Britain Rings in the Death of the Checkbook

(Dec. 17) -- British authorities have announced plans to phase out checks -- or cheques, as they are known in Britain. The first known British check was written out in 1659, and it now appears all but certain that the final endorsement will be scribbled by 2018 at the latest.

According to European Central Bank figures, the use of checks in Britain has almost halved since 2000, leading the UK Payments Council, which is responsible for the phase-out, to describe check use in Britain as being "in long-term, terminal decline."

In an era of global finance, instant electronic transfers and mobile banking, should this antediluvian form of paper payment disappear from the U.S. too?

They already have in the Netherlands, Bulgaria and Hungary. Poland has seen a 99 percent fall in the number of checks since 2000, and just a tiny fraction of noncash payments in Japan are made by check.

Checks are also in decline in the United States -- but still far from dead. Their use has been falling since the mid-1990s, according to the Federal Reserve, which clocked the rate of decline at about 6.5 percent annually from 2003 to 2006, the last year for which comprehensive figures are available.

But will checks disappear in the U.S. anytime soon? "It would pretty much astonish me," says Carol Kaplan of the American Bankers Association. "It would be a huge change, and there would probably be some people who would revolt."

Ironically, as check use falls off, their relative security as a means of payment is rising. That's a consequence of burgeoning rates of credit and debit card fraud. Few fraudsters these days are drawn to the shrinking realm of checks: the Australian Payments Clearing Association recently released figures showing that as credit and debit card fraud there rises, check fraud accounts for less than 1 cent of every 1,000 Australian dollars.

Still, electronic transfers and payments should have one obvious advantage over checks: speed. But Kaplan says an electronic system has not necessarily made it any easier for customers to track their money. "There is some opaqueness here in the U.S. as to when debit card payments will clear," she says, adding that some debit card transactions clear immediately while others, inexplicably for consumers, "may take a couple of days to be credited."

The only group to come out in force against the British decision are the elderly. Andrew Harrop, head of public policy for older people's charity Help the Aged, says online banking remains difficult for the 6.4 million elderly Britons without access to the Internet, and that many may be forced to store large amounts of cash at home, leaving them vulnerable to theft. The decision to move further toward electronic payment, he says, "will leave millions of older people worrying about how they will manage their finances without cheques." That argument is likely to keep American checks in circulation for decades to come.