Quiz: Will Checks become Obsolete?

Staff

4 Min Quiz

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About This Quiz

In the modern world of plastic, paper checks are nearly extinct. Paper checks are a cumbersome payment method, which is both expensive and slow. Take this quiz to learn why paper checks will likely soon be a thing of the past.

How long will it be before checks are completely obsolete?

Most people avoid using checks nowadays. However, It will be a number of years until checks are completely eradicated.

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Why are checks becoming obsolete?

There are number of reasons why checks are becoming obsolete, including the rise in debit card use and electronic check conversion, which makes check processing time much shorter.

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Why is it getting harder to pass fraudulent checks?

Due to modern technology, the whole banking process is faster, and modern checks have built-in security measures.

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Who has stopped using and/or accepting checks?

Many retailers these days do not accept checks. More recently, the Supplement Nutrition Assistance Program (SNAP), a U.S. government organization, has stopped issuing checks in favor of electronic payment instead.

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What does the Check Clearing for the 21st Century Act stipulate?

Passed in 2004, the Check Clearing for the 21st Century Act states that banks no longer need to keep original checks. They can instead keep electronic scanned copies of checks.

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When will check writing in the United Kingdom will no longer be possible?

The United Kingdom is taking more drastic measures to completely eradicate paper checks by 2018.

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Besides retailers and governmental programs, who else is eliminating paper check use?

Many employers now only provide one of two options for payroll: direct deposit or prepaid debit cards.

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How many checks were written in the United States in 2000?

In 2000, 70 billion checks were written in the United States. That means that on average, 270 million checks were written each day. Now that's a lot of paper!

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Where does your check go when you hand it over to your grocer?

As soon as your grocer heads to the bank, the amount on the check gets deposited into the grocer's account. The amount may not be immediately accessible to the grocer though.

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How can you ensure that the person you are paying by check has immediate access to the check's amount?

Under most circumstances, deposited checks are frozen for a given period of time. If both you and the person you are paying use the same bank, the check is not likely to be frozen.

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The Federal Bank Reserve is ______.

The Federal Bank Reserve is an intermediary bank that handles check processing.

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An intermediary bank _____.

A paying and receiving bank do not communicate with each other when a check is being processed. Instead, an intermediary bank handles check processing by providing check collection and delivery.

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What percentage of checks does the Federal Bank Reserve handle in the United States?

There are three different types of intermediary banks. The Federal Bank Reserve, which is one type of intermediary bank, handles only 27 percent of checks throughout the country.

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Correspondence banks _________.

Correspondence banks completely bypass the services of the Federal Bank Reserve and its associated fee. Instead, correspondence banks create partnerships among themselves, allowing direct communication for the transfer of checks.

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What is a clearinghouse corporation?

A clearinghouse corporation is an intermediary bank. It allows banks to transfer checks in bulk, rather than one check at a time.

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What is Fedwire?

Clearinghouse corporations transfer big bulks of checks between banks at one time. The money transfer associated with these checks is done through Fedwire, which is an electronic funds transfer.

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What percentage of check processing in the U.S. do clearinghouse corporations and correspondence banks account for?

The private sector, which includes clearinghouse corporations and correspondence banks, accounts for 43 percent of all check processing in the United States.

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What is a routing number?

The routing number is a nine-digit number found on the bottom left side of a check. It indicates which bank and the branch of the bank issued the check.

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What percentage of checks do not need to go through an intermediary bank?

If a check is issued and cashed by the same bank, then there is no need for an intermediary bank. Approximately 30 percent of all checks are withdrawn and deposited by the same bank.

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How might you still be able to get a paper payroll check each month even if your employer prefers direct deposit?

Some states require that paper payroll checks be made available to all employees. In this case, even if a company provides direct deposit as the main method of payment, they are still required to provide a paper payroll option if requested.

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