ARE CHECKS STILL RELEVANT? WHY I STILL USE CHECKS FOR PAYMENTS
Channel: ZIGGING by Mark Sigg
Date: 2021-08-19

As old school as it is, I still use checks for my payments. Why? Despite all the finance apps, digital payments, and even the rise of cryptocurrency, the use of check books are still relevant simply because no technology has come around to replace it. Sure, we can pay most of our monthly bills (electricity, water, broadband, and insurance) through all the nifty apps available out there. For the traditionalists, banks have modernized the way do their business and you can now do your banking through apps and websites. For the unbanked (especially in third world countries), the rise of alternative and pure digital banks are in widescale use. In the Philippines, there's GCash from Globe Telecom and PayMaya from Smart Communication. In more mature markets such as China, messaging apps such as WeChat has taken on the Superapp status in being able to conduct peer-to-peer payments. The rise of cryptocurrency has even led the to a bundling of traditional use such as bills payment with trading cryptocurrency such as Coins.PH in the Philippines. With all these advancements in technology, why and. how has the paper-based check book remain relevant?

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Let's step back and review the three most common uses of a check book in the past. The first would be for renting an apartment. Locally, condominium unit owners are almost entirely consistent with their requirement that payments must be done via post-dated checks, all neatly written out for the entire duration of the lease contract. While there are places that may agree on other means of payments, the de facto in the Philippines is to pay via post-dated checks. Perhaps this is the single most important reason why you should still have a checking account.

The second instance where you might still need to use checks as a means of payment would be for your downpayments and investments. Yes, investing in stocks, ForEx, commodities, ETF's, UITF's, and Mutual Funds are now doable via banking apps or new trading platforms such as eToro, WeBull, and GoTrade. Through these, you no longer need to write out a check to your stock broker. But what about other investments? Perhaps you're wanting to get started on a new insurance policy or putting in a down payment for a new house/apartment or a car. You wouldn't want to do a direct transfer of funds to your broker or sales agent now would you? You wouldn't want to pay this hefty sum in cash either. It would be most prudent to have a handy check book and  prepare a check as your promise to pay as you go through the contracts and documents relating to your purchase. 

Third, while bills and other routine payments can all be eventually sorted out online, you still have your one-off big transactions that you might be needing to do. Perhaps you have hired an interior designer for your new apartment. Perhaps you've put in an order for raw materials for the home business that you're starting. For whichever purpose, you might find yourself faced with the need to prepare a huge sum for a one-time payment that would be too risky to either pay in case or do a direct payment to a supplier of goods/services that may take some time to fully deliver. In these cases, using checks would be the safest way to go.

Why are checks still relevant and should you open a checking account? Absolutely. To understand this, let's go into the design of a check. A cheque is composed of 4 simple parts: the recipient, the amount, the date, and your signature. Aside from the magic that you can practically write out the amount of money you need like a genie, the other parts of the check make it the safest means to pay. First, while a check may carry hefty sum, it's not as risky as cash because designating the recipient ensures that the payment is only good for the intended recipient which the bank will verify through IDs. That's why you must avoid preparing cheques out to CASH since this is very dangerous. A misplaced check personalized to the recipient is of no relevance to whomever else finds it. Second, a check is only valid starting at the indicated date. So if you've requested goods/services that will take time to fully deliver, a post-dated check gives both you as the buyer and the recipient as the supplier to have a buffer. While the service is being completed, the recipient has something to hold on to as a means of payment. But since it is not cash, the payment is only completed once the check is deposited and cleared, fully consummating the transaction.

Using checks is about increased security and putting a bit of a human side to the transaction. It's not fool-proof but definitely gives the payer some flexibility in case of uncertainty. Until apps can serve this need to escrow random amounts for general use, I think that check books and checking accounts are here to stay.

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