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The evolution of the check as a means of payment: a historical survey

Author

Listed:
  • Stephen F. Quinn
  • William Roberds

Abstract

Though checks' popularity is now waning in favor of electronic payments, checks were, for much of the twentieth century, the most widely used noncash payment method in the United States. How did such a relatively inefficient form of payment become so dominant? This article traces the historical evolution of the check, focusing on its relation to complementary and competing payment technologies. ; Originating in the eastern Mediterranean during the first millennium as a convenient form of payment between local merchants, checks became more versatile through the development of negotiability in sixteenth-century Europe. The suppression of banknotes in eighteenth-century England further promoted the use of checks. In the United States, nineteenth-century legislation discouraged other payment methods and eventually led to a nationwide check payment system. In the twentieth century, under the Federal Reserve's leadership, checks expanded rapidly and became the nation's default payment method. ; The authors discuss some persistent historical themes surrounding checks: checks' ease of use, which provides advantages over other payment methods but creates risk to businesses and banks; checks' sophistication, which evolved through centuries of legal precedent and operational experimentation; and checks' high costs relative to other forms of payment. ; Checks' traditional dominance of the U.S. payment system, the authors conclude, resulted from historical happenstances. These events gave the check relative advantages that are only now being overcome by electronic payment technologies.

Suggested Citation

  • Stephen F. Quinn & William Roberds, 2008. "The evolution of the check as a means of payment: a historical survey," Economic Review, Federal Reserve Bank of Atlanta.
  • Handle: RePEc:fip:fedaer:y:2008:n:v.93no.4
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    References listed on IDEAS

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Modernizing the U.S. Payments System: Faster, Cheaper, and more Secure
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2017-07-31 17:50:04

    Citations

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    Cited by:

    1. Philip Gunby & Stephen Hickson, 2018. "Is Cash Dead? Using Economic Concepts To Motivate Learning and Economic Thinking," Working Papers in Economics 18/10, University of Canterbury, Department of Economics and Finance.
    2. Daniel Levy & Avichai Snir, 2017. "Potterian Economics," Working Papers 002-17 JEL Codes: A13, A1, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    3. Dennis Fixler & Kim Zieschang, 2016. "Producing Liquidity," CEPA Working Papers Series WP022016, School of Economics, University of Queensland, Australia.
    4. Francisco José Callado Muñoz & Jana Hromcová & Natalia Utrero González, 2010. "Direct pricing of retail payment methods: Norway vs. US," Working Papers. Serie AD 2010-20, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Gary B. Gorton, 2012. "Some Reflections on the Recent Financial Crisis," NBER Working Papers 18397, National Bureau of Economic Research, Inc.
    6. repec:kap:openec:v:28:y:2017:i:3:d:10.1007_s11079-016-9412-1 is not listed on IDEAS
    7. Jaremski, Matthew & Mathy, Gabrial, 2017. "Looking Back On the Age of Checking in America, 1800-1960," MPRA Paper 78083, University Library of Munich, Germany.
    8. Vânia G. Silva & Esmeralda A. Ramalho & Carlos R. Vieira, 2017. "The Use of Cheques in the European Union: A Cross-Country Analysis," Open Economies Review, Springer, vol. 28(3), pages 581-602, July.

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    Keywords

    Checks;

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