It is surprising that you would think accepting more payment methods is somehow worse than offering fewer.
Additional security vulnerabilities, additional costs to implement and support possibly blocking new better approaches, additional complexity...
If checks had not yet been invented, and someone came to Europeans saying, ‘I have this new ultra-cool system of payment which involves trivially forged signatures on paper where the bank upon receiving it takes a photograph rather than store it on paper and where fraud may not be detected for days; also, you have to manually keep track of the balance and if you don’t and you write a check that bounces you’ll be fined by the bank and maybe also the person you wrote the check too; and did I mention that the security is so weak that people who want to distribute their checks far & wide like Don Knuth can’t do it because their bank accounts will be raided? Pls pay me $$$ for my kicking invention kthnxbai’, do you think they would greet him with open arms?
Yes checks have downsides, but they have upsides as well, which is why a substantial percentage of people prefer to receive them. You should read about this thing called “Revealed Preference.” For example, more than a fifth of black and Hispanic Americans don’t have checking accounts—usually because of bad experiences involving a overdraft fees. So being able to receive checks is a nice convenience for them.
Also with checks you avoid interchange fees, so there are advantages to merchants as well.
I strongly suspect that in Europe the number of “bankless” households is much smaller. My point, though, is that having check capabilities isn’t worse than not having them—unless you already happen to be living in a place where nobody prefers checks.
Your argument reminds me of this guy I know who always gets really mad that some people buy iPhones instead of Android phones. But… they’re technically inferior! Stop using what I don’t use!
You should read about this thing called “Revealed Preference.”
I take it that it did not occur to you that this was the point of my use of the reversal test on the European absence of checks.
My point, though, is that having check capabilities isn’t worse than not having them—unless you already happen to be living in a place where nobody prefers checks.
I reiterate the point about revealed preferences plus a reiteration of my list of costs to supporting checks.
In that case, you have misunderstood what my discussion with Kaj was about. He felt that the fact that checks were still in wide use in the United States implied that financial services in America lack modern conveniences.
I pointed out that the fact that an older medium is still accepted does not, in fact, imply that wireless transfer and debit card payments are not available. My argument was not that Europeans should adopt checks because they are superior, but that having check capabilities doesn’t actually mean modern conveniences are lacking, as he implied.
I pointed out that the fact that an older medium is still accepted does not, in fact, imply that wireless transfer and debit card payments are not available. My argument was not that Europeans should adopt checks because they are superior, but that having check capabilities doesn’t actually mean modern conveniences are lacking, as he implied.
Revealed preferences as applied here can only give a stalemate: Americans preferring checks and Europeans never using checks doesn’t tell us which is superior. Adding in the reversal test and noting that the European electronic systems came after rather than simultaneously with checks tells us that in a direct head-to-head comparison, checks lost in a large area of the world, and noting that they don’t offer them at all, apparently, tells us that there is a large burden or cost to supporting checks—in direct opposition to your rhetorical invocation of ‘how can additional options be bad?’. With the burden of supporting checks established, the situation now looks like one of path dependence or local optima traps: the Europeans were able to escape to a more efficient secure useful system of e-banking while the Americans continue to be trapped in a local optima because they cannot profitably shift to a e-banking system while also supporting the costs of the existing checking system.
Americans continue to be trapped in a local optima because they cannot profitably shift to a e-banking system while also supporting the costs of the existing checking system
If this claim was right, there would be lots of locations in which card readers are not available, but checks are accepted. In fact, you seem to be totally wrong about this bizarre claim. In reality, debit cards, credit cards, and charge cards are pretty much always available wherever checks are accepted. I’ve never been to a retailer that accepted checks but not cards.
Adding in the reversal test and noting that the European electronic systems came after rather than simultaneously with checks tells us that in a direct head-to-head comparison, checks lost in a large area of the world
The same argument could be used to claim that Los Angeles’ transportation infrastructure is more advanced than San Francisco’s. (LA used to have a light rail system, but later transitioned entirely to cars. SF kept light rail going, in addition to having cars).
If this claim was right, there would be lots of locations in which card readers are not available, but checks are accepted. In fact, you seem to be totally wrong about this bizarre claim.
It’s a good thing I never said that because it is indeed bizarre. Of course individuals may move closer to the better European optima, but the system as a whole remains in the optima. You may be able to use your debit card in plenty of places, but where’s the rest of the European style system? Can you trivially send money from account to account? Receive deposits in minutes or hours rather than multiple days? etc.
The same argument could be used to claim that Los Angeles’ transportation infrastructure is more advanced than San Francisco’s.
Would pass the reversal test. There are plenty of LAers who would welcome a light rail system, and googling I see there are active light rail projects.
Additional security vulnerabilities, additional costs to implement and support possibly blocking new better approaches, additional complexity...
If checks had not yet been invented, and someone came to Europeans saying, ‘I have this new ultra-cool system of payment which involves trivially forged signatures on paper where the bank upon receiving it takes a photograph rather than store it on paper and where fraud may not be detected for days; also, you have to manually keep track of the balance and if you don’t and you write a check that bounces you’ll be fined by the bank and maybe also the person you wrote the check too; and did I mention that the security is so weak that people who want to distribute their checks far & wide like Don Knuth can’t do it because their bank accounts will be raided? Pls pay me $$$ for my kicking invention kthnxbai’, do you think they would greet him with open arms?
Yes checks have downsides, but they have upsides as well, which is why a substantial percentage of people prefer to receive them. You should read about this thing called “Revealed Preference.” For example, more than a fifth of black and Hispanic Americans don’t have checking accounts—usually because of bad experiences involving a overdraft fees. So being able to receive checks is a nice convenience for them.
Also with checks you avoid interchange fees, so there are advantages to merchants as well.
I strongly suspect that in Europe the number of “bankless” households is much smaller. My point, though, is that having check capabilities isn’t worse than not having them—unless you already happen to be living in a place where nobody prefers checks.
Your argument reminds me of this guy I know who always gets really mad that some people buy iPhones instead of Android phones. But… they’re technically inferior! Stop using what I don’t use!
I take it that it did not occur to you that this was the point of my use of the reversal test on the European absence of checks.
I reiterate the point about revealed preferences plus a reiteration of my list of costs to supporting checks.
In that case, you have misunderstood what my discussion with Kaj was about. He felt that the fact that checks were still in wide use in the United States implied that financial services in America lack modern conveniences.
I pointed out that the fact that an older medium is still accepted does not, in fact, imply that wireless transfer and debit card payments are not available. My argument was not that Europeans should adopt checks because they are superior, but that having check capabilities doesn’t actually mean modern conveniences are lacking, as he implied.
Revealed preferences as applied here can only give a stalemate: Americans preferring checks and Europeans never using checks doesn’t tell us which is superior. Adding in the reversal test and noting that the European electronic systems came after rather than simultaneously with checks tells us that in a direct head-to-head comparison, checks lost in a large area of the world, and noting that they don’t offer them at all, apparently, tells us that there is a large burden or cost to supporting checks—in direct opposition to your rhetorical invocation of ‘how can additional options be bad?’. With the burden of supporting checks established, the situation now looks like one of path dependence or local optima traps: the Europeans were able to escape to a more efficient secure useful system of e-banking while the Americans continue to be trapped in a local optima because they cannot profitably shift to a e-banking system while also supporting the costs of the existing checking system.
If this claim was right, there would be lots of locations in which card readers are not available, but checks are accepted. In fact, you seem to be totally wrong about this bizarre claim. In reality, debit cards, credit cards, and charge cards are pretty much always available wherever checks are accepted. I’ve never been to a retailer that accepted checks but not cards.
The same argument could be used to claim that Los Angeles’ transportation infrastructure is more advanced than San Francisco’s. (LA used to have a light rail system, but later transitioned entirely to cars. SF kept light rail going, in addition to having cars).
It’s a good thing I never said that because it is indeed bizarre. Of course individuals may move closer to the better European optima, but the system as a whole remains in the optima. You may be able to use your debit card in plenty of places, but where’s the rest of the European style system? Can you trivially send money from account to account? Receive deposits in minutes or hours rather than multiple days? etc.
Would pass the reversal test. There are plenty of LAers who would welcome a light rail system, and googling I see there are active light rail projects.