A Brief History of Personal Checks
Paper checks have been around for many centuries and played an important part in the development of the financial industry. Even though they are almost as old as cash itself, personal checks remain one of the most-used ways to pay. That's despite the continued growth of electronic payments and mobile banking.
You can expect the use of checks to remain a reliable payment option because of the impact they've had on the history of the world.
The Emergence of the Paper Check:
The earliest forms of checks can be traced back to the beginning of the banking system itself. It's believed that the people of the Ancient Roman Empire were the first to use what could be considered a paper check. That happened sometime around the first century B.C.
Other cultures had their own versions of checks.
During the 3rd Century A.D. the Persian Empire used letters of credit known as chak. The word is referred to in a number of Arabic documents. Muslim traders used a version of a check system in the 9th century and the Knights of Templar introduced another version of checks used by Christian pilgrims taking journeys to the Holy Land or across Europe between the years 1118 and 1307.
All of these check systems allowed merchants and travelers the ability to transfer large sums of money without carrying gold and silver coins with them. This could obviously be a physical burden, and there was also the possibility of getting robbed.
In the late 1500s, it's widely accepted that Holland became the first nation to use checks as a payment method in addition to a way of transferring funds. The use of checks spread across Europe from there.
The Paper Check Get Personal:
England began replacing handwritten checks (or cheques as they are called in the U.K.) with printed paper forms.
The Commercial Bank of Scotland created the first personal checks with a person's name printed on the front. That was in 1811. Soon after - the Bank of England began binding and stitching checks into sets. That is how the first checkbooks came to be.
Checks made their way to America a bit later in history. It's believed the first American to use checks was a businessman who mortgaged land to a fund in 1681 and wrote checks against it.
Modern Day Checks:
Big changes and some serious competition came about for personal checks in the modern age.
In 1959, the MICR code was developed in the United States. Magnetic ink character recognition let banks and credit unions read routing and account numbers using special machines. The process is much like the way a tape player emits audio by reading the magnetic tape on a cassette. By 1963, MICR codes were widely used almost universally around the U.S.
The '50s also brought about the first charge card with the Diner's Club Card, and the first ATM or automated teller machine entered the scene in 1967.
Personal checks were being used so often in the U.S. Concerns arose in the 1960s that the volume of checks in the U.S. would be too much to control. Automated Clearing House payment, or ACH, brought about conveniences we take advantage of all the time, such as automatic bill pay and direct deposit.
Checks are still a large part of the.S. economy. A study in 1979 revealed that more than 85% of all non-cash retail payments were made by check. Credit and debit card usage grew through the '80s and '90s, and electronic payments as a whole surpassed check payments in 2001.
In 2004, lawmakers in Washington D.C. passed legislation known as Check 21 (Check Clearing Act for the 21st Century). Check 21 makes it possible for banks and businesses to use digital images of checks known as a substitute check.
Check 21 eliminated the need for multiple individuals to physically handle a paper check. That made the check clearing process much faster and far more efficient.
The Future of Checks:
Checks have been a big contributor to the evolution of the financial industry for the past five centuries. While recent technology appears to make the use of personal checks less necessary, there are still many people who use their checkbook every day.
A recent study indicates 67% of Americans say they write at least 10 personal checks every month.
These days, you can order personal checks online and even choose check designs that fit your personality. Options at Check Advantage include Nature Checks, Wildlife Checks and Fun and Games Checks.
Mobile banking has become a very attractive option when it comes to purchasing goods and paying bills. Now you can even use a cell phone to make financial transactions. Quite a few banks have created programs for smartphones allowing their customers to deposit checks for virtually anywhere. All a user has to do is snap a picture of the check's front and back, enter the amount and send it to their bank or credit union.
There may be a final chapter in the story of checks around the world, but for the near future they will remain an option for everyone.
About the Author
Kasey Steinbrinck writes about personal finance and ways you can save through Check Advantage. Read more of his writing today at http://blog.checkadvantage.com/
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