Checking Out

Morgan O'Rourke


February 1, 2010

checkThe other day I used the last check in my checkbook. Now normally this wouldn't be notable except that I hadn't used a check in at least six months and had no idea I was down to my last one. Once, not too long ago, this would have been a problem. But today, not so much. These days I pay all of my bills online and the rest of my purchases are made with credit/debit cards and cash. There is just no need for me to write a check anymore.

I ordered new checks anyway because, well, you never know. And as I placed the order, it occurred to me that this could very well be the last checkbook I'll ever have. After all, it took me the better part of a decade to go through the last batch of checks and considering my current spending habits, it will probably take twice as long, if not longer, to get though this next one. And by then, who knows how we'll be paying for things?

So my new checks will likely be relics of this specific time in my life just as my last batch had an address that I had not lived at for more than five years and a bank name that doesn't even exist anymore due to an ancient merger.

The point is that like cassette tapes, rotary dial telephones and floppy disks before them, personal checks seem destined to become obsolete in my lifetime. British banks even announced that they plan to do away with checks entirely by 2018, citing a drastic drop in check use (3.8 million checks were written in the UK last year, compared to 10.9 million in 1990).

Of course, many people will be reluctant to do away with the check entirely. Advocates for seniors point out that a large portion of those over 65 have never even used the internet, let alone thought about paying for something digitally. Many others think of paper checks as being more secure than electronic payment methods (although, it should be noted that there still is quite a bit of personal information on some check faces).

While these concerns may have some validity, a shift will happen regardless of whether every member of society is ready for it, and the trend seems to be moving away from checks and other tangible forms of currency to something new. What we're really seeing is an evolution of the concept of money. Just as the use of coins took the place of the barter system and paper bills and checks supplanted coins, so will electronic transactions continue to replace paper as our primary form of payment. We see it now in all sorts of ways, from banks that favor ATMs over tellers to online services that allow us to shop without ever touching any actual currency.

What could prove to be an interesting side effect in this evolution of money, however, is how it alters our perception of value. Essentially, money is a representation of goods and services. In the old days, if you traded two chickens for a goat, it was very easy to see the value of the chickens. When money was introduced as a stand-in for a chicken, this value was still apparent since it was only one generation removed from a simple barter.

But as we get further and further away from the origin of this value it is only natural that our perception of money changes. Money that never actually manifests itself as a tangible entity becomes harder to quantify psychologically and, as a result, it is harder to respect the value behind it. Billions of dollars can be put at risk with much less concern for the consequences because we are so removed from what those numbers actually represent.

So while the evolution of money might be progress, we need to remember that just because it cannot be folded, does not mean that it no longer has the same importance. We only need to look at our current recession for proof of what happens when we overlook financial risks.

Perhaps that is why so many investors are turning to a physical asset like gold. It harkens back to a simpler time when value came from something that you could hold. For most of the world, gold is like a shiny, yellow security blanket. And ironically, since the value of gold is essentially arbitrary too, it might be the perfect asset in a post-check world. That is, until our bank information is implanted on microchips in our heads and we can finally pay bills with our minds.

Morgan O’Rourke is editor in chief of Risk Management and director of publications for the Risk & Insurance Management Society, Inc. (RIMS)