- The Washington Times - Monday, April 15, 2002

In the battle between innovation and choice vs. banking industry leviathans, who's going to win?At this point, I don't know. But it seems that customers who prize independence are almost certain to lose.
On April 8, in these pages, I reviewed VersaCheck 2002 Premium Pro, an $80 software package that lets Windows users design and print their own checks, using either a laser or ink-jet printer. The new version of the program is very easy to use, offers a lot of nice design features, and can help save money because you print only the checks you need, cutting down on waste. The finished product can look rather spiffy, if you ask me.
Then came the e-mails: two readers called my attention to a little "love letter" they received from Chevy Chase Bank. Use checks that aren't printed with magnetic ink on the "MICR" or "microcode" line the string of numbers at the bottom of a check and Chevy Chase Bank can slap a $1 charge on each check. This, by the way, is on top of any other account fees, plus any interest Chevy Chase Bank makes on the "float," or the investment of your funds in overnight accounts between the time they're deposited and the time a check or other debit hits your account.
Those customers who include a magnetic-ink "microcode" line on their checks or who buy their checks through the bank, won't get hit with the fee, because the checks can be "read" by Chevy Chase Bank sorting machines.
A canvass of some other area and regional banks revealed that some banks, such as Citibank, Bank of America, First Virginia Bank and Riggs National Bank don't currently charge such fees.
The American Bankers Association also weighed in. Spokesman John Hall said the ABA wants consumers to use only magnetic ink to print checks because that's a "standard" to which all banks, and the Federal Reserve, subscribe. Also, checks without magnetic ink can appear to be fraudulent, requiring merchants and banks to do extra work in processing a check. Mr. Hall also asserted that "all" banks use check processing gear that relies on magnetic ink, and not the optical character readers the software makers claim are employed.
A spokeswoman at the Federal Reserve Board of Governors in Washington, who asked that her name not be used, said there was no "legal requirement" that consumers print anything in magnetic ink on their checks, however.
Where do consumers end up? If you have a Hewlett-Packard laser printer, a brand that dominates the market, magnetic toner cartridges are available for a price roughly double that of a regular cartridge. If your laser printer isn't an HP (or a select model from Brother or Okidata), you're out of luck, magnetically speaking, just as you are if your printer is only an ink jet.
Within and around the banking industry off the record, of course people will say several things. One, while there's no legal requirement for magnetic printing, your bank may include such a stipulation in its customer agreement. Second, the Chevy Chase Bank gambit a $1 fee per item that's not magnetic might be the thin edge of the wedge: if that bank's customers don't protest, then other banks may follow suit. The nascent do-it-yourself check-printing industry could face a big challenge.
Third, amazingly, few in the advocacy community or in Congress seem interested in the issue. Along with that call from Riggs, I'm waiting on either Sen. Paul S. Sarbanes' press secretary, or the one from the Senate banking committee the Maryland Democrat now chairs, to call. Gentlemen, the lines are open. (To his credit, U.S. Public Interest Research Group official Ed Mierzwinski says his organization will back consumer choice and keep an eye on the matter.)
Now what's really interesting in all this to me at least is that the banks could make life easier for customers. Mr. Hall, the ABA's spokesman, acknowledges the magnetic system is a 50-year-old process. At the same time, automatic payments, Internet transfers, debit/ATM cards and other methods are cutting the number of "physical" checks being written by many of us. I can't remember the last time I wrote a check for my car lease; the payments are made with a Touch-Tone phone.
So, if banks were willing, they could upgrade processing systems to optical-character-reading devices, give consumers a break and let creativity flourish within reason, of course. It's not as much fun as whacking folks a buck a throw, I'll concede, but it could soften the "Old Man Potter" image today's otherwise-faceless banking conglomerates often display to people who just want to save a few pennies and are tired of discarding unused, out-of-date and expensive-to-purchase checks.

Write to Mark Kellner in care of The Washington Times, Business Desk, 3600 New York Ave. NE, Washington, DC 20002; send e-mail to [email protected], or visit the writer's Web page, www.kellner2000.com. Talk back live to Mr. Kellner on www.adrenalineradio.com every Friday from 5 to 6 p.m. EST.

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