If checks were outlawed, Steven S. Baum would shed no tears.
"I can not wait or the day they say checks can't be used," he said. "They are the merchant's worst nightmare."
And while Baum does not have such sweeping legislative powers, he is doing his part to usher in the new world of electronic funds transfer, a system whereby money moves through wires rather than in a blizzard of checks and cash. Electronic funds transfer includes such common practices as direct deposit of payroll checks to more exotic arrangements that allow people to pay their bills by telephone.
The number of electronic transfers has grown dramatically, from 750 million transfers involving $2.2 trillion in 1986 to 1.33 billion transactions amounting to $5.1 trillion in 1989, according to the National Automated Clearing House Association, the trade group that sets standards for electronic transfers.
As president of Greetings & Readings Inc., a large Baltimore County store that sells books, stationery, gift items, video and computer equipment, Baum installed a system in February that allows customers to pay for purchases by using their banks' automated teller machine cards. The number of such transactions has grown to about 20 per day, he said.
The money for the purchase is electronically transferred from the customer's account to the store's account. It is safe, convenient, and most importantly, fast, Baum said.
"The biggest savings is time," Baum said about the system, which is known as point-of-sale. Whereas a point-of-sale transaction takes seconds to complete, "you can't get a check out of there fast for anything," Baum said. And unlike checks, which "bounce like rubber balls," Baum said there is instant verification that there are sufficient funds in a customer's account to cover a purchase.
"There's no drudgery, no hassle and it's a clean, safe transaction," Baum said.
However, one of the drawbacks to the system is that many banks charge their customers for the service, making consumers reluctant to use the cards. These charges can range from 50 cents to $1.50 depending on the bank. But Baum is hopeful that banks eventually will see that point-of-sale is in their own interest and cut back the charges to be competitive with checks.
Baum's desire to reduce check writing does not stop with his business. He pays most of his personal bills by calling a computer at his bank and punching in some numbers on a Touch-Tone phone. Money instantly goes to companies that are pre-authorized by Baum to receive the payments. "I rarely use checks," Baum said. "I hate them."
While Baum is ready for the checkless and cashless economy, there is greater reluctance among the population in general. While direct deposit has made large inroads into the lives of many people, services such as point-of-sale, automatic debiting and paying bills by telephone have yet to catch on.
Direct deposit has gotten a substantial boost from the federal government, which encourages the service for all government payments, including Social Security.
About 19.5 million Social Security recipients receive their payments by direct deposit - that's 49 percent of the 39.5 million people who receive Social Security payments, according to Frank A. Battistelli, a spokesman for Social Security.
To the government, the biggest benefit of direct deposit is cost savings. It costs 4.5 cents to direct deposit a Social Security payment compared to 30.2 cents to make a check and then mail it. To the recipients, direct deposit is fast, convenient and safe. Battistelli said people receiving direct deposit are 16 times less likely to have a problem with their payment than people receiving a check.
Direct deposit also has spread to welfare payments. Earlier this year, Maryland began a pilot program in Baltimore of depositing welfare checks and food stamp money in accounts for recipients.. Welfare funds can be withdrawn from automated teller machines and food can be bought at participating store that have special point-of-sale terminals.
The federal Treasury Department has gone one step further and requires that all payments for Treasury notes, bills and bonds be kept in electronic files and that interest payments are directly deposited into a holder's account. There are no other options.
Private employers also have increasingly embraced direct deposit. In 1987, 11.9 percent of all payroll payments were made by direct deposit. That has grown to 17 percent this year, according to Steven M. Lewis, a spokesman for the National Automated Clearing House Association.
One of the big reasons for the growth is cost. Direct deposit is cheaper for both the companies and the banks. Lewis said companies save an average of 10 to 23 cents per transaction when payments are made through direct deposit. Banks and thrifts save even more, shaving 60 cents off each transaction.
Of the nation's largest employers with annual sales of more than $250 million, 82 percent offer direct deposit to their employees.