What is Electronic Check Conversion?

An electronic cheque is a payment instrument similar to regular paper cheque. eChecks are the digital form of normal paper cheques. eChecks were invented to reduce the hassles of normal paper cheques. An electronic check can be processed in fewer steps and has several additional security features compared to normal cheques.

An eCheck can be issued directly using the web banking account or by converting a regular cheque to electronic form. eCheck are required for the economy because it speeds up payment collection and reduces the cost of processing paper checks.

Electronic Cheque Conversion

An electronic cheque, just like normal cheques are used for one time payments. It is a payment instrument that initiates an electronic fund transfer to the payee from your bank account.

The process of converting regular cheques to electronic format is called electronic cheque conversion. This method requires specialized equipments that use your original cheque as the source of information to make an EFT transfer from your bank account.

How does eCheck Conversion Work?

The primary advantage of eChecks is the quickness in processing. Because of this simple reason, many businesses and retailers are now switching to eChecks for faster payment collection.

When you hand over your check at a retail store, and if the cash clerk gives back your void/marked check after running through a machine, then you can be sure that they are using eChecks. What did you notice there? Nothing? eCheck conversion works as simple as that!

The machine that the clerk using is an eCheck conversion equipment. When the clerk runs your check, it converts the information from your paper cheque to digital form.

The information taken from your paper check include, your signature, check number, account number, routing codes, bank name and the payer name. Then merchant bank send this information to your bank for verification. Once everything is found to be accurate, your bank will initiate the electronic fund transfer to merchant’s bank account. This way a purchase is now complete.

The system works almost similar when you send cheques for bill payments. The business may be converting your paper cheques to digital form for fast processing. In addition to faster processing, eChecks also reduces the processing charges for these businesses.

How do you know a business is using eChecks?

It is mandatory for businesses and retailers to let you know that they will be converting your paper cheques to eChecks.

If a business is using eCheck conversion, they have to tell you about this upfront. You may have already noticed this in retail stores. Some businesses tell you this only is their fine print. If you are paying bills by sending them a cheque, make sure you read the fine print. Chances are likely that they may be using electronic cheque conversions.

Some businesses do not use any of these methods to inform the buyers. Instead, they give this information through bank transaction statements.

Important Facts about eCheck Conversion

eCheck conversions are optional - According to Federal Electronic Fund Transfer Act, you can opt out from eChecks all together. Just contact the business and tell them you like to use the traditional methods.

Mandatory Notice to Customers – Businesses/Retailers need to tell customers that they will be using eCheck conversion methods.

Mark Cheques as Void – Retailers and companies have to mark the cheques void once they have digitized them.

Destroy Void Checks – Businesses have to destroy converted checks within 14 days of conversion. This is to prevent duplicate usage / fraud.

Things to remember while using eChecks

eCheck conversion is a simple process. However, it is not completely free from errors. Here are the things that you should look out when using eChecks.

Make Sure you Have Enough Balance – eCheck are processed quickly. Thus make sure you have enough balance to cover your purchases.

Check Bank Statements – Make sure eChecks are only processed one time. Errors can happen and sometimes, your account may have debited twice. Also, make sure you do not have any un-authorized transactions.

Keep Copy of Receipts – If your cheques were converted at retail stores, keep the receipt along with void checks. If you found anything incorrect regarding your payments, contact your financial institution with proof.

Keep Record of Your Cheque Payments – If you are sending cheque through mail, make sure you have details of this payment. In case of any discrepancy, you may have to use this information to prove your point. You can also contact your billing company to send a photo copy of your paid cheque.

The advantage of eCheck is that the buyer need not be aware of all the electronic fund transfer methods as he is just using his old pal, the paper cheque. By enabling eCheck the seller can grow his business faster, but not at the cost of losing a trusted buyer.