US banks allowed to resolve checks electronically

[Onan the Clumsy]

I heard an article on the radio yesterday that President Bush just signed a law saying US banks did not need to have the original check returned to them as part of the resolution process. They can now do it by digital imaging.

This caught my attention for obvious reasons and they then expanded the article with a bloke who ran a Part 135 operation and another who ran a flight school. They both pointed out how it will be that bit more dificult to build hours now.

[Zoner]

I went to the pet food store yesterday and wrote a check. The clerk ran it through a machine and handed it back to me. I started to tell her it really was good (thinking it had failed the test) and she told me not to fret, that the amount would be taken from my checking account automagically and I get to keep the check. Sure enough I checked when I got home and the amount had been debited. So much for writing checks and waiting for them to clear!

[Backwater]

For more background on this technology look up www.rdmcorp.com
This company is a pioneer in this field. Feel free to buy their stock (listed as RC.T - that's RC on the Toronto stock exchange)

[PAXboy]

This process has existed in Europe for nearly ten years - with a slight differance.

We have used a separate plastic card to initiate the process of funds transfer. The check book is now rarely used (certainly in Germany and the UK, of which I have direct experience) and the card is treated as if it were a credit card but is called a debit card, as the funds are taken immediately.

Three years ago, I purchased a car with this method. The funds were available in my checking account. At the garage, I present the debit card. Due to the high value, the card handling device automatically triggered a telephone call from the bank's handling centre to me. I verified my identify and the transaction was complete. Other than the verification, it was the same process as if I had been to the supermarket.

In the UK, we stopped passing checks from bank to bank (also) more than ten years ago. The original check stays in the bank where it was presented (either for cash, or deposited by a company/person) and the check is 'read' electronically and the information sent digitally between computers.

When I went to live in Germany, in 1998 for a period of 18 months, I was not issued with a check book at all. Everything was electronic. I was given checks only when I requested them but the bank was right - I hardly used them. When buying things mail-order, for example, you give them your bank account number and bank id code and they would then have signed permission to take the money.

It works fine.

Onan: Why will it "be that bit more dificult to build hours now."??

[TR4A]

We have used a separate plastic card to initiate the process of funds transfer.

That is a Debit card.

What they are referring to is writing a paper check that now turns into a (POS) Point of Sale transaction just like a debit card.

[PAXboy]

Eeer but if you have a debit card - why develop and install new technology to duplicate the process? Or have I missed something?????

[Zoner]

PAXboy: Many people write checks knowing that it takes several days for the money to be removed from their accounts. I do it because my checking account earns interest. The merchants want the money to move faster so they have devloped this means to do so. If the merchants and the banks no longer have to send checks to the Federal Reserve bank to clear, they will no longer need the fleet of Lears and other small planes that are now used to move the checks. Flying checks (low pay, lots of night & IMC) has been a traditional way to build time while waiting on that dream job.

[yggorf]

Seems to me that some countries need to learn about modern banking. Living part time in Italy and part time in Belgium, I have not used a check in years. Don't even bother to have a check book... The European Monetary Union does have its advantages...

[BrightonGirl]

Paxboy, there's another reason why some people (like me) like to use paper checks -- in addition to the debit card.

If I ever want to prove to a company that I made a payment, if I've used a debit card I would have to send a copy of my checking account statement showing the debit. But I don't like the idea of sending someone a statement that shows what else I do with my money, and how much or how little I may keep in that account. If I use a paper check, which I get back with my monthly statement after it's been paid on, then I can send them a copy, front and back, of that one piece of paper.

Some banks in the U.S., like mine, return your "cancelled" checks to you with your statement. Others send you pages of the microfiche copies -- sometimes with the option to also get the checks themseves for an additional monthly fee.

[edited for spelling and to add the last paragraph]

[PAXboy]

B.Girl: OK, I take the point about easy proof of payment and that can be helpful. With e-banking, it is true that one have to mask off the part of the statement that you do not want them to see, whilst you photocopy it.

In the UK, we also used to have cancelled checks sent back to us but this stopped more than 15 years ago. The main reason was to stop the truck loads of paper criss-crossing the UK every day. When a bank receive a check now - they keep it on their premises and it is handled electronically from then on.

The issue about clearing delay is still something that some folk like to rely upon. I reckon that the sooner the money is out of my account - the better - so that I cannot spend it again!

Zoner - thanks for the info regarding hours building.