I had some friends in college that had a roommate on an exchange program from Norway, and when they explained to him that we used the moral equivalent of IOUs scribbled on sheets of paper to do a majority of our finance, he thought they must have been making fun of him (as in, telling him things about the US that are false so that he'll make a fool out of himself; to be clear: they did not do that to him).
We draw our names in functionally illegible ways on legal documents as authentication, even though we've known it's a broken system for hundreds of years.
Part of the problem is that checks became "free" some years ago but all other alternatives charge fees. Rent is one of the biggest demands for checks, as most landlords don't want to pay Visa or Mastercard (or Paypal or Square or Mint) a percentage of thousands of dollars a month.
Part of the problem is that checks became "free" some years ago but all other alternatives charge fees.
What economic force keeps the checks "free" and charge fees on the more efficient solutions?
Checks were phased out here exactly because it's expensive and labor-intensive to process checks instead of wire transfers that have been automated for decades. It's the same reason nobody goes to a physical bank anymore (except old people): it costs a lot to do anything over the counter, be it withdrawing cash, paying bills, or... cashing checks :) You can do that free over internet. Usage of cash is going down as well but I think cash is fundamental enough that it will never disappear, though.
Wire transfers are free here and can be initiated thru internet banking and be completed the following banking day. Before internet, we had wire transfer machines, similar to ATMs. Debit cards don't cost anything either (some banks charge a yearly fee, similarly to some credit cards). It would probably cost tens of euros to cash a check here, and rightly so given the amount of labour.
Wire transfers are good. You can even buy from internet shops without a credit/debit card if they support a scheme where you make a verified wire transfer through your bank's internet service, and many shops do. The shops get online verification from my internet bank that the wire transfer has been made, so the payment is completed immediately and the shops just ship you the good.
I feel like this comment was missing the punchline; are you saying that in other countries (where, at least in Norway, apparently even rent is not paid with IOUs scribbled on sheets of paper) checks cost as much as bank transfers, or that bank transfers are free?
(Also, FWIW, in many countries in Europe two-factor authentication is incredibly common, if not expected or even legally required; it is my understanding from some business deals I was a part of that Germany, in particular, is quite the stickler on this front.)
Cheques are not secure. One well known scam is to order something (imagine for £2000), then overpay by cheque (say £10000). You call the seller, and explain the mistake. You say "Wait for the cheque to clear. When you have the funds could you transfer the extra money (£8000) to our account / bank transfer / etc?". The victim assumes that once the cheque has cleared the money is theirs and it's legit, they don't realise that a bank can (and will) claw-back the money from forged cheques.
The victim is down the product, and £8000.
The scammer has the product, and £8000. And because they used other means of money tranfer there's no way of getting the money back.
This is now the second comment I have received on this thread that somehow seems to feel the need to point out that checks are insecure, when in fact a) that is obvious and b) I personally abhore checks (and thereby need no convincing of their ineptitude), and refuse to use them for anything I have control over (including paying contractors: if you require me to send you a check you will not be hired). I am highly confused by this, as my contribution to this thread was "funny anecdote that backs up someone else's comment about how people outside the US realize checks are stupid".
Signature forging has been an ignored issue for ages.
In the US, most banks will subsidize the $15-ish for a box of checks out of the interest earned from the money in your account. Likewise, paying the payee is also subsidized by the interest you don't receive. So Americans see checks as a way to move money without fees.
Check fraud is still a big issue, and I'm very surprised that no other payment processing company has figured out how to hide fees from customers in unpaid interest.
Again: you are preaching to the choir about checks not being secure; I personally refuse to use them for numerous reasons, this being one (others include the variable delay, the risk of losing the slip, and the increased paperwork due to having to file 1099-MISC).
As for an alternative payment processing company that supports transferring money for free: if you use your PayPal balance to transfer money for a purpose that cannot be disputed (such as "I admit that I owe Bob money, and this is my payback"), they do the transfer for free.
