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Fraud Threat Halts Knuth's Hexadecimal-Dollar Checks
Barence writes "You may be aware of Donald Knuth, the creator of TeX and author of The Art of Computer Programming, who used to post checks to anyone who spotted an error in one of his books — one hexadecimal dollar, or $2.56. No one cashed them though. This blogger has two of them proudly on his wall, but the sad news is that modern day bank fraud has put a stop to Knuth's much-loved way of keeping his books free of errors." (Here's Knuth's own post about the sad change.)
Also, there's no guarantee that when someone writes you a check that they have the funds to cover it, because it isn't processed right then and there. These two factors put together have led the vast majority of merchants to simply refuse checks today.
Many merchants who receive a lot of checks on a regular basis (and thus cannot afford to turn those customers away) are switching to instant check processing systems. We implemented one of these at an old job of mine. Basically, a scanning device reads the check, gets online, turns the check into a direct withdrawal (EFT) from the account instead, slaps a big VOID on the check, and the voided check is handed back to the customer, usually to their great surprise.
Essentially, the check itself becomes useless, merely a carrier of account information. The scanned check image is stored, for verification purposes if it happens to be needed later. Initially, the system didn't do "instant" account checking, but that was added later, so that a bad check could be instantly spotted as such.
On a side note, a year after we rolled these systems out at all locations, the number of check we processed dropped by almost 75%, with a corresponding increase in credit/debit transactions. Once people figured out that writing the checks was essentially useless and that if they lacked the funds they would get an instant rejection while they were standing there basically holding a voided bad check in their hands, then they stopped trying.
Turns out a surprising lot of our customers were basically relying on the float period, where they could write the check and not have it get into the system for a few days, giving them time to come up with the money. When that no longer worked, they stopped trying it. There was no decrease in sales, but since our bad check problems disappeared almost overnight, we had a major increase in profits.