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What’s next for the Check?

Strategically Speaking
Apr 4, 2012

Milton King Author: Milton King,

Those of you that have read my blog postings before know that I like to look at a historical view of the topic at hand.  In this case it is the check.  I have to admit, this research yielded some surprises for me too.

Why the historical perspective?  Well, to understand where something is going, it helps to understand where it has been.  The “death of the check” has been around the corner for decades.  Yet the check is still here.  Considering it has survived for over 2000 years, what made us think this time would be any different?

The early forms of what we know as the check (cheque) date back to 321 BC.  

According to Wikipedia - In India, during the Mauryan period (from 321 to 185 BC), a commercial instrument called adesha was in use, which was an order on a banker desiring him to pay the money of the note to a third person.

The Adesha sounds an awful lot like what we would call a check today.  What’s interesting is there are examples of check-like instruments being used all over the world in every century.  It appears to be a natural part of the maturation of any economy.

What we might call the “Modern Era” of the check dates back to around 1770, where the informal exchange of checks took place between London banks. Clerks of each bank visited all the other banks to exchange checks, whilst keeping a tally of balances between them until they settled with each other.

The 1800’s noted the introduction of the pre-printed checks, check books and wide acceptance and usage.  The 1950’s brought in MICR and the use of automation to enhance the exchange process.  Then 2004 was the year of the Check 21 Act.

2004 moved the focus from processing the checks to capturing them.  How do we get as close to the consumer as possible?  The answers:

  • Branch Capture
  • Teller Capture
  • Image ATM
  • Smart Phones
  • Home Capture

With 24 billion checks still in circulation we still have to ask “what is next.”  We clearly can’t ignore 24 billion “orders on a banker desiring him to pay the money of the note to a third person.” in hopes they will go away.

Some possible solutions of the future:

  • Write a virtual check on your smart phone and text it to the recipient. 
  • Write a virtual check on your smart phone and text it to an ATM for deposit.
  • A drive-through that scans your phone, similar to SpeedPass (a service that allows you to quickly pay tolls; for those of you who do not live in Toll Road areas)
    • You could do your entire transaction in seconds.
  • A virtual checkbook on your phone that positions you to take advantage of all of the above and log it in your accounting program.
    • This would be great for small businesses.

Oddly enough, had you asked a group of Check-Professionals the “what’s next” question 15 years ago they would have said things like:

  • Electronic presentment   
  • Scanning at a business     
  • Scanning at the POP          
  • Teller Scanning         
  • The elimination of the paper check

They wouldn’t have considered large-scale use of image ATMs or smartphones.  They would have frowned at the thought of the consumer doing the scanning.  In fact there are many of you who are still frowning at it.

The point being, just 15 years ago much of what we were doing today was unthinkable.  So, if history is any indication of the future, the future list we create today is probably aiming low.

Whatever the new technology ultimately brings us; it is safe to say, that after 2000 years, the check will still be a part of it.

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