Checks continue to dominate the market for noncash retail payments in the United States. Each year, U.S. residents write between 65 billion and 70 billion checks, an average of one check per business day per resident. This dependence on checks is unique among developed countries. It is also extremely costly: by switching from checks to other forms of payment, U.S. residents would save between $60 billion and $100 billion dollars per year.
Why do checks continue to see such wide use within the United States? Economists’ explanations have focused on check “float,” which is the interest earned by a check writer between the time a check is received as payment and the time the payment is settled. This article explains how check float arises within the U.S. payment system and how float can discourage the adoption of other types of payment. The authors also consider several proposals for reforming the U.S. payment system. While these proposals hold some promise, they are also subject to criticisms. The authors conclude that over the near future, policymakers will need to weigh the drawbacks of these proposals against the benefits of a faster transition to a more efficient payment system
posted on November 18, 2000 02:58:17 PM
Tc, What part of this hangs on the paper trail dependence? We tend to still want written proof of everything we do. A paperless society is, IMO, a total pipedream.
In my job as MIS manager of a health clinic, we print out records on a daily basis, even though our system is backed up daily and this could be printed whenever needed. What a large waste of trees.
[ edited by tc61380 on Nov 17, 2000 08:26 AM ]