It's pretty mental that the US still uses cheques for paying employees. I'm 26 and have never been given a cheque and all payments have been electronic.
By and large, the US doesn't use physical checks for paying employees. (we use the word "paycheck" colloquially) It's required by (possibly state?) law that companies allow direct deposit if you so choose. But it's an extra step the employee has to take, and many don't. It's technical debt for the employer to just give the employee a physical check and say "it's your problem now" than to pester them to provide their bank account information.
My first paycheck from my first summer job in high school was a check, and my severance from my last company was by check. Other than that, it's all been electronic. My previous three jobs don't allow regular paychecks by physical check, you have to have direct deposit. Physical paychecks are definitely the exception, not the norm.
There's also a lot of resistance to electronic banking in... certain circles. I'm not sure what they think "normal" banking when you speak to an actual teller is.
A lot of unbanked people are not crazy or freedom nuts or anything, but just dirt freaking poor. It costs a lot of money to run a bank account with only a few hundred dollars in it. Add to that the fact that many banks purposely reorder transactions to force you to take as many overdraft fees as possible, banking for those living paycheck to paycheck is not cheap
> A lot of unbanked people are not crazy or freedom nuts or anything, but just dirt freaking poor. It costs a lot of money to run a bank account with only a few hundred dollars in it.
Where? Everywhere I've banked offered checking accounts for completely free with no minimum balance, and I know many credit unions operate this way. If you're paying money to your bank, stop it.
> Add to that the fact that many banks purposely reorder transactions to force you to take as many overdraft fees as possible, banking for those living paycheck to paycheck is not cheap
This is really scummy but many banks allow you to, for debit cards, deny the transaction instead of overdrafting. That won't help with bounced checks or electronic transfers but it can make a big difference.
I own a restaurant in the SF bay area, and nearly all of my employees prefer cash or paper checks even if I offer direct deposit. (Not paying under the table - I still withhold and issue W-2s...)
Most major banks in the US require something if not a minimum balance to waive the monthly fee. Something like $x threshold for certain direct deposits, or you're a student/young adult, or you use your debit card x times a month.
Smaller banks and credit unions can have problems too: locations or lack of participating ATMs or the same problems as the big banks. There are absolutely scenarios where it can be easier (time and money-wise) to just go to the check cashing store.
Some unbanked people are undocumented and afraid to open accounts that might be closed/seized. Some have piss poor credit. Some of those folx won't be able to open new accounts because their chexsystems report has some negative item on it. A single issue like your car breaking down once can snowball into a much bigger situation.
> deny the transaction instead of overdrafting
Honestly, for paycheck to paycheck folx, this can still hurt. There won't be $200 in overdraft fees, but imagine, your PG&E bill is now past due because they couldn't charge your card. Now they want $20 for reconnection on top of the past due bill and 2x more in the form of a deposit due to bad credit. Welp, maybe the $200 in overdraft fees would have been easier to deal with.
Living paycheck to paycheck sucks for so many reasons, and so many of those reasons out of the individual's control.
We have a small business and print checks manually for employees. With 50+ employees and majority of them working less than 10 hours per pay period, the per employee cost to use a direct deposit/payroll service is cost prohibitive. With our employees being typically over 40, it's been rare to even have someone request direct deposit. Just thought I'd share a different perspective than the typical HN crowd.
Yeah. I've worked for many thousand person employers down to those with less than 10. I haven't had physical payroll checks to deposit since at least the mid-eighties. (Probably longer but I just don't remember.) Probably took longer for all expense etc. checks to go direct though as they're often through a different system.
I ran payroll for a 20 person company (US) for seven years, not a single person asked for or received a manual check in that time frame. This was between 2005-2012. I was the only person there under 40 years old.
That's an odd way to phrase it, since it doesn't seem like a particularly large sample as you state it. So how many individuals are you talking about, given your turnover?
Back up here. OC said "we run a small business and print checks manually". OC also said "With our employees being typically over 40, it's been rare to even have someone request direct deposit." So I responded from my own experience running payroll at what was also a small business, with employees who were also all 40+ years old. Where the heck does sample size come into this? It’s completely beside the point. We’re sharing anecdotes here, not research projects.
Never dealt with finance/payroll. What is the typical per-user cost associated with direct deposit? I figured being as pervasive as it is that the cost was negligible.
We also have high turnover so maintaining direct deposit info doesn't make sense either. It ends up being around $10/mo per employee for a low-end payroll service which includes direct deposit/year end taxes/forms/etc.
Except that as a result of that, the people were actually debited their entire paycheck, or even two! So it was stolen in this case, even if temporarily.
The (retail) US financial system is archaic and competes with Healthcare in regulation creep and backwardness. The first time I ever saw a check in my life was in the US.
Once I was buying a house, and my bank would write a cashier's check for free, but charged $50 for a wire transfer.
So I walked a $300K check from my bank two blocks to my escrow company to save the $50. The check must have been more expensive for everyone to handle (even at the bank, they had to wait for a manager to operate the special "check typewriter" - not everyone was allowed to operate it), but for whatever reason, it was "free".
When we bought our house, we also went the cashier's cheque route for the downpayment, but had a tremendous surprise: the cheque bounced when the lawyers tried to deposit it! I called the bank, and a manager met me at the door. He couldn't figure out what happened, but they re-issued the cheque and it all went through...
I once tried to speed up a transaction and got a cashiers check. Only to find out that a hold was placed on it because it slightly was more than typical for the account. The hold was for 7 business days which turned out to be 2 weeks (it was a Friday). Of course they couldn’t reverse the hold not giving me back the check. I said ‘don’t you think people will start walking around with cash if you keep doing this’ - they said yes, cash would be faster. Meanwhile spacex is building starship. And Suntrusts wire fees are $60 last time checked and take an hour to complete (in the branch because you pay extra to have that as an online feature). Also, did you ever try to amend a wire transfer because of a misspelled letter? That’s a procedure. What a waste of capital in a digital age.
I'm in the US and haven't been paid (payroll) by check in at least a decade.
Also MyPayrollHR did have direct deposit:
> This communique came after employees at companies that depend on MyPayrollHR to receive direct deposits of their bi-weekly payroll payments discovered their bank accounts were instead debited for the amounts they would normally expect to accrue in a given pay period.
Most people get paid electronically. A lot of things people don’t realize is that at 330M+ people, the US has a lot of legacy systems due to the sheer size of the population.
I don’t buy this argument at all. The EU is 500mm people across 24 different countries, speaking many languages, and I had no problem paying and receiving money from anyone in any of those countries.
US banking is a decrepit mess because the treasury allows it to be.
> and I had no problem paying and receiving money from anyone in any of those countries.
And no one in the US has problems sending and receiving money from anyone else in the US either...
The parent's point is that legacy systems still exist in the US, as I'm sure they do in the EU. That doesn't mean that getting paid by a paper check is particularly common for regular workers. The vast majority of people are paid electronically. No one likes dealing with checks and for the most part no one really has to. The only times I ever do that is when I'm paying a contractor many thousands of dollars for e.g., work on my house. Usually those guys are older and self-employed, and either don't know how to accept money electronically or don't want to because of fees (and I don't blame them). In those instances I get a cashier's check made. That's the only time I have to deal with it.
There are of course instances where an employer might not provide direct deposit because they find the added expense too much to bear (as another poster pointed out). We're not living 50 years in the past, as you might imagine. Checks are not particularly common.
> The parent's point is that legacy systems still exist in the US, as I'm sure they do in the EU.
And the actual point is that no, they don't, they were cleared away because their existence is a pox on everyone.
Having seen both systems upclose, for the average consumer the European banking system is about a hundred years in the future from the American one, which is a steaming hot cesspit of legacy systems and banking institutions that spend all their time figuring out ways to milk more money out of consumers.
Case in point:
> or don't want to because of fees
It's not okay to charge people fees to send or receive money.
(Technically, European banks still can do that, but since the EU has forced all banks to accept transfers from each other using a common system, and that all money transfer are executed as "shared fees" where the sender pays the fee to their institution and the receiver pays the fee to theirs, free and open competition has driven the price of sending and receiving money to 0€.)
> And the actual point is that no, they don't, they were cleared away because their existence is a pox on everyone.
You’re telling me checks don’t exist in the EU anymore? Forgive me for being skeptical.
> where the sender pays the fee to their institution and the receiver pays the fee to theirs, free and open competition has driven the price of sending and receiving money to 0€.)
You’re gonna have to elaborate, because that sounds like both parties pay money to perform an exchange, which is even worse than what we have, where one party does.
Are you saying that if I wanted to pay someone $100 I have to cough up an additional $5 and the receiving party has to pay $5 to get their $100? In what way is that “no fees” unless the receiving party is reimbursing the paying party directly? Unless I’m missing something here, a transfer of $100 cost $110 under this system.
> Are you saying that if I wanted to pay someone $100 I have to cough up an additional $5 and the receiving party has to pay $5 to get their $100? In what way is that “no fees” unless the receiving party is reimbursing the paying party directly? Unless I’m missing something here, a transfer of $100 cost $110 under this system.
You pay the fee to your banking organization, which is 0€. The receiver pays the fee to their banking organization, which is also 0€.
Or in other words, there are no fees.
The idea being that the EU has made it very easy to switch banks, and forced a regime where a customer can freely pick the bank that has the lowest fees, which lead to a situation where no bank that wants to retain customers can bill them for transferring money.
> You’re telling me checks don’t exist in the EU anymore? Forgive me for being skeptical.
They still exist in a couple countries but have completely disappeared in most. When wire transfers are free to consumers and cost cents to business account holders, why would anyone use something else?
I just did a Google search for caching checks in my native language. All the top hits were for forum posts on the theme "I just got a check from the US, how do I deposit it?" I suppose I could deposit a check with some hassle. If I really wanted to, I also suspect I could figure out out to write a check. But I really doubt I could find anyone who would accept it. I am also certain there is no way I could deposit it without it being cleared first. The check float thing still boggles my mind.
Yes, in most EU countries checks are nearly nonexistent, and a large portion of population have never ever seen (much less used) a check even once in their life, it's something you read about in literature and hear mentioned in American media. IIRC they're quite popular in United Kingdom still, though.
I worked in a bank for a bunch of years, a decade ago we were processing <100 checks a year, which was an unusual (and expensive) service; about half of the checks was companies doing international sales to unusual countries and the other half was scams; so that business was shut down - some banks do offer a service of cashing checks, but many banks will not.
A wire transfer to an account in another banks is (depending on your bank) either free or something like 0.15-0.30 eur, certainly cheaper than a stamp if one would need to send a paper check.
Yeah, a lot of places offer direct deposit. Then some employers even offer like some type of prepaid debit cards with your pay loaded on it, I guess for the unbanked.
I remember 10~ years ago when I worked in the U.S., every month I'd get an envelope with a check. I'd stop by my bank on my bike ride home to deposit it. Now that I think about it, not sure why it couldn't have been done bank-to-bank directly.. Possibly there was an associated cost that the employer couldn't be bothered to cover.
~21 years ago I worked for a small company who didn't offer direct deposit because of the cashflow implications -- having to transfer money to the payroll processing company several days in advance -- and often we'd be handed our physical checks before they'd put the money in their payroll account, so if I'd walk over to their bank at lunch they often would not cash them.
All of which is disturbing to me now but I was young and dumb and didn't stay with them long.
(A few years earlier, I had an after-school job at K-Mart and they paid everyone with actual cash in an envelope!)
They don't (usually), you usually set up direct deposit to get your paycheck deposited into your bank account electronically. In fact, my employer actually requires direct deposit - it's the only way they will pay you.
Also, the government no longer sends out physical social security checks, they stopped doing that like five years ago.
A cashier's check was required as my first payment for an apartment, every payment after can be done through online. I still don't understand what the purpose of the initial payment was.
A cashiers check is cut by the bank and not you. You pay the bank, bank writes the check, landlord gets a check they draw from the bank, not your account. It’s very hard to reverse cashiers check so the chance of it bouncing is extremely low.
It's just an idiom. When you hear a financier talking about being in cash it doesn't mean they have a giant stash of currency notes piled up in the corner of their office.
Usually, you fill out a form giving direct deposit information, and then they give you a paper check for your very first payment. Once you deposit that, verifying your account information, all further payments take place electronically.
Little bit older. Never in my whole life used a cheque in Germany. Then I moved to canada, and learned it's a common thing here. Salaries are by default paid with cheques, people pay their rent with them, etc. I was genuinely surprised when I opened a bank account and they wanted to give me cheques (and even charge for them!). I however got around using them - things can also be paid electronically by setting up direct deposit. It however always feels like the non-standard way.
At 25 the only check I receive is worth £24.82 from the second settlement (money held "in case") of a will. I tried getting them to just BACS it like the first settlement... but they won't BACS less than £25
They also refuse cash and donation as a settlement, so in the spirit of the deceased I don't cash it, and a new one arrives every six months.
I guess I'll find know the Solicitor has retired when the cheque stops coming...
My first paycheck from my first summer job in high school was a check, and my severance from my last company was by check. Other than that, it's all been electronic. My previous three jobs don't allow regular paychecks by physical check, you have to have direct deposit. Physical paychecks are definitely the exception, not the norm.
There's also a lot of resistance to electronic banking in... certain circles. I'm not sure what they think "normal" banking when you speak to an actual teller is.