The real problem with the Chase "ATM glitch"

Paper checks, just like the penny (and even the dime), deserve to die. The sooner the better.

Why it matters: The paper check has declined in popularity to the point at which it is no longer broadly understood. That can prove dangerous.

Driving the news: The whims of the TikTok algorithm alighted disastrously upon Chase last week, as videos went viral of people writing large checks to themselves, depositing the nonexistent money into their accounts, and then withdrawing enormous amounts of cash.

• This, of course, is check fraud — but the people who thought they discovered an "ATM glitch" can probably be forgiven for not even really understanding what checks are, let alone what check fraud is.
• Most of them have probably never written a check in their lives.

Between the lines: Checks, as a payments technology, are both awkward and archaic.

• When they were first introduced, the payments rails were literally rails — payees would present checks at their banks, who would then load those checks onto trains headed for the bank of the payer. It could be well over a week before the payee discovered whether the funds were actually there or not.
• Modern technology has speeded up the process a lot, but there is still a significant period after the check is written where the recipient thinks that they have gained money while the payer can still see the money sitting in her account.
• A huge number of checks are also placed in the mail, adding a whole new level of unpredictability to the process. (This is still true, amazingly, even for some very large 401(k) rollovers and other transactions that take place between financial institutions.)
• As a result, checks can be presented a very long time after they're written — at which point there might not be sufficient money in the account.

The big picture: For all that some folks are blaming the Chase fiasco on a lack of financial literacy education, the fact is that teaching kids about what checks are and how to balance a checkbook, let alone what check fraud is, is an exercise in futile anachronism.

• While the basics of debt and spending are universal, the idiosyncrasies of checks — the very things that made this glitch possible in the first place — are simply not important or relevant to today's children, nor will they ever be.

The bottom line: Americans are still wedded to paper checks in a way that befuddles citizens of other rich countries. Sadly, that means checks won't be going away any time soon — and consumers will continue to bounce checks without intending to.