What Are Some Advantages and Disadvantages of Paying with Checks? The Insider’s Perspective!


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Checks are a convenient and cost-effective payment option, but they also come with drawbacks such as the risk of fraud and bounced checks. Additionally, clearance processes are time-consuming. Overall, checks offer many benefits but require careful consideration before use.

A check is a draft that is signed, dated, and written that instructs a bank to pay the bearer a certain amount of money. 

The individual or organization issuing the check is known as the payor or drawer, and the person to whom it is made out is called the payee. On the other hand, the drawee is the bank on which the check is drawn.

Checks have been a trusted payment method for centuries, offering a reliable, flexible, and convenient way to exchange money between individuals and businesses. 

The check can then be presented at a bank or any other financial institution, where it will be processed and cleared. Once the check has been cleared, the money will be transferred from the payer’s account to the payee’s account.

A check is typically used for making payments in the form of cash but can also be used for paying bills or other types of payments. 

When a check is written, it must be signed by the person writing it. This signature serves as legal proof that the writer has authorized the payment.

They offer an effective way to make payments without carrying large amounts of cash. They are convenient and can be sent via mail or other delivery services. 

In addition, using checks helps to keep accurate records of all transactions between two parties.

This article will discuss their origins, key features, and, most importantly, the advantages and disadvantages of paying with checks.

The Origin of Checks

Paying with Checks

Throughout civilization’s long history of paying for things, the development of payment methods is driven by a need for convenience. 

True to form, checks came about due to the quest for an alternative to traveling with sacks of coins. From there, payment methods have usually been replaced or phased out by approaches that were even more convenient or safer. But it turns out that the old methods are themselves still hard to shake.

Checks have an intriguing history; despite calls for checks to become extinct, they have yet to be eradicated, evolving from the need for more convenient and secure payment methods. 

The earliest checks may have had their roots in ancient Roman prescriptions, but the checks we know today can be traced definitively to 9th-century Muslim traders. 

These traders introduced the “sakk,” a piece of paper instructing a bank to pay from the trader’s account. The sakk made international commerce easier and safer, as merchants no longer needed to carry bulky bags of coins.

We cannot answer the question: What are some advantages and disadvantages of paying with a check? Until we fully understand their origins and changes in needs as with different eras.

Europeans encountered the concept of checks during the Crusades, but it was in the 15th century that checks gained popularity, particularly in Amsterdam, a major trading hub. However, rampant fraud issues led to bans and requirements for in-person validation at banks.

The breakthrough came in the 16th century with the advent of negotiability, allowing checks to circulate among parties and making long-distance payments even more convenient. 

In the United States, checks began to emerge in the late 17th century, with printed versions introduced in 1762 by British banker Lawrence Childs, who added serial numbers for record-keeping, giving checks their name.

Features of a Check

Now that we’ve covered the history, let’s move on to the essential features of a check. Understanding these elements is crucial for anyone using checks for payment or to receive funds.

At the top left of a check, you’ll find the name and contact information of the person writing the check, also known as the drawer. The bank that holds the drawer’s account is listed on the check.

There are several lines on a check that need to be filled in by the payor:

  • The date goes in the top right corner.
  • The payee’s name is placed on the first line in the centre, marked “Pay to the Order Of.”
  • The dollar amount is written in a box next to the payee’s name.
  • The amount in words goes below the payee’s name.
  • The payor’s signature is essential; the check is invalid without it.
  • A memo line in the bottom left corner can be used for notes, references, or account numbers. 
  • On the bottom edge of the check, you’ll find a series of coded numbers, including the bank’s routing number, the payor’s account number, and the check number. In some countries, like Canada, the routing number is replaced with an institution and transit or branch number.
  • An endorsement line is located on the backside of the check, which should be signed by the payee when depositing or cashing it. After going through the clearing process, the receiving bank frequently places a deposit stamp on the back. In some cases, the check may be sent back to the payor.

Advantages of Paying With Checks

While trying to balance convenience and safety, many people unfamiliar with the usage of checks keep asking what are some of the advantages and disadvantages of paying with checks. Well, checks are a popular and convenient way of making payments and offer many advantages, including:

1. No Convenience Fees

One significant advantage of using checks is that they often come with no convenience fees. Many businesses charge extra fees for electronic payments, making checks a cost-effective option. 

2. The Safe Way to Send Money

When it comes to security, checks offer peace of mind. You can make payments without carrying large cash or navigating complex bank transfers. The additional layer of security is a vital advantage; the payee’s account details are not visible, reducing the risk of fraud. 

I recall a situation where a stranger found my lost check, but cashing it proved challenging due to signature verification and ID checks. You could catch a person in the act of picking up your money, and there would be no way to prove it is yours. Once cash leaves your hand, anyone can spend it. 

On the other hand, if a stranger finds your check and attempts to cash it, he will have a tough time. That’s because banks and merchants still require a signature on every check, and cashiers are typically required to check customers’ IDs to verify that signatures are legitimate.

3. Proof of Payment

While providing a satisfying answer to the question, what are some of the advantages and disadvantages of paying with checks? It is essential to note that Checks provide clear proof of payment. 

Although processing and documenting a check may take longer, showing an image from your online banking page can be irrefutable evidence that a payment was made.

4. Instant Access to Funds

For the payee, checks offer the advantage of immediate access to funds. Payments are received immediately upon check presentation, eliminating the waiting period for funds to clear. 

This also facilitates tracking and verifying payments, a benefit I’ve found particularly useful in my financial management.

5. Proper Finance Management

Using checks makes managing finances more straightforward. Your canceled checks or a list of canceled checks are returned by your bank, offering insights into your financial habits even without revealing your credit card number.

6. Record Keeping

Checks provide a physical record of transactions, which is invaluable for tracking business or personal expenses. Furthermore, checks can be canceled, or payment can be stopped if issues arise, such as a lost or stolen check.

7. Ideal for New Businesses

For new businesses, checks offer a simple payment solution and a better means to manage cash inflow. 

For instance, setting up electronic facilities can take a while, requiring login credentials and other procedures to obtain alternatives such as point-of-sale (POS) for accepting payments. Checks offer a straightforward and immediate option.

8. Easier to Rectify Wrong Transactions

What are some of the advantages and disadvantages of paying with checks? Well, one advantage is that they are easier to rectify wrong transactions. 

In case of errors or issues with a check, you have time to act before it’s cleared. Unlike electronic transactions, where rectifying mistakes can be more complicated, checks provide a window to stop a transaction before completion. This added flexibility can be quite beneficial when managing your finances.

9. Expanding Payment Options for Customers

Only some people are comfortable with electronic transactions. Accepting checks broadens your customer base, offering options for those who prefer or face technical challenges with online payments. 

In my experience, this inclusivity has been essential for closing deals and accommodating a wider clientele.

Disadvantages of Paying With Checks

What are some of the advantages and disadvantages of paying with checks? This is the first and most crucial question, usually by individuals yet to understand how checks operate and how best they can incorporate it into their businesses. 

However, as with everything in life, there is always the “other side of a coin”. Now, let’s examine the flip side and consider the disadvantages of using checks as a payment method.

1. A Cheque May Be Returned or Stopped

For businesses, there’s a real risk of a customer paying with a check and then stopping it or needing more funds for clearance. This situation can be financially burdensome, making you liable to pay for the goods yourself, and in most cases, recovering payments from such customers can be arduous.

2. Challenging Bookkeeping

Writing checks requires meticulous record-keeping. Failing to note details such as the check number and account holder can lead to delayed transaction details. In contrast, electronic methods provide instant records, which are valuable for dispute resolution.

3. Higher Risk of Fraud

When considering the question, what are some of the advantages and disadvantages of paying with checks? One notable disadvantage is that checks are susceptible to fraud due to their ease of access and forgery. 

Large organizations, in particular, are vulnerable to financial fraud through the issuance or receipt of fraudulent checks, which can be challenging to track and recover.

4. Time-Consuming Clearance Process

Receiving a check, depositing it, and waiting for it to clear can be time-consuming, particularly in cases of emergency or for smaller organizations without the resources to manage this process efficiently, and you’d have to wait for seven working days before the check can be cleared.

5. Need To Reapply For Checkbooks

If you run out of check leaves, reapplying for a new checkbook can be a hassle. This inconvenience is especially noticeable for larger organizations with frequent transactions. 

You must also go in person to collect these cheques or write an authorization letter for someone else to take it on your behalf.

6. Risk of Errors

When using checks, there is a greater chance of mistakes. Complications and processing delays may arise from errors in writing the amount in words or numbers, mispronouncing the recipient’s name, or failing to sign the check. Errors also risk the check being returned or denied, requiring repairs and rework.

7. Supply Cost

If you are asking, what are some of the advantages and disadvantages of paying with checks? One of the disadvantages to remember is that using checks may result in extra costs for checkbooks, printing services and associated supplies like registers and ink. 

Over time, these expenses can increase, particularly for companies or people who regularly write checks.

8. Manual Reconciliation

Reconciling your bank account by hand is frequently necessary when using checks. You must maintain a record of the checks you have made, oversee their processing, and confirm that the balance in your account corresponds with your documentation. 

This manual process can be laborious and prone to mistakes, especially for large transactions.


Checks offer several advantages, including cost-effectiveness, security, and ease of record-keeping. However, they also come with disadvantages, such as the risk of bounced checks, higher chances of fraud, and time-consuming clearance processes. Ultimately, using checks depends on your specific needs and circumstances.

To create a balance with the usage of checks and also when answering the question What are some advantages and disadvantages of paying with checks? It’s essential to carefully weigh these listed factors and determine if checks align with your preferences and requirements. 

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