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It's an ongoing process. 10s of thousands of jobs were taken out the last two decades by changes to check processing. Check imaging and clearing by image transm

It's an ongoing process. 10s of thousands of jobs were taken out the last two decades by changes to check processing. Check imaging and clearing by image transmission or conversion to ACH, along with more payments being made by credit cards, resulted in shutting down rather large back end operations that were coding, sorting, repairing, transporting, returning, re-presenting, and including paper checks in customer's statements. A check that processed without any irregularities didn't cost much. However, any errors or unusual processing that a check required cost a lot. What is needed to really reduce costs is a payment system that eliminates error and irregularities, or which uses AI to handle them.

larzang 7y ago
> What is needed to really reduce costs is a payment system that eliminates error and irregularities, or which uses AI to handle them. Perhaps some kind of... clearing house, which could be automated? In the US we have a dozen startups for you to send money to your friends. In most of the world you just do a bank transfer. I pay my rent and utilities with ACH, but I know people who still don't have that option and are stuck in the dark ages of checks or credit cards with processing fees. I have accounts with multiple credit unions, and one doesn't permit online ACH transfers and another takes 3+ days to do it. I'm currently trying to consolidate those accounts but even that's a huge hassle. It's nearly 2020 and the form the payroll company my employer uses wants a voided check from me to change where my direct deposits go! I don't have checks and haven't written a personal check in probably 15 years. We keep scratching our heads looking for that magic future tech solution to our problems (AI! AI for everything!) when we actually just need to fix adoption of the freaking 45 year old standardized solutions right in front of us. Checks have always been an almost entirely American aberration and a bad solution on all sides. It took us almost 15 years after Europe to adopt chip cards, and we're still swiping in places and almost nobody requires a pin for security. NFC adoption isn't great either outside affluent areas. We're not lacking new financial solutions, we're lacking proper adoption of the solutions we already have and the rest of the world is happy to use.
- Merrill 7y ago
  US payments is a very complex system - there are around 4900 banks and a similarly large number of non-bank players. Managing change is really hard. Not everyone wants a change. One person's costs are another person's revenues. There are also a lot of managers managing organizations that process fraud, errors, and other irregularities. Costs don't matter if you can charge enough in fees and interest. In the case of chip cards, the US wasn't about to pay for the French smartcard patents. In general, financial technology is a patent thicket and its best to wait 20 years before implementing new ideas unless you have really positive financial case and can be sure you have the IP locked down.
  - simonh 7y ago
    I find it really hard to believe that the costs of those patents would have been higher, to the US economy as a whole and thus citizens in general, than the costs of sticking to the old inefficient, manual systems for 15 to 20 years. I smell politics. I suspect there's also the old argument that standardisation takes regulation, and regulation is evil. Government should stay out of this (oh, btw, Government - can you just pay the next tranche of subsidies directly into the executive bonus account. Thanks!).
    - Merrill 7y ago
      An earlier transition to chip cards may have reduced costs to the US economy as a whole and thus citizens in general. On the other hand, it would have shrunk the size of the credit card business. It's not politics. It's simply self interest of the key players in the business.
    - nybble41 7y ago
      If government had stayed out of it then the cost of patents would not be a factor; the improved system could have been universally adopted and standardized as quickly as it could be reverse-engineered.
      - Merrill 7y ago
paulpauper 7y ago
hmm,,but the us economy and banking sector is also much bigger, paper checks are still popular, and if there are problems a human will still need to review things. The result is that even if some jobs go away due to technology, more jobs total will be create indirectly.
- Merrill 7y ago
  See Figure 1 in https://www.federalreserve.gov/paymentsystems/2018-December-The-Federal-Reserve-Payments-Study.htm https://www.federalreserve.gov/paymentsystems/2018-December-... Checks are down to a third of what they were in 2000. The fastest growing type of non-cash payment is debit card, and a lot of these are chip and PIN.

larzang 7y ago

> What is needed to really reduce costs is a payment system that eliminates error and irregularities, or which uses AI to handle them. Perhaps some kind of... clearing house, which could be automated? In the US we have a dozen startups for you to send money to your friends. In most of the world you just do a bank transfer. I pay my rent and utilities with ACH, but I know people who still don't have that option and are stuck in the dark ages of checks or credit cards with processing fees. I have accounts with multiple credit unions, and one doesn't permit online ACH transfers and another takes 3+ days to do it. I'm currently trying to consolidate those accounts but even that's a huge hassle. It's nearly 2020 and the form the payroll company my employer uses wants a voided check from me to change where my direct deposits go! I don't have checks and haven't written a personal check in probably 15 years. We keep scratching our heads looking for that magic future tech solution to our problems (AI! AI for everything!) when we actually just need to fix adoption of the freaking 45 year old standardized solutions right in front of us. Checks have always been an almost entirely American aberration and a bad solution on all sides. It took us almost 15 years after Europe to adopt chip cards, and we're still swiping in places and almost nobody requires a pin for security. NFC adoption isn't great either outside affluent areas. We're not lacking new financial solutions, we're lacking proper adoption of the solutions we already have and the rest of the world is happy to use.

Merrill 7y ago
US payments is a very complex system - there are around 4900 banks and a similarly large number of non-bank players. Managing change is really hard. Not everyone wants a change. One person's costs are another person's revenues. There are also a lot of managers managing organizations that process fraud, errors, and other irregularities. Costs don't matter if you can charge enough in fees and interest. In the case of chip cards, the US wasn't about to pay for the French smartcard patents. In general, financial technology is a patent thicket and its best to wait 20 years before implementing new ideas unless you have really positive financial case and can be sure you have the IP locked down.
- simonh 7y ago
  I find it really hard to believe that the costs of those patents would have been higher, to the US economy as a whole and thus citizens in general, than the costs of sticking to the old inefficient, manual systems for 15 to 20 years. I smell politics. I suspect there's also the old argument that standardisation takes regulation, and regulation is evil. Government should stay out of this (oh, btw, Government - can you just pay the next tranche of subsidies directly into the executive bonus account. Thanks!).
  - Merrill 7y ago
    An earlier transition to chip cards may have reduced costs to the US economy as a whole and thus citizens in general. On the other hand, it would have shrunk the size of the credit card business. It's not politics. It's simply self interest of the key players in the business.
  - nybble41 7y ago
    If government had stayed out of it then the cost of patents would not be a factor; the improved system could have been universally adopted and standardized as quickly as it could be reverse-engineered.
    - Merrill 7y ago

paulpauper 7y ago

hmm,,but the us economy and banking sector is also much bigger, paper checks are still popular, and if there are problems a human will still need to review things. The result is that even if some jobs go away due to technology, more jobs total will be create indirectly.

Merrill 7y ago
See Figure 1 in https://www.federalreserve.gov/paymentsystems/2018-December-The-Federal-Reserve-Payments-Study.htm https://www.federalreserve.gov/paymentsystems/2018-December-... Checks are down to a third of what they were in 2000. The fastest growing type of non-cash payment is debit card, and a lot of these are chip and PIN.