Why do banks and businesses charge a returned check fee if your check doesn’t clear, but if your debit card is declined it just is declined with no fees?
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Processing a check requires a small amount of human effort in order to accomplish. Not a lot, mind you, but there are time, wages, and equipment involved in that process. It used to be much more, prior to the development of several different technologies that are now utilized to dramatically increase efficiency and accuracy. Those fees you pay? They were established back when processing checks was a much more manual process, because banks understandably wanted to be compensated for the wasted time and effort in processing a bad check. The cost required to make up for the lost wages and etc. is much less now, but regulators have allowed banks to keep the fees at a disproportionately high level.
Businesses charge return check fees for more or less the same reasons: they are wasting time and energy trying to cash a bad check, and their own bank very likely charges them a fee for even submitting a bad check.
Debit cards, by contrast, can be processed almost instantaneously entirely by computers. Initially the debit machine just queries your bank to see if there are adequate funds available, and if not, then it rejects the transaction right then and there, saving everyone involved both time and money. If everything is good to go, the transaction will get fully and automagically processed some time later, and although the business’s bank may not actually receive the funds until a day or two later, they know with 100% certainty that they will get it.
The check doesn’t get withdraw from the account until it’s presented at a bank. The merchandise is out of the seller’s hand by that time so the bank still pays out the check. A returned check fee is the bank charging for the service of paying the check from an account that doesn’t have the funds to cover the amount.
You can still get hit with overdraft fees from a debit card. If you deposit a check, use your debit card against the funds credited from that check, and later have that check bounce you’ll get hit with an NSF fee for every one of those transactions.
Usually you don’t get charged bounced check fees if the store has the ability to immediately withdraw the money as if it were a debit card. Stores freaked a few people out when they’d hand the check back to the customer.
The fees were to recoup the cost of people’s time in processing the check, and because there were a lot of people would couldn’t balance a checkbook. Sort of a stupid tax for some, and a deterrent for those intentionally passing a bad check, or taking the chance on getting money deposited before the check was deposited by the store.
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