I've been explaining quite a bit of late about a new federal law that allows banks to convert your checks to digital images.
Well, banks aren't the only businesses using electronic means to process paper checks.
Increasingly, consumers are finding that their checks are being electronically converted by retailers, credit card companies and other businesses that get paid by check. This process is known as "electronic check conversion."
An e-check, as it is also called, is a one-time electronic debit made from your checking account. So, your checking account statement would reflect an electronic funds transfer.
Under electronic check conversion, your check is used simply to obtain information -- such as the bank routing number and check number -- to process your purchase or payment. That information is used to make an electronic withdrawal from your account using the Automated Clearing House (ACH) network.
Many companies are adopting electronic check conversion because it speeds up payment and reduces processing costs.
There were more than eight times as many check-conversion transactions in 2003 than just the year before, according to NACHA-The Electronic Payments Association, which develops the operating rules and business practices for the ACH and for electronic payments.
NACHA estimates that about 225 million (2 to 3 percent) of checks written in retail stores are converted to e-checks. And approximately 10 percent of all consumer bill payments made by check are now converted into electronic payments, the group says.
NACHA also projects that the number of e-check payments is likely to reach or exceed 1 billion by the end of this year.
Your check can be converted whether you're standing in the store making a purchase or mailing it to pay a bill. For example, you may buy something and write a check. But instead of the clerk placing your check in her cash register drawer, she scans it and returns the check to you. If this has happened to you, your check was electronically converted. In some cases, you might not have needed to fill out the check.
