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The History of Checks Around the Globe

posted 31 Oct 2010, 11:22 by Sam Mbale

Paper checks have been around for many centuries and played
an important part in the development of the financial
industry. Even though they are almost as old as cash itself,
personal checks remain one of the most-used ways to pay.
That's despite the continued growth of electronic payments
and mobile banking.

You can expect the use of checks to remain a reliable
payment option because of the impact they've had on the
history of the world.

The Emergence of the Paper Check:

The earliest forms of checks can be traced back to the
beginning of the banking system itself. It's believed that
the people of the Ancient Roman Empire  were the first to
use what could be considered a paper check. That happened
sometime around the first century B.C.

Other cultures had their own versions of checks.

During the 3rd Century A.D. the Persian Empire used letters
of credit known as chak. The word is referred to in a number
of Arabic documents. Muslim traders used a version of a check
system in the 9th century and the Knights of Templar
introduced another version of checks used by Christian
pilgrims taking journeys to the Holy Land or across Europe
between the years 1118 and 1307.

All of these check systems allowed merchants and travelers
the ability to transfer large sums of money without carrying
gold and silver coins with them. This could obviously be a
physical burden, and there was also the possibility of
getting robbed.

It is believed the first nation to widely use checks as a
form of payment instead of a means of transferring funds was
Holland in the late 1500s. The use of checks spread across
Europe from there.

The Paper Check Get Personal:

England began replacing handwritten checks (or cheques as
they are called in the U.K.) with printed paper forms.

In 1811, the Commercial Bank of Scotland was the first to
make personal checks with an account holder's name printed
on the forms. Soon after - the Bank of England began binding
and stitching checks into sets. That is how the first
checkbooks came to be.

Checks made their way to America a bit later in history.
It's believed the first American to use checks was a
businessman who mortgaged land to a fund in 1681 and wrote
checks against it.

Modern Day Checks:

The modern age brought some big changes and the beginning of
some competition for personal checks.

In 1959, the MICR code was developed in the United States.
Magnetic ink character recognition let banks and credit
unions read routing and account numbers using special
machines. It is similar to the way a tape deck plays back
audio from the magnetic tape on a cassette. By the early
sixties, MICR codes were used on checks all over the U.S.

The '50s also brought about the first charge card with the
Diner's Club Card, and the first ATM or automated teller
machine entered the scene in 1967.

Personal checks were being used so often in the U.S.
Concerns arose in the 1960s that the volume of checks in the
U.S. would be too much to control. Automated Clearing House
payment, or ACH, brought about conveniences we take
advantage of all the time, such as automatic bill pay and
direct deposit.

Checks are still a large part of the.S. economy. A study in
1979 revealed that more than 85% of all non-cash retail
payments were made by check.  However, credit and debit card
use increased through the 1980s and 1990s, and electronic
payments as a whole outnumbered check payments for the first
time in 2001 (according to the Federal Reserve).

In 2004, lawmakers in Washington D.C. passed the Check
Clearing Act for the 21st Century also known as Check 21.
The law allows merchants and financial institutions to
create digital versions of personal checks called substitute

Check 21 eliminated the need for multiple individuals to
physically handle a paper check. That made the check
clearing  process much faster and far more efficient.

The Future of Checks:

Checks have been a big contributor to the evolution of the
financial industry for the past five centuries. While recent
technology appears to make the use of personal checks less
necessary, there are still many people who use their
checkbook every day.

A recent study indicates 67% of Americans say they write at
least 10 personal checks every month.

These days, you can order personal checks online and even
choose check designs that fit your personality. Options at
Check Advantage include Nature Checks, Wildlife Checks and
Fun and Games Checks.

Mobile banking has become a very attractive option when it
comes to purchasing goods and paying bills. People can use
their cell phones to make financial transactions. Quite a
few banks have created programs for smartphones allowing
their customers to deposit checks for virtually anywhere.
All a user has to do is snap a picture of the check's front
and back, enter the amount and send it to their bank or
credit union.

There may be a final chapter in the story of checks around
the world, but for the near future they will remain an
option for everyone.

About the Author:

Kasey Steinbrinck writes about personal finance and ways you
can save through Check Advantage. Read more of his writing
today at