In the children's game, scissors cuts paper. But in the real world of modern finance, it is plastic that has the advantage over paper.
With the explosion in the use of credit and debit cards in the past few years, the need for personal checks dropped off dramatically. Combined with a huge amount of fraud, the end of check guarantee cards and the greater security to business owners provided by a debit card with PIN number, a growing number of local merchants have stopped taking checks completely.
Mark Thomson, owner of Plaza Liquors on Campbell Avenue, did away with accepting checks a year ago. "Merchants that have products that do well on the black market have problems with bad checks," he explained of his decision, believing his business was a particular target because of the easy ability to fence liquor.
"We had major fraud problems with checks between $100 and $500, even though an I.D. was produced. But it, too, was fraudulent. In 2000 they cost us between $3,000 and $5,000. That type of attack on the business was untenable to us and is why I stopped taking them."
At the same time, the use of debit cards has grown in popularity, so it was an easy transition. Plus, Thomson lists another advantage of plastic over paper. "We went to the debit system because [transactions] are 100-percent guaranteed for amounts less than $1,000."
Asked if he thinks his no-check policy has resulted in him losing customers, Thomson thought for a moment and replied, "It is really hard to tell if it has cost us business. Some people may have secretly gone away."
Up the street at La Baguette bakery, owner Norbet Satta doesn't think he has less business since he stopped accepting checks almost two years ago. "People love to use their debit or credit cards," he says, "so I don't think I've lost customers." Plus he was receiving between 15 and 20 bad checks a week during the holiday season. "It got to the point where we had to say 'bye-bye' to checks."
The manager of a Campbell Avenue eatery, who requested anonymity, confirmed the huge problem with bounced checks for his business before he stopped taking them. He added another twist on the tale. "Sometimes customers would come in several days in a row and pay by check. We wouldn't know they were bad until after they had run up a bill of $200."
Bankers understand the problems of bad checks. After all, over 500 million of them are written each year nationwide.
Larry Finuf, Tucson community bank president for Wells Fargo, says his institution does several things to try to cut down on check fraud. It sponsors seminars and holds education programs to alert businesses to the problem. It also offers e-checking, a system that scans a check, verifies there is enough money to cover it, and tells the merchant of any outstanding issues with the account.
Despite that, Finuf agrees that the use of debit cards has risen while businesses acceptance of checks has declined. "It minimizes a businesses risk even more than e-checking," the local banker says.
Bank One also has e-checking, but Vance Miller, its market manager for Tucson and Southern Arizona, doesn't believe fewer businesses are taking checks these days. "Some segments within the small-business community have chosen not to accept checks from a risk standpoint," he says, "but I don't think more businesses aren't taking them. It is only some niches of the business community."
Both bankers agree, however, that there is a growing trend toward the use of plastic, whether debit or credit cards. Bank One alone now processes 4 million debit transactions each month statewide.
While older people may cling to the traditional ways of cash or check to pay for merchandise, Miller points out another important factor for the future of personal finance. "The younger generation," he says, "has no problem with using debit cards."
But banking and business, both men say, is about offering customers choices. So will personal checking eventually disappear, killed off by fraud and the greater use of debit cards? Will we become a checkless society?
Finuf of Wells Fargo is uncertain. "I think checking will decline in use," he says, "and we will continue to evolve toward more electronic financial transactions. But whether checking will disappear or not is hard to say. It all depends upon the consumer acceptance of electronic transactions."
Bank One's Miller is confident that personal checking will continue. "I don't think we'll see an end to it because some people will want to write checks. We must come to a happy median where everyone can get along."
But Plaza Liquor's Thomson won't be going back to accepting checks, or installing an e-checking system. "I won't use it," he says, "because it's a waste of paper and people like the debit system."