Personal Checks Going Electronic?

Bankrate.com recently ran this article about the future of personal banking.

The next time you write a personal check it could be deducted from your account as fast as an ATM withdrawal. Banks and retailers across the nation are ushering in the day when you write a check and it is debited instantly and electronically from your account.

The future of checks as debits will be fed through a device that reads your account number at the bottom of the check. The amount is transferred electronically from your account to the merchant, just as if you had used a debit card. Hundreds of retailers are participating in pilot projects across the U.S. Other tests, conducted by electronic funds network Star Systems, is going on with some of the country's biggest retailers. Sometime this spring, when you write a check at Best Buy, CompUSA, Kmart, Office Max, Sears, Talbot's or ToysRUs, the money will be debited from your account, regardless of which bank you use.

Companies in the payment industry, from retailers to banks and all the businesses in between, welcome the conversion of checks into electronic debits because they expect it to cut costs and fight fraud. Retailers will get their money quicker. "It's going to accelerate the verification process and lessen losses," says Hank Farrar, chief operating officer of Small Value Payments Co. "Merchants lose billions of dollars to fraud. The fact of the matter is, the consumer pays for those losses in the cost of goods and services." Some folks might find record keeping easier. If you report your checkbook lost or stolen, the missing checks won't be usable.

As soon as the tests prove workable and affordable, everyone in the industry expects retailers to adopt the technology quickly. It might not stop at the cash register. Collection agencies, investment brokers and mortgage lenders have expressed interest, says Farrar of Small Value Payments Co. Let's wait and see!


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