history of the paper check
Over the years payment methods have evolved to include RFID chips, mobile apps, cryptocurrency and more. It’s hard to imagine that with all the advances made, paper checks are still used by millions of people every year - despite the paper check industry being an old and outdated process.
In honor of one of the world’s oldest and most enduring payment methods, we’ve put together a brief timeline of checking throughout the ages.
1st century bc
While there is some debate about the exact timing, many believe the first checking system dates back to ancient Rome. Romans would use “praescriptiones” instead of gold, similar to how we use paper checks today in place of cash.
3rd Century AD – 9th Century AD
The next major uses of checking were by merchants who felt it unsafe to travel with large sums of money. The Persian Empire created “chaks” in the 3rd century AD while Muslim traders used the “Sakk System” roughly 600 years later. Both systems issued credit notes that promised a specified amount to be paid out upon delivery of goods.
1100s – 1300s AD
Non-merchant travelers got on board with the use of checks by the early 1100s when the Knights Templar began using them for Christian pilgrimages through Europe and Israel. Again, the thought was that traveling with chests of money would attract robbers. By depositing and withdrawing funds from “charter houses” using written notes, pilgrims could lighten their loads and stay off the radar of thieves.
Many historians agree that the first personal checks were written in Holland during the 16th century. Amsterdam was a hotspot for traders back then, so it just made sense to have cash on hand to deal with other merchants while you were there. Seafaring merchants deposited and withdrew funds right there at the Dutch banks, and to sweeten the deal, some cashiers even allowed you to write notes that would enable them to pay funds out directly to your creditors without you being present. This over 500-years-old system was remarkably close to the system we use today.
By the 1600s checks or “cheques” had made their way to England, the US and elsewhere, but it wasn’t until the early 1700s that the first printed versions showed up. As you can imagine, handwriting bank notes opened the door to a lot of fraudulent activity over the centuries. In 1700s however, pre-printing on special check paper and the use of tracking serial numbers helped to reduce forgeries.
The first checkbooks were printed in the mid 1800s and checking systems were spreading worldwide. Many countries, such as India and the UK, began to implement stricter usage guidelines to control this growing system.
Bank of America and SRI revolutionized the banking industry in the 1950s with a system called ERMA or the Electronic Recording Method of Accounting. If you’ve ever wondered about the strange symbols and letters at the bottom of your checks, there’s a reason it makes no sense to us. That font is only readable with the help of magnetic-ink character recognition (MICR), a form of “language” ERMA used to process check information. By automating the banking industry with this dynamic duo, banks could now process over 130x more checking accounts in a day than they used to.
Modern checking accounts are accessible everywhere thanks to mobile banking and the internet. The most notable advancement of recent years was The Check Clearing for the 21st Century Act which enabled the quick and easy remote deposit we have today.
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