Canceling the Check?

Whole Foods may follow Fresh & Easy in accepting only cash, credit, debit at checkout

LOS ANGELES -- Whole Foods Market Inc. is considering banning the use of personal checks at its grocery stores and this month stopped accepting checks at two stores in Los Angeles County and one in Arizona as a test, according to The Los Angeles Times. Fresh & Easy Neighborhood Market Inc., the California division of British retailer Tesco, already will not take personal checks at any of the 70 stores it operates in California, the report added.

"Supermarkets used to be a repository of checking, cashing payroll and personal checks, but in an age of direct deposit [image-nocss] and debit cards, that's not something that is relevant to their customers anymore," Mac Brand, a Chicago food industry consultant, told the newspaper.

These chains see check processing as a time-consuming and expensive service at a time when the industry is looking to drive down business costs, Brand said. But such a move carries risk.
"Every time you take something away, you run the risk of severing your relationship with a customer," he said.

But stores such as Vons, Albertsons and Ralphs, for example, whichlike many supermarkets, have bank branch within their locationscontinue to accept checks. They also cash payroll checks, although the chains typically charge a service fee of about $1 to about 1% of the check, depending on the municipal regulations of the city where the store is located.

Representatives of these chains told the paper that there were no plans to end the services, and one supermarket industry executive questioned why, in an environment of increasing competition for shoppers, a company would add a barrier to potential sales.

Fresh & Easy, which started opening stores two years ago, has only self-service checkout. It does not take checks or manufacturers' coupons.

"We keep our systems as simple as possible, keeping prices low for customers. We do accept cash, credit and debit cards and also have an ATM in store," Brendan Wonnacott, a spokesperson for the El Segundo, Calif.-based chain, told the paper.

Bill Jordan, Whole Foods' regional vice president, said prohibiting personal checks should improve service. "Since most of our customers pay with cash, debit cards or credit cards, we want them to be able to check out as quickly as possible. This pilot program was put in place to see if personal check users would make the switch to debit cards or another form of payment."
In little more than a week into the change, "the program is off to a great start," he told the Times.

So far only the stores in El Segundo, one in Los Angeles and a store in Tempe, Ariz., have stopped accepting checks. The chain had already stopped cashing payroll checks.

Jordan said Whole Foods would evaluate consumer reaction before rolling out the change to other stores.

A recent rise in bad checks also factors into the new policy, he added. "That unfortunately makes it more difficult for the remaining customers who prefer to pay this way. To help reduce fraud, we have a several-step personal check approval process that can often inconvenience other customers in line," Jordan said.

The chain prefers cash, debit cards and credit cards because they can be processed quickly and "come with added protections" that safeguard the interests of the consumer and the retailer, said Jordan.

Many retailers prefer the type of debit cards that require the shopper to punch in a personal identification number to complete the purchase. That is because those have the best combination of low transaction fees and security, Adam Levitin, a law professor and consumer finance expert at Georgetown University, told the paper. But probably the biggest advantage for grocery stores looking at stopping accepting checks is the labor savings of taking and processing the checks, he said.

Amid today's endless array of payment options, it is easy to forget that checks represented the ultimate in banking convenience just a few decades ago, added a report by AOL Daily Finance. Before ATMs, debit cards and easy access to credit cards, most consumers relied on checks to buy things at stores, supermarkets, and malls. Many grocery stores let customers write checks for more than their bill, amounting to basic cash withdrawals that could be conducted without a trip to the bank.

But history has moved on, and what was once a major convenience has become quite the opposite. With many customers using online banking to check their balances and debit cards combining the ease of credit cards with the reliability of checking, personal checks have become an unwieldy, annoying way to pay, and an impediment to easy recordkeeping. Most stores demand proof of identity with personal checks; many ask for a credit card as a backup form of payment. Many eBay sellers refuse to take checks, due to their unreliability and their slowness to clear. And among those companies that do still accept checks, e-checks have become increasingly common, enabling check users to experience the ease of credit cards.

Personal checks do have a certain low-tech charm. For some customers, the time lag between writing a check and having it cashed can be a lifesaver. But this ease comes with a price: many vendors let checks pile up before going to the banks, creating delays that can leave customers confused about their bank balances. And as anybody who has been caught behind a check-writing customer knows, paying by check is slow and irritating.

(Be sure to participate in today's Kraft/CSP Daily News Poll on the question of accepting checks.)