Also banking is a hugely complex problem involving two of the hardest things to deal with, money and people.
It's particularly the case where you have a lot of small banks geographically spread out running a variety of legacy systems all of which talk to each other in weird and whacky ways.
I'm surprised kiting still works though.
I'll wait! 'Cause if it got even remotely adopted and mainstream, I'll be waiting... for years or decades.... before I can ever hope to make a single transaction.
Yup. Nothing like Satoshi's Glorious Blockchain and its blazing fast 4 transaction per second reference implementation that is Bitcoin.
Example: https://en.wikipedia.org/wiki/Paycheck says
”A paycheck, also spelled pay check or pay cheque, is traditionally a paper document (a cheque) issued by an employer to pay an employee for services rendered. In recent times, the physical paycheck has been increasingly replaced by electronic direct deposit
[…]
A salary statement, commonly called a payslip, pay stub, paystub, pay advice, or sometimes paycheck stub or wage slip, is a document that an employee receives either as a notice that the direct deposit transaction has gone through or that is attached to the paycheck.“
The French and Swedish versions (sorry, can’t check the other ones due to language issues) of that page only discuss the pay slip, I think because “recent times” started half a century ago in those countries.
I think it also is telling that that page doesn’t even have a German or Dutch version linked to it, while https://de.wikipedia.org/wiki/Entgeltabrechnung (German for ‘pay slip’) exists
It might be interesting for a poll: when did you last receive a physical pay check, and in which country?
I just used to walk over the road to my Natwast branch and deposit it at lunch time.
For the majority of professional Americans, we receive our pay via direct deposit so we never see a pay check. The working lower-class still uses pay checks since they're paid on a weekly basis. I think when margins are thinner, it's cheaper to write checks than to set up direct deposit.
How does that follow? People make electronic payments of a few dollars millions of times a day, with the banks still somehow making money on it. Now, paying a few hundred a week isn’t feasible?
”I think when margins are thinner, it's cheaper to write checks than to set up direct deposit.”
From what I know about automation and American banks, I (perhaps too cynically) think it’s less about being cheaper than about being more profitable for the banks.
How would maintaining the infrastructure to move pieces of paper around, check them for validity, moving the necessary cash around, etc. be cheaper than scaling an existing digital system to handle 10% or 20% more customers?
It seems to me that the obvious reasons for not using a bank account are not the ones people mention in these threads. The ones that occur to me are:
- You're not a legal resident
- You're in ChexSystems
- You're subject to some sort of legal judgment or garnishment
The US banking system is built on a foundation of batched communication, with batches arriving via mail several days later.
Each bank is operating as an independent ledger, with no global awareness; so, while each bank can see the deposits may be coming from the same account, they wouldn't necessarily see that the check redemptions were going into the same account. It's not unreasonable to get a series of checks from the same person, or to make a series of payments to the same bank.
Because of the delays are inconsistent and sometimes complex, it's more convenient to act on the shared fiction of deposits being immediate, and take escalating punitive action when the fiction unravels. Ex: large fees for both despotiting a check that is not honored, and writing a check that is not honored when presented. If it happens frequently, your account may be limited to transacting only in fully cleared funds, and you may be blacklisted from banking through credit reporting companies, or referred to law enforcement.
However, there have been several changes to shorten clearing times in (somewhat) recent times, including Check 21 in 2004, which allowed all checks to be processed as images instead of paper, and Same Day ACH starting in 2016, with planned enhancements through 2021. As the clearing window shortens, kiting becomes less feasible and useful.
What's needed to fully solve something like this is to put a block or reservation on a chunk of funds. So when bank A checks whether there's sufficient balance at bank B to clear a check, they'd need to put some kind of hold on those funds at bank B to have confidence that the check will clear. This is basically what credit card authorizations do, especially if the credit card is attached to a checking account.
Isn't that a debit card (rather than a credit card)?
Can someone explain why banks don't have systems in place to detect this kind of fraud? It seems like even the most minimal communication between banks would help detect it.