The Check Is In The Ether - automatic processing of personal checks through electronic check conversion systems - Brief Article

Kiplinger's Personal Finance Magazine, August, 2001 by Christine Pulfrey

TRENDS | A new process turns paper checks into ELECTRONIC PAYMENTS.

THE NEXT TIME you whip out your checkbook to pay for a purchase, don't be surprised if your check is handed right back to you. No, it's not a free lunch nor are you being treated as if you were a deadbeat. The merchant may be one of a small but growing number using a system known as electronic check conversion (ECC) that processes paper checks just like electronic payments.

Your check is first run through a reader that captures the essential details. There's no need for the store to keep the check and send it on its way through the cumbersome clearing process that ends with the canceled check being sent back to your bank and perhaps to you in your monthly statement.

With ECC, you sign an authorization, much as if you were using a credit card, and you walk out of the store with your voided check. The vaporized check clears in a couple of days--faster than a paper check, but the money isn't removed from your account as fast as if you had used a debit card. So, you still get the benefit of some float.

ECC backers say the system cuts the risk of fraud and speeds transactions at the checkout. Check writers will also benefit by receiving more detailed monthly bank statements that list the merchant's name as well as the date and dollar amount of each ECC transaction.