Do you find the fast-paced, ever changing landscape of check processing fascinating? Probably not, but if you stop and consider how much things have changed just in the last 5 years, you might at least find it interesting. I remember vividly my dad sitting at the kitchen table trying to balance the checkbook each month. Inevitably it would involve an argument with my mom because somewhere along the line she added/subtracted wrong or transposed some figures. Dad would flip through all the returned checks to uncover just what caused the problem. Thank goodness those stressful times don’t need to be repeated. The age of Online Banking has given us instant access to our accounts and I would venture to guess that most folks balance their checkbooks without having to wait on the monthly bank statement.
Since the passage of Check 21 legislation in 2004, banks have been clearing checks via images of the original checks instead of the actual checks. This has allowed the Federal Reserve to close 44 of their 45 check processing offices. The sole remaining check processing site is the Cleveland Fed. Concurrently the Atlanta Fed is the sole processing site for electronic payments. I find that fascinating. You don’t??
Here’s a few more (as provided in the 2010 ABA Issue Summary):
- Checks make up 11% of all consumer payments at the point-of-sale. Other payments include cash – 33%; debit cards – 33%; credit cards – 9%; and prepaid cards – 4 percent.
- Some banks process more than a million checks/check images per day, traveling through sorting machines at speeds of up to 60 mph.
- Approximately 18.3 million checks bounced (returned unpaid) in 2006.
- Banks use special magnetic ink on the numbers at the bottom of checks to speed processing and prevent fraud.
On that last note about banks using special magnetic ink – it really is up to you – the business writing the check to make sure that their checks contain the special magnetic ink. This is why it is very important that you either order your checks through your bank’s preferred vendors or if you print your own checks, that you make sure you are using the proper MICR ink as opposed to regular toner.
Things have really changed and the transformation of the landscape is no where near mature.