America: a nation living in the 20th Century

When did you last write a check (cheque)? When did you last receive one?

Although a valid payment mechanism in some countries, it has been phased out in many. Finland stopped using checks in 1993 and Poland in 2006. The Netherlands have taken it a step further. Having banned domestic checks back in 2002, the country will no longer process foreign checks from the start of next year.

These days, in some countries, a check is just a piece of paper. It has no value at all even though, in other countries, it could be worth thousands. This is a reflection of payments developments and maturity. Most countries that don’t accept checks are advanced economies with electronic payment infrastructures that allow real-time payments and more. The countries that accept checks are few and far between and tend to be well behind in infrastructure. In other words, they are legacy economies.

The largest of these legacy economies is America. I only ever get a check from an American. No one else would go near them. America thinks they are advanced as they have remote check deposit after Check 21 legislation passed in 2004. Great. However, it doesn’t work elsewhere.

In the UK, we tried to phase out check usage in 2012. A deadline was set to make checks a thing of the past by 2018 but the hoo-ha that arose meant that we still have checks around today. They will disappear, but not quite yet.

However, unfortunately, it means that when I do get a check from an American client – the only clients who ever issue me with a check – it’s a pain in the arse. And so I got one the other day. It is from an American bank, drawn on their account and written for a five-figure sum. Unfortunately, anything over $10,000 immediately raises the bar for AML. Hence, it has to go through full processing rather than a quick processing of trust. Anything over $10,000 is not trusted and needs to be checked. We must check the check.

Checking the checkers is a bank thing. Some reckon that for every two employees in a bank, a third is there looking over their shoulders checking what they’re doing. Sounds about right.

In the case of a check, an unknown payment system last seen in the last century, my bank gives me this funny look.  What is that? says the teller. An American check, I say with disgust. The teller looks at me like I’m from Planet Zog. A check? he says. American? he asks. Yes, I say. With much dialogue between teller and manager, they finally accept that it is a valid piece of paper they can take as a deposit. My deposit slip is duly stamped: check received. More than $10,000. Wait.

That was on June 14, 2019. And I wait.

A month later, on July 18 to be exact, there are no funds in my account. The money from the check I was dependent on was still not there. I knew it might take up to 20 working days, based upon previous experience, but seriously? A month has passed and no funds. So I call the bank.

Note here that I never call the bank. I do everything on the app. But now I have to call the bank. It takes me five minutes of googling to find their telephone number as the link in their app to call them doesn’t work.

I get through and the first thing is they want a telephone access PIN. I don’t know it as I never call the bank but luckily my guess is right. Then I get into a system that wants my account number and sort number or telephone banking number before I can get through to a human. I look up the numbers and get through. Ten minutes wasted already.

Then I finally find I’m talking to a human, admittedly about 4,000 miles away in a much warmer climate, but at least a human. Well, I thought that until they tell me I have to get through their security system.

Address and post code was easy, but then they ask me to name a regular transaction on my account like a direct debit, and the amount last paid. I have no idea. Sir, you have failed our security system. Goodbye. They hang up.

I’m now angry, and go and check my app for a few transaction details. Armed with this, my account number and sort code, telephone banking number and PIN, googled customer service number, I call back. This time I get through the security system and finally get to ask: where’s the money from the check I deposited on June 14?

Oh, I cannot help you with that sir, says chappie in offshore call centre. You have to call this number.

I get another number, this time in Scotland, and dial it. Luckily I have my numbers and transactions on a jot of paper in front of me and, even luckier, their security clearance system is the same as the one used in the offshore centre. I’m so happy. I got through!

Then I ask the crunch question: where’s the money from the check I deposited on June 14?

Ah, says Mrs Doubtfire. That will take a while as it’s an American check for more than $10,000.

How long is ‘a while’? I ask.

Two months, she says. Most US checks take eight weeks to clear, she continues. You can expect the funds by August 14 before 17:30, she drawls. If you don’t have the funds on August 15, call me back, she offers.

I am stunned and move to twitter to share my shock.

I deposited a USD cheque into my account on June 14. Wondered where funds, so rang them today to find out. An hour later ... expect funds before 17:30 on August 14.#DigitalAge

— Chris Skinner (@Chris_Skinner) July 16, 2019

And got a great set of responses from “here’s a payday loan” to “my bank is using homing pigeons” to send paper payment instructions.

Anyways on August 14 before 17:30, the check funds finally appeared in my account. At an exchange rate of $1 = £1.214. If the funds had been transferred by TransferWise, the exchange rate would have been $1 = £1.195, so that’s not good. The bank just made a tidy sum in exchange rate fees and, to add insult to injury, they charged me £100 to process the check.

So, here’s my plea to all of my American clients. Never send me a check. I realise you are a legacy economy from the last century with infrastructure that cannot support wire transfers and real-time payments, but come on. It’s time to join the 21st century.

From this blog last year:

The cryptocurrency Litecoin processed a single transaction between two users in April 2018 valued at nearly $100 million. The transaction took just over two minutes to process for a cost of $0.40 cents.