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Old Apr 27, 2013, 10:16 AM   #1
vrDrew
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A Modest Proposal: No More Checks (Retail)

Throughout my career, I've had very little first-hand experience in the retail end of business. So I was a little surprised to learn that a) many businesses still take checks from retail customers and b) the costs of continuing this policy seem far out of proportion to any benefits.

Which brings up the question: Why don't businesses en masse announce that as of XYZ date they won't accept checks as payment?

Pretty much everyone has a debit card these days, if not a whole wallet full of credit cards. And for those luddites who eschew the banking system, there is still good old cash (although businesses still get burned with counterfeit bills from time to time.)

I think checks still have a place in business-to-business transactions; and (maybe) in ongoing financial relationships (ie. utilities, mortgage payments, etc.) - although the need for that is fast disappearing too.

Can anyone give me a good reason businesses ought to keep accepting checks these days - I'd be curious to know.
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Old Apr 27, 2013, 10:23 AM   #2
samiwas
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I'm guessing if it was that big of a deal to them or was an insurmountable cost, they would stop. Many places don't accept checks, and many do. I guess it's just a choice how you want to serve your customer.

I still write checks for my car payment (they don't have a card option), health insurance payment (i don't think they have a card option), medical bills, and a couple of other things. But most of it is through debit. I rarely ever use credit cards.
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Old Apr 27, 2013, 10:24 AM   #3
Sydde
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Cards incur some sort of transaction fee, usually a percentage of the sale (3~5% has been common n the past) for credit, debit uses a different scheme IIUC. So far as I know, checks do not cost the payee anything.
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Old Apr 27, 2013, 10:28 AM   #4
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Originally Posted by vrDrew View Post
Throughout my career, I've had very little first-hand experience in the retail end of business. So I was a little surprised to learn that a) many businesses still take checks from retail customers and b) the costs of continuing this policy seem far out of proportion to any benefits.

Which brings up the question: Why don't businesses en masse announce that as of XYZ date they won't accept checks as payment?

Pretty much everyone has a debit card these days, if not a whole wallet full of credit cards. And for those luddites who eschew the banking system, there is still good old cash (although businesses still get burned with counterfeit bills from time to time.)

I think checks still have a place in business-to-business transactions; and (maybe) in ongoing financial relationships (ie. utilities, mortgage payments, etc.) - although the need for that is fast disappearing too.

Can anyone give me a good reason businesses ought to keep accepting checks these days - I'd be curious to know.
Although your point about checks is interesting, a couple of points. I would suggest that for smaller, local businesses, one reason for continuing to take checks is for the convenience of their patrons. An odd and antiquated idea, but local stores actually providing service to their patrons still exists! Granted, it is occurring less and less, but that topic is for discussion in another thread.

For larger retailers, it seems to me there must be some financial benefit or the practice would be discontinued already.

Edit: I was slowly typing while those plagiarists above stole my points!!
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Old Apr 27, 2013, 11:07 AM   #5
vrDrew
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I was slowly typing while those plagiarists above stole my points!!
I know the feeling....

In your post you describe the acceptance of checks as a "service." I'd rather characterize it as a "convenience" provided to a small subset of customers.

But I'd argue that, just as restaurants once provided the "convenience" of letting patrons smoke at the table; the time for this convenience - for retail customers - is drawing to a close.

Lets look at the costs involved with accepting checks:

1) A business either has to go to the expense of installing (and using) an electronic check verification system such as Telecheck. This has fixed costs (a monthly service fee ranging from $5 to $20 per terminal); and a transaction fee (again $0.25 to $0.50 per transaction) plus a percentage of the amount of each check: roughly 1.5%.

OR, it can take the risk accepting checks "unverified" - which can vary wildly, I've seen small businesses (those doing around $100,000 per month) regularly have to write off $1000 or more per month in NSF checks; plus the fees associated with that.

Either way, accepting checks is expensive.

2) Accepting checks is time-consuming. We've all stood behind the elderly lady at the supermarket checkout who, upon being told her groceries come to $52.50, starts rummaging around her purse looking for her checkbook, pen, etc. Then we wait while she laboriously writes out the check, fills in her register. Then we endure her look of shocked indignation when the clerk asks for some form of identification. And then we wait while the clerk types in the necessary data, and wait still further as the electronic portion of the transaction concludes. This process typically takes at least a couple of minutes, and often is the largest single component of the transaction.

Retail labor is expensive, and making every other customer in line wait isn't doing anything for your business either.

3) Accepting checks adds to the store's administrative overhead. Checks need to be endorsed and bundled as part of the individual deposit for each register. They need to be taken promptly to the bank.

Accepting payment from credit or debit cards isn't "free" either. But a) the costs are low, and B) most importantly predictable. If I were to take retail payment in my own business, I'd far rather pay the couple of percent a service like Square charges, than risk possibly hundreds of dollars in losses from a single bad check. Accepting cards lets you spread the cost of doing so fairly across all your customers. Accepting checks forces every customer to pay higher prices because of the actions of a very few bad apples.
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Old Apr 27, 2013, 11:33 AM   #6
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Originally Posted by vrDrew View Post
I know the feeling....

In your post you describe the acceptance of checks as a "service." I'd rather characterize it as a "convenience" provided to a small subset of customers.

But I'd argue that, just as restaurants once provided the "convenience" of letting patrons smoke at the table; the time for this convenience - for retail customers - is drawing to a close.

Lets look at the costs involved with accepting checks:

1) A business either has to go to the expense of installing (and using) an electronic check verification system such as Telecheck. This has fixed costs (a monthly service fee ranging from $5 to $20 per terminal); and a transaction fee (again $0.25 to $0.50 per transaction) plus a percentage of the amount of each check: roughly 1.5%.

OR, it can take the risk accepting checks "unverified" - which can vary wildly, I've seen small businesses (those doing around $100,000 per month) regularly have to write off $1000 or more per month in NSF checks; plus the fees associated with that.

Either way, accepting checks is expensive.

2) Accepting checks is time-consuming. We've all stood behind the elderly lady at the supermarket checkout who, upon being told her groceries come to $52.50, starts rummaging around her purse looking for her checkbook, pen, etc. Then we wait while she laboriously writes out the check, fills in her register. Then we endure her look of shocked indignation when the clerk asks for some form of identification. And then we wait while the clerk types in the necessary data, and wait still further as the electronic portion of the transaction concludes. This process typically takes at least a couple of minutes, and often is the largest single component of the transaction.

Retail labor is expensive, and making every other customer in line wait isn't doing anything for your business either.

3) Accepting checks adds to the store's administrative overhead. Checks need to be endorsed and bundled as part of the individual deposit for each register. They need to be taken promptly to the bank.

Accepting payment from credit or debit cards isn't "free" either. But a) the costs are low, and B) most importantly predictable. If I were to take retail payment in my own business, I'd far rather pay the couple of percent a service like Square charges, than risk possibly hundreds of dollars in losses from a single bad check. Accepting cards lets you spread the cost of doing so fairly across all your customers. Accepting checks forces every customer to pay higher prices because of the actions of a very few bad apples.
While I agree with you and have been there many times behind the elderly people in a way it makes me sit and think about how go go go we are in today's society. I'm at the grocery store, not rushing to a hospital. I can wait. In the whole scheme of things that extra minute or two did in no way make my day any worse.
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Old Apr 27, 2013, 11:37 AM   #7
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I'm sort of going to agree with the OP, but not for any reason he stated.

Rather, as a consumer I don't pay by check anymore as I don't want my name, address, bank account number and routing number all floating around on the same piece of insecure paper. Add: back in the day, people used to joyfully add their SSN and DL numbers as a pre-printed part of the check so they wouldn't have to write them on there. Oh, I harken to those simpler times... LOL

Edited to add that many places that do take checks have systems much more sophisticated than what the OP describes. Many only take checks from pre-approved people, for example. If you're pre-approved, you can either hand a blank check (something I would never do, mind you) to the cashier and he/she inserts it into a special check scanner/printer which takes the check, prints out the right amount, and then scans it in for electronic deposit.

Some places even allow you to punch in your telephone number to pay by check. Now, granted, that's bypassing the actual check-writing process the OP gets into lurid detail over, but it gives an idea of how far "checks" have come.

Last edited by smithrh; Apr 27, 2013 at 11:51 AM. Reason: Additions
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Old Apr 27, 2013, 11:50 AM   #8
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I'm sort of going to agree with the OP, but not for any reason he stated.

Rather, as a consumer I don't pay by check anymore as I don't want my name, address, bank account number and routing number all floating around on the same piece of insecure paper.
Precisely. And, I can attest that identity theft does indeed exist. I use my credit card in situations where there is some chance of an information compromise because it has the most protection. I use my debit card when there is little chance of compromise. I write checks only when there is no alternative, because checks have too much information on them.
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Old Apr 27, 2013, 11:54 AM   #9
VulchR
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Actually it annoys me no end when some companies will not accept electronic payment but will accept a mailed check. As if I have any checks....
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Old Apr 27, 2013, 11:54 AM   #10
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Originally Posted by vrDrew View Post
Retail labor is expensive, and making every other customer in line wait isn't doing anything for your business either.
Expensive to who? No one I know working retail (myself included) is paid anything close to worth a damn ($12+ an hour is doing really well in retail).
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Old Apr 27, 2013, 11:55 AM   #11
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A English speaker cries quietly in the wilderness....Cheques.
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Old Apr 27, 2013, 11:56 AM   #12
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As if I have any checks....
I haven't written a check in over a year.

I wouldn't care one bit if stores stopped accepting them.
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Old Apr 27, 2013, 11:57 AM   #13
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A English speaker cries quietly in the wilderness....Cheques.
Hmm..still can't get used to the UK English pronunciation for filet...
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Old Apr 27, 2013, 12:04 PM   #14
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Originally Posted by vrDrew View Post
Can anyone give me a good reason businesses ought to keep accepting checks these days - I'd be curious to know.
How about a good reason NOT to stop accepting checks?

You don't have to use them, but there's nothing wrong with giving people options.
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Old Apr 27, 2013, 12:11 PM   #15
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People still use checks?
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Old Apr 27, 2013, 12:18 PM   #16
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Hmm..still can't get used to the UK English pronunciation for filet...
In English it's "fillet" the only time you'll see "filet" is in pseudo French restuarants as "Filet Mignon" which is a bit odd because in French filet is quite likely referring to pork.
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Old Apr 27, 2013, 12:18 PM   #17
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People still use checks?
You know very well that they do. So why the post?
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Old Apr 27, 2013, 12:18 PM   #18
malman89
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Tell that to the multiple universities I'm personally aware of, multi-million dollar companies, and endless list of foreign locations that don't take American Express that processing a check is more expensive.
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Old Apr 27, 2013, 12:19 PM   #19
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Precisely. And, I can attest that identity theft does indeed exist. I use my credit card in situations where there is some chance of an information compromise because it has the most protection. I use my debit card when there is little chance of compromise. I write checks only when there is no alternative, because checks have too much information on them.
So card readers don't exist where someone can hack the scanner and get your information?

Most stores now do echecks, they scan it hand it back to you and it only takes seconds.
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Old Apr 27, 2013, 12:23 PM   #20
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So card readers don't exist where someone can hack the scanner and get your information?

Most stores now do echecks, they scan it hand it back to you and it only takes seconds.
If by scanner you mean card reader - then all they have is basic CC info, not coupled with your bank account number and address.

If by scanner you mean the check scanner - yep, another security reason not to use checks.
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Old Apr 27, 2013, 12:27 PM   #21
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How about a good reason NOT to stop accepting checks?
I'll give you an example of one form of payment that, while it has higher marginal costs (like checks), is actually - for some businesses - a good idea.

American Express. Unlike VISA/Mastercard payments, you can't deposit American Express payments directly into your bank account like cash. Instead they become a "receivable" and you wait anywhere from a few days to several weeks to have the amount credited to your account. And Amex typically charges somewhat higher fees than other credit card issuers.

Why then does it make sense for businesses to accept AmEx? Because statistically AmEx can show that their cardholders have generally higher incomes, and more importantly have a higher spending level at each transaction. If the guy paying with MasterCard buys a $18 bottle of wine with dinner, the AmEx guy will buy the $35 bottle. So, in exchange for the convenience of accepting American Express, the business reaps the benefit of higher sales.

I don't think anyone can point to similar data that retail check-writers have a similar higher spending pattern.
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Old Apr 27, 2013, 12:27 PM   #22
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If by scanner you mean card reader - then all they have is basic CC info, not coupled with your bank account number and address.

If by scanner you mean the check scanner - yep, another security reason not to use checks.
There are security risks everywhere, I don't see how a cc is really any more secure than a check. With the right equipment anyone can have what ever data they want out of you.
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Old Apr 27, 2013, 12:30 PM   #23
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There are security risks everywhere, I don't see how a cc is really any more secure than a check. With the right equipment anyone can have what ever data they want out of you.
I'll give you a hint: one is good for full-blown identify theft, and the other is good for maybe a day of purchases that will be refunded quickly.

Much much rather have the latter.
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Old Apr 27, 2013, 12:57 PM   #24
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.....

Can anyone give me a good reason businesses ought to keep accepting checks these days - I'd be curious to know.
I'd have to assume that merchants still find accepting checks brings them business they don't want to lose, even if the cost of accepting checks is more.

As it is, technology is already turning checks (cheques for Peterkro) into a paper version of a debit card anyway
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Old Apr 27, 2013, 01:11 PM   #25
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... there's nothing wrong with giving people options.
This really is the bottom line.

If merchants accept them and some people prefer them, then it really is not a big deal to me.

I can suffer () standing behind one at the checkout register.

First world problem.
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