Complex Systems with Patrick McKenzie (patio11) The honey badger of payments
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Apr 23, 2026 A deep dive into how checks quietly shaped U.S. payment rails and why old paper habits still matter. The history of centralized clearing and ACH is unpacked with surprising protocol parallels. Discussion covers how checking accounts function like credit, operational holdouts to instant payments, and a bold policy attempt to eliminate federal paper checks that exposed stubborn edge cases.
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ACH Carries The Long Shadow Of Paper Check Logistics
- ACH and many U.S. interbank payment designs are historically built to support nationwide paper check clearing.
- Settlement timing reflects old transport limits, e.g., how long to move data between New York and San Francisco by rail.
Checks Promiscuously Distribute Credit Throughout The Economy
- Checks distribute credit broadly because writing or accepting a check is effectively a credit extension.
- This systemic credit distribution shifted risk from merchants to the banking system and influenced things like arrests for uttering when checks bounce.
Legal Risks Around Checks Shape Social Consequences
- Legal enforcement around checks (uttering) made check-based disputes criminal in ways other consumer disputes are not.
- That enforcement influenced system behavior, including NSF fee economics and unequal prosecution of poorer people.