4 ms·

Isn't the use of checks in the USA partly path dependent? They worked fine as long as humans were in the check processing loop. Right now, businesses in the U

• btilly 17y ago
  The transaction costs is a key point in the inertia of the system. I have 2 bank accounts in 2 different banks. If I walk into one bank and want to deposit money in the other I am charged $25. OTOH I can write a check for a trivial amount of overhead. In reality there is a considerable overhead to processing checks. And banks recover it in various ways, including reducing the amount of interest on checking accounts. Similarly every business uses tracking systems for every payment made and received so that they can catch and flag any checks that are cashed which they did not write. This is also not free. But by and large these are so much taken for granted that people aren't even aware of this overhead.
• wmf 17y ago
  In retail checks are not needed thanks to debit cards that have the same transaction cost as checks and are even faster to use than credit cards.