Electronic check conversion is something which has been happening for many years. In a report published by the Federal Trade Commission called ‘Facts For Consumers’, there were almost 739 million paper checks being converted into electronic means in the first nine months of 2004 alone. Thus, at present the numbers could have reached many billions all over the world and understanding the process of electronic check conversion is therefore vital for those who are using or intend to use checks as their preferred mode of payment.
What is an electronically converted check?
Electronically converted check could be defined as a transaction based on the information received from a written check or through designated means in order to make a payment through the account of the issuer. Thus, it involves writing of a check with the issuers’ bank account, the amount, to whom it is issued for and the bank in which the designated bank account has been created.
How do paper checks become electronic?
When a paper check is issued to a store or posted for payment of bills, the receiver will convert the check into an electronic check using a machine. In the case of a store, as the customer issues the check for buying goods, the store cashier can quickly convert the check into an electronic check and could hand the paper check back to the customer following marking it as void. At the same time, the customer needs to sign on a receipt while a copy of the receipt will also be given after completion of the transaction.
What happens once the paper check is converted into an electronic check?
Following its conversion, the information retrieved from the check will be used electronically to make a withdrawal from the designated bank account electronically into the bank account of its receiver. The information will appear as an electronic check conversion in the monthly bank statement of the issuer as well.
What are the differences in manual check processing and electronic check conversion?
In electronic check conversion the floating period between issuing the check and making the payment from the issuers account will be relatively small. Therefore, one needs to be careful when issuing a check to a place where it will be converted into an electronic check as the account needs to have sufficient money at the time of issuing the check or soon afterwards. Furthermore, as in the case of issuing a check to a store, the presented check may be given back following obtaining its information necessary for the transaction. At the same time, there may be different rules and regulation which governs such transactions which is different to that of a manual check processing.
How to know if a check will be electronically converted?
Usually, in a store where such conversions will take place, a sign board stating that such a conversion will be carried out should be hanging near the cashier. In other instances, fine print in the back of a receipt or else in the agreements or contracts signed between individuals and institutions should have a clause stating the same. In whatever instance, the issuer should be informed that a check will be electronically converted in order to make a withdrawal from the issuers account.