Would it be a big deal to you if your bank suddenly decided to not send you any more paper checks?
With more payments being done via credit cards, debit cards or over the Web every year, it's not unreasonable to wonder what the endgame is for paper checks. After all, I find it hard to believe that my daughter's generation will be hauling around books of paper to make transactions when she's my age. Andrew Kahr of American Banker has an interesting blog this week on the demise of paper checks in Europe:
I recently asked my bank to send me more blank checks. Instead of the checks, I got an unexpected declaration: "There will be no more checks. You can use electronic payments, or cards."
You might think this has no relevance to you, since I live and bank in Switzerland, rather than the U.S.
But what happens in Europe tends eventually to reach the U.S. For instance, handheld card terminals were ubiquitous in Europe before I saw any in the U.S.
Kahr goes on to explore reasons why American banks have held on to paper checks while their European counterparts are moving on, the most persuasive of which is this one:
Could the many billions in annual overdraft fees be a significant reason? Recent regulatory changes make it easier to impose such fees on checks than on electronic payments.
I think Kahr has hit the nail on the head here. Customers may have to opt in to get charged for overdrafting their account with an ill-conceived debit card transaction, but there's no such rule for checks. As long as banks can make money off bounced-check fees, paper checks are here to stay.
But if bounced check fees dried up, I could easily see banks charging a fee for paper check-writing privileges, especially in the brave new world of unfree checking we'll likely see if debit interchange reform goes through. As Kahr points out, paper checks are more expensive to process than debit card transactions or electronic payments.
What do you think? Would you pay to write paper checks, or could you find a way around the checkbook?