the inherent hassles that come with processing checks.

The U.K., on the other hand, is already devising a much wider-sweeping front-end approach. The current plan is to spend the coming years devising practical alternative payment methods for those lingering scenarios where check writing is still commonplace and. Pending several incremental reviews, check writing in the U.K. is currently slated for a permanent moratorium in 2018. Other countries have already seen the use of paper checks fall by the wayside.

But here and now, it's not just consumer-written or government-issued checks that are getting the ax. For example, more businesses are cutting out physical payroll checks and giving employees two options: direct deposit or prepaid debit cards. The exact details vary between companies and locations (often governed by state laws), but employees who're still clinging enthusiastically to the idea of paper payroll checks sometimes have fallback options, such as specifically requesting paper paychecks each pay period.

Perhaps the real question though, is how long we'll continue referring to them as checking accounts, even as the actual checks fade into memory. For more about the banking business and how to leverage it to your advantage, visit the links on the next page.