What is an Electronic Check?

An electronic cheque is a form of payment made via the electronic methods that is almost equivalent to a conventional paper cheque. As the name suggests, e-checks are electronic and can be processed in fewer steps and bears additional security features than a standard paper check.

Electronic checks were developed to speed up the electronic transactions. E-checks can be used everywhere a regular paper checks can be used. It is governed by the same laws that apply to paper checks.

Benefits of using eChecks

The biggest advantage of e-check are the quickness in processing. Because e-check is processed much faster than normal paper cheques, these electronic cheques reduce bad check write-offs, returned-check fees and check collection hassles.

Eliminates Bank Processing Fees - Another advantage of digitalizing cheques. Because of digitization, the cheque processing actually occurs with in computers. Now the cheques are transferred between computers rather than physically moving them. Thus, the costs are very low or near to none.

Fast Transactions - Digital methods are often very fast. Same is the case for electronic cheques. As most of the processing is done by computers, the transactions are carried out in real time.

Uses advanced security features - In order to prevent any frauds or phishing attacks e-check are embedded with many advanced security features. These embedded identification number included routing numbers, account numbers and bank identification numbers. Because of these unique numbers, an e-cheque can be only cashed by right bank account holder.

Easy to Convert Normal Cheques to e-Checks - A paper cheque can be converted to e-check with the use of proper equipments. Many banks and retailer are using these equipments to digitize the paper cheques.

Disadvantages of eChecks

Uses Electronic Only Methods - As in any electronic method, there is a great chance of hacking and phising attacks to echeques. Fortunately, the sytem is equipped with ant-fraud and anti-phising technology to prevent such attacks.

Limited Use - As e-Checks are still new form of money transfer, it is still not accepted by majority of businesses. Thus, you may have to rely on traditional methods on some occasions.

Requires Special Equipments for eCheck conversion - As described earlier eCheck conversion is an easy process. However, the equipment required for such conversions may not be cheap. Thus, banks & retailers may have to invest in these equipments to fully utilize this new electronic format.

Facts about Electronic Checks

eCheck is an Electronic Format – An eCheque exist only in digital form. Because of this reason, an eCheque has more security features than a standard paper check. Security features provided by electronic checks include authentication, public key cryptography, digital signatures and encryption, among others.

eCheck are Proccessed Quickly – What a normal cheque requires weeks now will be processed in less than a day. Thus, make sure you have enough balance in your account before sending someone an eCheck.

You won’t receive eChecks back – Unlike normal checks, your bank may not be returning your void eChecks. However, you will be able to see them in your bank statement.