Outdated Checks

JERUSALEM — Great Britain might phase-out checks in the next several years:

The board of the UK Payments Council, which oversees payments strategy, is meeting to discuss whether the cheque clearing system could end by 2018.

Cheques, first written 350 years ago, are widely regarded by experts as being in terminal decline.

However, the failure to find a suitable replacement has meant no date has yet been set for the system to end.

Not only are checks in danger, printed money itself might become extinct. This worries me for two reasons: an increased cost to the consumer, and less anonymity in general.

When people pay with a credit or debit card, roughly three percent of the purchase price goes to the issuer of the piece of plastic. (Think of it as a “service” or “convenience” fee, but it’s really just an ingenious way for banks to generate a lot of profit because the cost to process the transaction is essentially zero.)

As a result, business frequently raise their prices to pass along that cost to the consumer. For example, I once bought a girlfriend here flowers at a small kiosk with my Bank Leumi debit card because I had forgotten to bring cash. The owner simply told me: “Five shekels (roughly one dollar) more.” Imagine this exchange occurring in every sale throughout the world. If checks no longer exist and a suitable alternative is not found, then a reliance on plastic would lead to a general increase in prices.

Still, as the article mentions, banks are looking at electronic means including mobile phones through which purchasing can occur. While the cost to perform the transaction would be next to nothing, private commerce would no longer be anonymous. There would always be a digital, paper trail.

Obviously, I do not depend on cash as a means to buy drugs, sell them, or engage in any nefarious activities like organized crime, but I do not like the idea of the possibility that someone, somewhere could theoretically see every item that I buy and sell as well as possibly have access to my private, financial data. Hackers will always find a way.

If Cellcom, for example, would own my Israeli cell phone, then Cellcom would be responsible for the security of my financial transactions processed through and stored on the device. And if the electronic safeguards prove costly to them, then I might have the cost passed along to me anyway.

Elsewhere: Many companies are fighting the credit-card fees. Good for them!

3 responses to “Outdated Checks

  1. Yeah, this is an unhappy trend. As you note, hackers are omnipresent, and your privacy — your very “identity” is never secure. The day they do away with cash is the day I withdraw from the global economy.

  2. … as if it’s not already easy enough for governments to inflate our currency …

  3. Business can offer cash prices if they want to encourage the cheaper transaction, in the US, this is rarely seen. As a result, I’ll almost always use the CC since I am accumulating points worth 1% off. I might pay cash for 3% off though…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s