Dear Liz, I do not agree with your opinion that electronic payments are much more secure than sending checks in the mail. My own personal experience of sending checks for about 40 years with a single incident (which was not attributable to the USPS) gives great confidence in the mail as a payment system.
In contrast, not a month goes by without a large organization responsible for all kinds of personal and financial information being hacked in a cyber attack. If the bad guys get my credit card information, I don’t lose more than $ 50. I’m also not going to risk them having my bank account and routing numbers for the dubious convenience of keeping a stamp.
Yes, mailboxes are broken into, but until there are real penalties for inadequate IT security, businesses will continue to underfund their network security and be reactive rather than proactive. I will try my luck with the local thieves and not the global population of hackers.
Answer: You are absolutely correct that the databases in which information is stored can be vulnerable to hackers if companies do not take proper precautions. But avoiding electronic payments doesn’t keep your information out of those databases. Information about you is collected and stored whether you like it or not. You didn’t provide your Social Security number, date of birth, and credit account details to Equifax, for example, but there’s a good chance you’re one of the 147 million Americans whose information were disclosed when this credit bureau was breached.
Unlike some databases, electronic payment transactions have strong encryption which makes it extremely difficult for hackers to intercept and read information. Criminals much prefer to target information that is at rest in databases rather than trying to capture and decode it in transit.
Your checks are almost certainly converted to electronic transactions, anyway. Few checks are physically passed between banks these days. Often times, a biller will take the routing and account numbers printed on your check and use them to request an electronic funds transfer through a clearing house such as the Automated Clearing House (ACH).
Since these numbers are printed on every check you send out, anyone who sees this piece of paper, from a mail thief to someone entering payment into a company’s computer system, could abuse this. information. This is a much greater risk than the possibility that an electronic payment could be hacked in transit.
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions can be directed to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.