Fintech has seen rapid evolution over the past decade, and impacts both businesses and individuals across the US and beyond. We automatically think of such aspects as open banking, contactless payments and peer to peer lending platforms. But fintech has also changed more established financial instruments. Voided checks are a case in point.
Check usage is in seemingly terminal decline in the US. Only 15 percent of Americans write checks regularly, most of whom are of older generations. Furthermore, a growing number of retailers no longer accept checks as a payment method – these include Target, Aldi, Old Navy and Whole Foods. Yet voided checks are still needed in a variety of situations, for example when taking out a credit agreement or being added to an employer’s payroll system. Fintech companies have developed several solutions help to address the continuing need for voided checks in the digital age.
Voided check generation
The rise of digital and contactless payment methods means that around 50 percent of Americans seldom or never write checks and do not routinely carry a check book. But there is a great online tool made by VoidedCheck that allows anyone to generate a properly voided check from their desktop or mobile device.
The voided check generation tool can be used by anyone, regardless of which US bank they use. It can generate a voided check from personal accounts, business accounts, joint accounts and even savings accounts. It is quick and easy to use – it’s just a case of selecting the appropriate financial institution from the drop down list of more than 5,000 banks and credit unions then entering the appropriate account details such as account holder, account number and routing number. You can then download the voided check or have it sent directly to the email address of your choice.
The database of banks is synced with the United States Federal Reserve, so the accuracy of check information is assured. All private and checkout information is double encrypted and secured with both AWS and Stripe services.
Automated check verification
The main purpose of voided checks is for account and identity verification. As such, there is always a risk of deceptive practices and attempted fraud where voided checks are concerned. Advances in AI have provided fintech solutions for check verification that significantly improve fraud prevention by reducing the risk of fraudulent checks going undetected.
Popular examples in the US include Yodlee and Plaid. The software is integrated with bank databases and instantly cross references the routing code, account number and bank holder, flagging up any anomalies to the account holder in real time.
Mobile check deposit
Of course, sometimes checks are voided due to an error in handling. Mobile check deposit is a fintech innovation that is ostensibly to make depositing a check quicker and easier. At a time when US bank branches are closing at a rate of 200 per month or more, that benefit is not to be underestimated.
But mobile deposit processes also reduce the risk of errors and the need to void checks unnecessarily. Users can simply scan the check using the camera on their phone, and the data is read with no manual intervention and therefore no risk of human error during processing.
Blockchain solutions as an alternative to voided checks
A generation ago, Americans wrote several checks every week. Today, voided checks are more commonly used than checks for payments. A generation from now, they might have passed from usage entirely. Cutting edge blockchain solutions like Chainlink use decentralized oracles to verify bank account details through smart contracts. The process is fast and secure, so there is a real possibility that this, or a system like it, will one day replace voided checks as a verification method.
That, however, is unlikely to happen any time soon. Technologically, we could do away with the need for voided checks tomorrow. However, they remain the standard verification method, and that is enshrined in the compliance rules for businesses, banks and regulators across the US. Any change will come slowly and gradually. For now, voided checks are still both relevant and necessary. Fintech solutions such as the VoidedCheck tool and other software we have mentioned makes voided checks secure and easy to work with, even for those who have grown up in the internet age and have no use of need for a physical check book.
