Comment by bigstrat2003 | Hacker News Reader

Comment by bigstrat2003 | Hacker News Reader

Parent Full thread

He does that. He's simply eliding the explanation in his comment here, because he explained both of those things in the article. The "reasons" he elided are:

* Banks don't want to do business with these particular people because they know them to be a bad business risk. They often know, via credit reporting methods, that the specific individual human standing before them has a history of cashing bad checks/committing fraud/whatever it is. Therefore, they decline to work with that person.

* The people who are bad risks for banks get rather tired of dealing with banks, both because constant rejection is tiresome and because bank employees make it very clear (though unspoken explicitly) that they are persona non grata there. By contrast, the people at the check cashing shop treat them better, so they would rather take their financial business there.

I get why you want the explanations and not just "for reasons", but both of these points are quite clearly spelled out in the article. So I don't really think the author deserves the grief you're giving him in this case.

>They often know, via credit reporting methods, that the specific individual human standing before them has a history of cashing bad checks/committing fraud/whatever it is.

This wouldn't even be an issue if America didn't still rely on the utterly archaic check scheme for transferring money.

> This wouldn't even be an issue if America didn't still rely on the utterly archaic check scheme for transferring money.

It still will be for as long as many people cannot get and maintain a free bank account that is usable for transferring funds via whatever scheme you envision replacing checks. And the property that checks have, namely that some percentage of them get unwound for various reasons and that percentage varies substantially by customer, is very hard to get rid of. As long as that property exists, access to a bank account that provides that mechanism will be an extension of credit and thus not universally available.

It's possible that a system for instant payment clearance, like FedNow, might reduce the problem of insufficient funds and similar clearance issues. However, that doesn't eliminate the possibility of bad/fraudulent/etc checks, just reduce it.

>whatever scheme you envision replacing checks.

You're acting like this is some kind of futuristic concept. Are you not aware that everyone in every other country manages just fine without checks? They're only used in the US. If I went to my bank now and asked them about "cashing a check", they'd probably look at me like I had two heads. They simply don't exist.

Oh, your bank knows about cashing American cheques (or British or I think French ones, though they're much less common). It's on their table of fees, and costs €20.

I would never accept to be paid by an American cheque because it will take months to get the money.

Oh, why? Because they actually wait for it to clear. Zero fraud then.

In the US you seem to like living with options for fraud.

Less fraud, not zero fraud.

Even if your bank sends the cheque for collection and waits for the payor bank to confirm there’s funds there.

The cheque could have been stolen and forged, or a legitimate cheque could have been altered. There’s even an example up-thread of a bank recycling account numbers. The owner of the bank account it’s drawn against can take weeks or months to notice that the fraud has happened, and when they do the transaction can be unwound leaving your bank liable to return the value of the cheque.

When I used to deposit US cheques regularly in the UK, I’d be offered the choice between “negotiation” (we assume the cheque is good and will pay it this week) and “collection” (we’ll send the cheque back to the US and only pay you when we collect the money weeks later), but in both cases there was language on the form making it clear that they could pull the money back up to years later if something went wrong.

There’s literally no way of implementing cheques—-or most other payment rails—-without someone, somewhere choosing to extend credit and deciding to take on that risk.

Maybe. I've never taken one and only one client ever asked me if i can take one.

Tbh I think you can still pay by (local) cheque even here but you need to go to the bank and sign something in blood to get them. And not sure if anyone actually takes them any more.

They may have been used for B2B with 30-60-90 day payment terms 15-20 years ago.

> You're acting like this is some kind of futuristic concept.

No, I'm not. I'm well aware of how other countries operate, as well as proposals for upcoming systems in the US.

I'm observing that the article we're currently discussing talks about multiple sources of issues with checks, and immediate-clearing electronic systems solve some but not all of them.

Immediate clearing systems eliminate NSF issues: a check will never bounce, it'll get cleared immediately or rejected immediately. This is a great thing and I'm looking forward to it. It'll be a massive reduction in fees and hassle for many people.

Immediate clearing systems do not eliminate the problem of the purported originator of the check disputing/rejecting/etc the check payment and the originating bank clawing back the payment. There are any number of reasons for that, some of them legitimate. The article mentions some of them, and there are more.

I am not making an argument against immediate clearing systems; on the contrary, I think they're an incredible good idea. I'm observing that they are not, in fact, a panacea that on its own will completely eliminate the reasons why people are unbanked or underbanked.

Reply on news.ycombinator.com